All Forum Posts by: Louis Barkhuizen

Thank you @Christina Johnson. Very valuable insight.

Thank you @Jon Crosby much appreciated.

Hello there guys and gals. I have been evaluating potential properties for STR in Port Aransas Texas, and have found two routes to go. Buy an SFR with no HOA to deal (ballpark SFR cost in Port A is around $400K), or buy a condo/townhome (ballpark cost in Port A around $290K)

From pouring over AirDNA data I see the SFR's on average earn slightly more revenue than condo/townhomes, but not a significant difference.

My ROI and CAP will be much better with the condo/townhome, and I can use the remaining funds to buy a second SFR :)

So my question is: is it worth dealing with potentially problematic HOAs in communities where SFR are allowed (eg. not taking care of deferred maintenance, or lackluster landscaping, etc). I have been advised by fellow investors to stay away from condos or townhomes.

Thanks for any replies.

@Basit Siddiqi thanks for your response to my question. Would it not make sense then to give the furniture or contents a reasonable value of, for example, $10,000 in the purchase. That furniture depreciation would be better than if the contents were just valued at $1. Right? Maybe overthinking this.

Thank you @Thomas Dulin for that insight, much appreciated.

Good morning all. I am getting ready to pull the trigger on m first STR. I am looking at a couple of fully furnished units, which brings up a question.

Are the contents (furniture, TV,s kitchenware, bedding, etc) of a fully furnished unit listed separately on the purchase contract, or are they just included in the purchase price? I ask this because the contents of a 3 bedroom house can add up to tens of thousands of dollars. Does the appraisal take into account the contents as separate from the real estate itself? 

Also, the furniture can be depreciated of 7 years as opposed to the 27.5 years depreciation schedule for real estate?

Thanks for any input, and have a great day.

Morning all. Be careful using a "second home" as a vacation rental if you are using conventional financing. Fannie Mae states the following:

Fannie Mae’s April 3 clarification of the “Second-Home Rider” shows that homeowners are allowed to rent out a second home after one year of ownership and that short-term renting during the first year is also permitted under specific conditions

The following eligibility requirements apply to second home Mortgages:
·The Mortgage must be secured by a 1-unit property
·The Borrower must occupy the second home for some portion of the year
·The Borrower must keep the property available primarily (i.e., more than half of the calendar year) for the Borrower's personal use and enjoyment
·The Borrower may rent the property on a short-term basis provided that the property is not subject to any rental pools or agreements that require the Borrower to rent the property, give a management company or entity control over the occupancy of the property, or involve revenue sharing between any owners and the developer or another party
·The Mortgaged Premises must be in such a location to function reasonably as a second home
·The second home must be suitable for year-round occupancy with the following exception: a second home with seasonal limitations on year-round occupancy (e.g., lack of winter accessibility) is eligible provided the appraiser includes at least one comparable sale with similar seasonal limitations to demonstrate the marketability of the subject property. See Section 5601.2 for general property eligibility requirements.
The property must not be subject to any timesharing or other shared ownership arrangement

So it is possible, but there are some limiting rules. Most notably, the property has to be available to the owner for use (ie not booked out as a STR) most of the year, and that you cannot pay a professional property manager to manage the place.

Michael,

Hi there. I am going through the same process at the moment. I am working with Host Financial and they definitely look at past SRT income if available.

One of the tools they use to determine STR revenue forecast is AirDNA revenue forecast calculator. In my case the property I am looking to buy has not previously been used as A STR, so no revenue history. I qualify for the financing via the AirDNA revenue forecast (and the other usual factors like credit score etc). Hope this helps.

Thanks @Timothy Church for your comments. Much appreciated.

Amanda,

 have already connected with Turnkey and Vacasa. Thanks for your reply.