All Forum Posts by: Nathan Grabau

This really depends on how it will do as an airbnb. I would use pricelabs to check the comps in your area and see how they are performing, especially at this time of year, as that will impact the decision. 

Your time horizon is also important here, for a high end airbnb, I would plan on spending at least $20 a foot furnishing it, so you need to make sure you have the capacity to recover that cost too. 

That all being said, if you want to get into the STR game, this is probably a great excuse to do it. But if you core competency is flipping and flipping is what you want to do, take the hair cut, and find the next house you are going to flip.

I would call your Realtor to ask this. They could give you a list of a few people to use who they trust to do a good job. 

You probably want to ask your lender about this specifically. When I have found myself in situations like this, normally cousin is about as far removed as a lender will allow. It would be mortgage fraud to lie about something like this, and this is not legal advice, but I know of situations where I think people ended up doing this and have not yet been caught for it. Once again, not legal advice, do not break the law or encourage your friends to break the law with you, claiming to be your cousins when giving you gift funds. 

Renters insurance does not really impact your insurance policy. Essentially you are adding an extra layer of protection for your tenants, your other tenants, and yourself. I do not require my house hacking tenants to get renters insurance, but I only have friends who I have confidence in living in my properties. Renters insurance is also incredibly inexpensive, like 20 bucks or less a month, so this is not a big ask at all if it helps you sleep better at night. 

I would go with the hard wired ones. Especially if you live in an area with regular freezes. It would suck to have a future tenant have a friend over that unplugs the heater so they can charge their phone, and have a pipe freeze as a result. Not the most likely situation, but you want to idiot proof rentals as much as possible. 

This seems to be close to a best case scenario in a situation like this, assuming the property hasn't been destroyed by him. Having to evict him for non payment, especially depending on the plumbing issue, will get very messy very fast. If there is actually a habitability issue, he could sue you too. Let him leave, fix the issue, and get a new tenant in there. 

My primary concern would be related with settling on the property. We are seeing a lot of new construction in Colorado that is less than 5 years old that is having foundation issues. 

With regards to the driveway specifically, if snow is a factor, that should be considered. Thinking out loud, I would assume that you also get some form of a benefit from that elevation change from the road, with how high your property sits. 

My biggest tip with new construction would be, do not skip a pre close inspection and then also do an 11 month inspection, or an inspection before the first downgrade of the warranty happens on the home. It's 500 bucks, twice, that likely saves you thousands. 

This is going to be market specific. Forced appreciation through raising rents is normally not factored into small MF. The dryer/ washer is not a huge value add either. Did you buy it off market/ below market value last year at 235k? What other improvements have you done, specifically any 2k+ fixes? 

It would be hard for me to get in the last 2 years up 28% without a more substantial value add. I know that in most of the markets I watch, 22 is now flat year over year, so you would be assuming 28% appreciation in just 2021 alone. 

What you will need to do is pull market comps to see what this is worth. Small MF is really based on the value other investors are paying for similar properties, ideally duplex's, close to yours, with a similar sq/bed/ bath. 

I would not overthink this. Your LLC's name will have very little impact on the success or failure of your entity. I own properties in LLC's that are named after other properties, ie one property located at 1220 4th St is owned by 1319 7th St Nevada LLC. Good luck and congrats on getting your LLC started!

Most Heloc's will only go up to 85-90% LTV and they are getting harder to find. You should be able to find a 80% LTV Heloc for a duplex pretty easily. It is pretty hard to get your cash out of a deal when you are only putting 3.5% down for an FHA loan.

What I would recommend doing is trying to find a 75% LTV cash out refi lender, so you can find another property to buy with a 3.5% down FHA loan. You should be able to pull 15-20k out of the house, and then go get another FHA property. There are some time delays here because of primary residence rules that a lender can share with you, but this is probably your fasted way to scale with traditional financing.

There are a number of other strategies such as no money down seller financing that you can use to get deals with little to no money down. I have not had any luck with them, but I also have not put a very high level of effort into pursuing them.