All Forum Posts by: Leo Watts

@Dominique B.

Ah ok nice!

@Dominique B.

Looks great! What zip code? Any HOA?

I have a rental in a different market than I live in, and I don’t use a PM. For a one off property it’s really not necessary, especially at 10%. What are you paying them 10% for? Is the condo falling apart?

@Andrea Aguilar

There are two main first time home buyer programs in DC, Open Doors http://www.dchfa.org/homeownership/available-programs/dc-open-doors/

And HPAP http://dchfa.org/homeownership/available-programs/hpap/

There are specific requirements for each, and your income and other specifics of your situation will determine how useful they will be for any given property. There are many other stipulations that I recommend you familiarize yourself with.

As @Russell Brazil alluded to, sellers are sometimes wary to accept a contract contingent on the above programs due to added paperwork and time. If you’re in a bidding war for a particularly desirable property, it’s not going to be in your favor.

The good news is that the condo market is not currently as crazy as for single family homes. Doing some preliminary browsing, there are probably 25 - 50 condos that fit into the broad strokes of your search criteria (under 500k, under 400ish a month HOA).

The properties vary wildly though, from 500 to 1000 sq ft (a massive difference especially if you’re planning for a long term roommate). There are one and two bathrooms, some with parking or a balcony, some that are brand new construction and some that are old, to say nothing of the different lifestyles available in different neighborhoods. Some are just listed and some have been lingering on the market (over priced or some deficiency not readily apparent?)

As you tour a few units, you will start to narrow down what is truly important to you (550 sq ft is way too small for a 2 bedroom), this neighborhood is better than this (but I will pay more and get less), I need new construction (or maybe not).

Casting a wide net is a good preliminary step, but a refined set of criteria will make the process more fruitful and will guide where you spend your time hunting and writing offers.

@Deisy P.

I read your comment about the contractor taking advantage of the roof situation. That happens to many people. Always get three quotes!

I will say, speaking fluent Spanish is one of the best advantages you can have in this business. I recommend looking for latino / contractors and handymen. It may take a while, but you will likely find someone that has very reasonable prices and is responsive but doesn’t speak English well and so struggles to get higher priced jobs. Once you find a good one, he will be your best friend and a life saver especially on small maintenance jobs.

That super commuting sounds ridiculous! You’ll never be able to enjoy all DC has to offer and it will be hard to build a network in a metro full of educated and wealthy people.

If you don’t mind driving, why not look at properties a little farther out? I just looked at a house hack in Woodbridge in the middle - high 300s that will cash flow 1000 a month and could be optimized to cash flow 2000 a month when the owner moves out. If you don’t need to be in DC proper or an area with great schools there are ways to generate cash flow around here.

@Andre Gillett

Sure I think all investing is based on gut feeling plus some intellectual calculations plus familiarity with a neighborhood. You could be quite right. Or the timeline could extend longer in the case of a downturn and a slow down of appreciation plus bump in foreclosures.

Can you elaborate on what your strategy is? Buy and hold? That would make the most sense if you think there will be a major uptick in values. How do your rents pencil out VS acquisition costs? Market rent or section 8?

Curious to learn more.

I’m personally somewhat skeptical on EOTR, though I want to be a believer. I invested heavily in a similar area of my hometown of Dallas (South Dallas) and saw good returns but my cost basis was low. EOTR pricing seems to already factor some anticipated explosive growth which seems more like a 10 - 15 year timeline than a 2 or 3 year timeline. Also, a river is always a huge natural barrier anyway. The divide between most of dc and eotr is huge in so many ways. I’m sure there’s still tons of money and impact to be made if you know the neighborhood and have a good strategy, but it being a place for anyone to come in and invest and make good money, anticipating a huge radical appreciation, I’m skeptical.

@Russell Payne

I had a property I own on Airbnb. Long term rental income is $3250. Longterm is $5500 (could have been more but I didn’t fully optimize it for large groups - more risk but more upside)

People generally don’t want 5 bed houses during the week in a non tourist city. So you had lots of vacancies in the weekdays and then people having parties on the weekends.

