All Forum Posts by: Nathan Grabau

Are you opposed to taking out debt? You find a 450k-550k home or duplex, and carry a small mortgage on it. It will still cashflow phenomenally, and will have a very low leverage level, which helps if you are leverage adverse. 

 The other thing you are doing too is decreasing the chance of bad reviews. The we pay for one car(offering a service) but you have to pay for additional cars(making the charge very clear) should help you. This probably also helps you get bad reviews of people who are upset they had to pay for a second or third car taken down, as it will be incredibly clear in your description. 

What is your bedroom count and how car dependent are people who are traveling to your STR? I would have a certain number of cars, lets say 1(assuming it is not like a 6 bedroom str) that are included for free, and then people have to pay the resort on check in if they have more cars. If you are eating $5 a day at an 80% occupancy, that is 1500 a year, but you then are being accommodative with an option that does not impact your guests, but then if they want more vehicles, you are not out of pocket on it or trying to recover that cost yourselves.

I would ask them how much money they need on a monthly basis and see if you can get close to that. They could say "if we had an extra 2k a month that would save us" and you give them 2k a month, on a 0% interest rate, and amortize it however long it takes to get to 0 and I would just be generous with the purchase price then. 

I am invested in the Ames, Iowa market. My Realtor there is also an investor, and owns a property management/ maintenance company. I am actually in the process of selling a property that I bought a little more than a year ago where I am going to double my money. I have been very happy with the tenant base in the rural cities around Ames. Primarily ag/ food processing workers who are content good people who are not looking to rip anyone off. Avoiding major metros for me has yielded better tenants. If you send me a message I am happy to get you in touch with my Realtor and his team! 

I would call the sellers insurance agent and ask how they recommend dealing with this. I would assume that your purchase is not financeable so it should not matter too much either way. 

It is worth getting a CPA, they will save you money and prevent mistakes. There are little things that trigger or could trigger audits that are just better to avoid, and a CPA can help you avoid these, which saves you time in the long run. I would contact the agent you used to buy the properties to see if they have a rec for a CPA in the area. 

 If you can do subto, it keeps it off your credit. That being said if you can assume a 2.7% loan and it is smooth, the advantages of subto are not as extreme. 

With regards to your original question, I would prefer to hold onto the cash. Everyone likes to see cashflow as their front line of defense, but in my mind, cash is the true first line of defense. A/C and hot water heater goes out and you have a 5000 bill, I would rather have 70k than a 800/ month lower payment. 

The 800 is a pretty big swing though, typically when people are talking about 70k it is for a sub 500 monthly payment swing, so that is the only thing that creates a gray zone for me in your specific example. 

I am not sure why high rates would prohibit you from refi'ing right after you complete your renovation, assuming you do not have a early payoff fee, you should be fine at whatever rate, because you can refi it. 

Do you have a line item for misc/ unknown things in your reno? 

Market is not really trash, but if yours is you should be benefiting from it on the purchase side, so ARV should just chase the purchase.

Looks like you are buying at an after repair 9 cap, which is pretty decent, this deal does not sound bad to me unless it is in a undesirable market like Flint, MI. 

 Denver Metro and NoCo airbnb laws are brutal. Westminster and Arvada are the last open cities. Unincorporated Boulder county, outside of a subdivision allows them. Larimer County, outside of Estes Park and Fort Collins has a permit process, but it is 3-6 month. Longmont and Fort Collins allows them, but you have to be a resident and you can only have 1. Colorado Springs is still pretty good too, as I understand it.