All Forum Posts by: Kristi K.

I’ve been in this investment class for 20 years, so I’ve lived through a few of these cycles.

It’s fascinating just how far these inflated values can crash.

Consider this one…asking 1.2 million 3 years ago, asking $749K today, and it’s still sitting.  Going to be some really good deals in a few more months when panic sets in.

https://www.zillow.com/homedetails/436-Lucerne-Way-Gatlinbur...

Is anyone investing in SFH in St. Louis? I lived there for 10 years and know the area well and still have family there. It's also a ~4 hour drive from where I currently live so although it's out of state, I feel like it's quite accessible to me. Would love to hear from any investors who are in that market. I'm looking at county vs city.

Quote from @Kristi K.:

Well, I can say that living in Indy and driving to Chicago, it is definitely an arm pit. It is close to Chicago but when driving if you get off that exit which I did on accident once 😬, one thinks “war zone” and will I make it out alive. I did obviously. Now, if close by Merillville can spread its niceties to Gary, then perhaps. I guess you would have to be prepared for the type of tenants. Maybe it could be a Section 8 focus ???

Quote from @Mike Klarman:

We can reverse engineer to come up with some approximate numbers.

ARV = 300k

Project cost = 300k x 70% = 210k

210k = Purchase Price + Rehab

a 300k ARV won't be a 4 bed house host times. So let's assume a 3/1.5 structure of about 1300 - 1800 square feet. An interior rehab for this kind of house will be 70k with quality finishes. If you need mechanical work the rehab can go to 90k - 100k. But for this example let's assume 80k.

So now 210k = PP - 80k

PP = 130k

So now we have a rough estimate of all the numbers:

PP - 130k

Rehab - 80

ARV - 300k

Now you're question is how much capital will it take to get through to the exit.

Let's say you get 85%/100% financing.

You'll need 15% of 130k for the downpayment - 19,500

Closing costs for lender: 2 points, plus 1500 service fee (5500)

Closing costs for title - 1500

Deposit to Contractor to get started (this gets returned after the rehab is over but is still a capital requirement) - 10k - 20k

Holding costs - 1500/2k for 6 months...? - 10 - 12k

Miscellaneous Costs - utilities, insurance, any overages - 3k - 5k

Buffer of 10% reserves - 5k - 10k

So if you add all that up, you can see how you need to be 50k+ liquid to get through just a smallish deal like this.

 Nice! Thank you for that breakdown.

Do others agree with the numbers? 

Quote from @Kristi K.:

Quote from @Cindy Houck:

Hello! Tax woes...

Was so happy to stumble upon this post since I am a month into having my STR License and now subject to a 9% Transient tax on top of the State 1.5% - I know, ouch. Was too busy getting my STR up to speed that I missed that the taxes on the platforms wasn't being all collected. Luckily I am catching it now and it affects only 2 of my bookings. VRBO flatly states that they are "obligated" to add both taxes where Airbnb only takes the state transient tax and leaves you to the local. This of course is going to be an accounting nightmare to report to the city.

Questions: Can you force Airbnb to collect all the taxes?  Is this something the County local government can enforce?

Has anyone had a work around for adding in the taxes on Airbnb?  We have tried 

It is totally county/State specific. VRBO only collects and remits state tax in my county in Texas, I have to pay the hotel occupancy tax directly to my county tax office monthly. AIRBNB collects and remits both though. You need to contact each platform for your specific location to be sure. 

 This is a source of frustration for me. I am trying to put one of my listings on VRBO and contacted them about this but nobody I spoke with knew. The last person was going to look into it and get back to me at a scheduled time the next day and I never heard. So I've had it on hold b/c I want to be sure everything is all in order before accepting bookings on that platform. I guess I can ask the county and see if they know. I believe Airbnb is handling it all so far. 

Hello! Tax woes...

Was so happy to stumble upon this post since I am a month into having my STR License and now subject to a 9% Transient tax on top of the State 1.5% - I know, ouch. Was too busy getting my STR up to speed that I missed that the taxes on the platforms wasn't being all collected. Luckily I am catching it now and it affects only 2 of my bookings. VRBO flatly states that they are "obligated" to add both taxes where Airbnb only takes the state transient tax and leaves you to the local. This of course is going to be an accounting nightmare to report to the city.

Questions: Can you force Airbnb to collect all the taxes?  Is this something the County local government can enforce?

Has anyone had a work around for adding in the taxes on Airbnb?  We have tried 

Quote from @Kristi K.:

Quote from @JD Martin:

Quote from @David Pike:

If you invested $100k and then put $19k in for the capital call, you would potentially get your capital call back ($19K) plus 25% of the $100k so $25k.

So you're looking at either a $75k loss if you gamble the $19k, a $100k loss if you don't participate and are wiped out, or a $119k loss if you participate but are still wiped out. That's too big a gap for me; I'd have to just eat the current loss and move on. If you had better than house odds at being made whole, it might make sense but there's just no upside here. What a shame. I haven't reread the thread but I know I remember some people predicting the cap call on #1 would just be the beginning. 

Edit: I went back and read the whole thread, which is not the big thread that's been going for a while. Wow. It looks to me like, prompted or not, a lot of cheerleaders showed up to encourage the OP to dive on in, the water is fine. I'd be interested in seeing how many of those posters are still around these days.  

This article came out yesterday. It doesn't really say much though

 https://heraldspost.com/ashcroft-capital-lawsuit/

the article just brings up what every lawyer says when a deal goes bad..  nothing new here.
In hindsight limited partners maybe should have just invested with  companies that took on NO debt and lived with the return you know 4 to 5% .. plus any appreciation over time.  It was industry competing for the same investor dollars on the same assets so you need leverage to juice returns.. we see it on BP all the time.. the Max leverage refi till you die get max doors investors.. And the pay cash own less doors smaller returns sleep well investors.. Personal choice right ?

Hey BP Community,

Hoping to tap into the collective wisdom here. I'm closing on a property in Cleveland that I plan to rent out. However, I've hit a snag with securing landlord insurance.

So far, I've received a few responses declining coverage, citing:

• Higher crime rate in the area
• The property is older
• The age of the roof

I'm a bit stuck on how to proceed. Has anyone else experienced similar challenges in Cleveland or other areas?

My questions for the community:

• Are there specific insurance companies you've found that are more willing to work with older properties or properties in areas with perceived higher crime? (Bonus points if you have experience in the Cleveland market!)
• For those who've dealt with older roofs, what were your options for insurance? Did you have to replace it immediately?
• Any general tips or strategies for finding landlord insurance when facing these types of hurdles?
• Should I be looking at specific types of policies or riders?

Any insights or recommendations would be greatly appreciated! I'm eager to rent out this property, but I want to make sure I have the right insurance in place.

Thanks in advance for your help!

Quote from @David Pike:

If you invested $100k and then put $19k in for the capital call, you would potentially get your capital call back ($19K) plus 25% of the $100k so $25k.

So you're looking at either a $75k loss if you gamble the $19k, a $100k loss if you don't participate and are wiped out, or a $119k loss if you participate but are still wiped out. That's too big a gap for me; I'd have to just eat the current loss and move on. If you had better than house odds at being made whole, it might make sense but there's just no upside here. What a shame. I haven't reread the thread but I know I remember some people predicting the cap call on #1 would just be the beginning. 

Edit: I went back and read the whole thread, which is not the big thread that's been going for a while. Wow. It looks to me like, prompted or not, a lot of cheerleaders showed up to encourage the OP to dive on in, the water is fine. I'd be interested in seeing how many of those posters are still around these days.