Lots of locals smoking weed on the front porch / blasting music on front porch, plus worse, that I wasn’t fully privvy too.

Airbnb is making it harder and harder to screen Airbnb tenants (a quick Google / FB stalk is impossible without last names / photos being shown).

A party starting to kick up at 2 am that you’re watching from your outdoor cams hundreds of miles away and your 450k home on the line is a terrible feeling.

Anyone who’s been doing Airbnb long enough has horror stories, big items stolen, thousands of dollars of damage, or worse. You also deal with endless bull **** with there’s not enough cups, I can’t find the house, I saw one hair in a corner, I thought this was going to be as good as the four seasons, yada yada. You’re always paranoid about a bad review that can derail all the work you’ve put in.

Then when you analyze the numbers; taking on this semi full time job may not be worth it.

$5500 income

Minus $550 (10% for property management that coordinated cleaners, some maintenance, restocking, communicating with guests which I took over eventually because I was much better / more invested in it.)

Minus $300 for bills (water elec cable / internet gas)

Minus $100-150 for each clean

Remember you have a 5 bedroom house and your 15 guests just spilled beer all over the place, dirtied the **** out of the kitchen and all the bathrooms, tracked dirt in the house, and maybe smoked weed inside

And you have to strip all the beds and sheets and everything and remake everything / restock everything

That’s a 3+ hour job for at least 2 cleaners

Now you can find cleaners that are cheaper, but will they do a half *** job and hurt your ratings (this is common in volume Airbnb businesses), be able to show up consistently and on off times (Friday at 11 am and then also Sunday at 11 am). A volume business is hard to outsource to one lady that may charge less but not be as reliable, so ultimately you need a real cleaning company

Then the component that really killed me was I was outsourcing laundry. Each turnover (full hotel quality bedding on 5 beds / 4 baths) is at least $80. If you have a back to back turn around, how can you do in house laundry with 2 - 4 loads of wash and dry and fold in the 4 hours between check ins. You could do onsite laundry which I was going to do but the time constraint is difficult. Having a cleaner drop it off at a laundry mat and pick up at a later date for a cheaper per pound cost just adds more labor / steps of complexity to the process.

You can add two night stay minums to reduce your cleaning and laundry costs but it drives away your opportunity for big one night pay days. You can also try to rent out the rooms individually for weeknights when demand is lower, but that adds a whole nother layer of complexity and micromanagement and so and so slept in the wrong bed that’s it’s hardly worth it.

So let’s say you only had 5 full turnovers at $200 a pop, for $1000 minus $550 management minus $300 bills minus $150 restocking of supplies and incidentals That’s $2000 taken out of your $5500 leaving you a $3500 profit when you could just do LTR at $3250 without adding years to your life

Now if I was local, which I was at one point, I could reduce a fair bit of these expenses and improve the systems. I also had reason to believe I could hit $7500 or $8000 on this property (not 100% that I could, but a buddy was doing similar numbers in a similar property but also being less discerning with guest screening and had a longer run time to build up reviews).

If my end profit was $5000+ a month, the headache seems more palatable.

But, when Airbnb decided to give a no questions asked refund on $20,000 on confirmed “strict” bookings, and the str market tanked, I switched over to LTR and haven’t looked back.

/endrant

@Russell Payne

I’ve managed out of state long term and short term.

Long term is maybe fix something once or twice a month.

Short term is managing cleaners, dealing with guests complaining about cleaners, random **** breaking, reporting damages do Airbnb, seeing a big *** party starting at your house at midnight (your property manager isn’t on call 24/7 and are charging for every hour spent), dealing with pissed off neighbors etc.

You need to weigh all those costs (management + cleaners stack) minus potential high weekday vacancy minus Airbnb’s rising fees and declining service plus your time and headache spent, VS an easy / much more guaranteed paycheck.

There's a lot of guru BS in the STR game. You can make great money under the right circumstances, but the work load is many times greater, and Airbnb etc is far from passive (unless you're giving up 50% of the profit at a vacation rental condo for instance)