All Forum Posts by: Nathan Grabau

Yes, we are seeing this in Colorado too. We had one open house last weekend that had 17 buyers that came through, which is a dramatic turn from the 4 or 5 we were getting on lucky days! 

When you said you would work with him, what do you think you were agreeing to? Because you have agreed to work with him, you create a gray zone that is probably not worth a fight for 1-2k. I would begin marketing the property immediately and let him know while you are willing to work with him, you consider that letting him out of his lease early, when you are able to find a replacement. I would see what he says and return the deposit, minus fixes and vacancy cost between 2-10 and when you find a replacement. 

If the unit is in great shape, and your market is still hot, I would be generous with him. 

I would hold the deposit until a replacement is found and he has moved out, assuming you can in FL. Different states have different rules surrounding how fast you must return a deposit, it is most likely 60 days. 

I would just look this up on Bankrate.  https://www.bankrate.com/banki... 

Yes that is the broad strokes. Generally on DSCR loans I would expect 25 year ams and balloons after 5-7 years. Personally I would avoid ones with significant prepayment penalties as rates are falling.

The local bank I took my first DSCR loans also wanted to see more RE experience than I had, so part of the deal was an unwritten agreement that my Realtor and PM who they lend to would manage the properties to help protect their investment.

There is so much margin in STR's, that it is hard to not be excited about it. That being said, I would run your numbers based off of 2019-2021 data, not 2022 data and make sure they still work. The deals I help underwrite, even at these interest rates still pencil. That being said, I would not be encouraging anyone who is living off STR income, to leave their jobs right now, because I would expect margins to compress in 2023 as competition grows.

I would contact local banks/ credit unions in your area. Walk in to their main office and ask to talk to someone about real estate lending. It is likely you will be across the table from their VP of lending or a similar role. I would ask them what they are interested in lending on and the terms they have. I would expect 20-25% down, and a minimum DSCR of 1.25 most of the time.

I am not familiar with the specific numbers in the Phoenix metro area, but I can say that our inventory in Colorado "tripled" from the lows to half of what it was pre-pandemic. 

That being said specifically with investors, I do not know why we are so eager to buy on the way up but not on the way down. It is rare to time the bottom perfectly, but historically, buying on the way down if you can defend your portfolio is an incredible time to buy. 

If you are not going to hold RE personally, you want to make sure you hold it in an LLC and not a C or S corp.

I am not a lawyer and this is not legal advice, but LLC's do offer some legal protection, but failure to comply with different regulatory requirements for them can result in them being "pierced". I have most of my income properties in LLCs though.

As a high earner, I would research "short term rental bonus depreciation". You can depreciate most RE assets, but you can only take a limited amount of that depreciation against your active income(w-2) and once you earn over 150k, that benefit goes away. There are things you can do with STRs that allow you to take depreciation against your active income which substantially reduces your tax liability. 

This is a weird gray zone for me, my PM getting multiple quotes would be weird for me because either he doesn't have someone he trusts to do the work, or he doesn't trust that I trust him so he is sending me multiple quotes. 

As a contractor, especially on a roof replacement, whether it starts now or in 3 months makes little to no difference, I think asking for all that info is going to get you "Karen" pricing, or at least that's what I would give you. 

In my mind, the only question I would ask you PM is who they recommend/ who they would hire if it was their roof. If its not the cheapest one (lets say its the 35k one) I would ask why they think the 2.5x price is worth it and do my very best to trust them/ listen with an open mind. 

Just some feedback on the other 2 requests on your spreadsheet, price per sq ft is a dumb metric to ask for as your building is the same size for all contractors. And shingle warranties aren't worth the paper they are written on, so I would not care about the warranty. 

While I would rather my PM not ignore me, and tell me all three of my requested data points are dumb, them ignoring you, and then saying "well you can call them" is them essentially telling you the questions are dumb. I would not over read into their handling of this request, and I would also find all of your questions dumb, and would tell you(and am telling you) if you were my client. 

In my experience these laws are not often enforced and if you cannot find one, it probably does not exist. That being said, hoping something is not enforced is not a business model I would recommend and you should be able to call your city's compliance/ code enforcement office and ask them. If you do this in person, I would vs over the phone, you might get better results. I would also feel no shame in asking "is this rule actually enforced?". The person you are talking to is a real person and treating them like they are a real person with questions like these helps your results.