All Forum Posts by: Qui Chau

Laird, I totally agree with you on diversifying your portfolio into other markets and also make it enjoyable for your family to use. We had looked at Galveston about 1.5 years ago but decided against it due to these reasons:

1. lack of quality contractors to support our venture

2. flood insurance and headaches of hurricanes and bookings that may be affected by it

3. beach isn't the best or cleanest compared to other locations

4. insufficient tertiary markets to fill in vacancies (i.e. conventions, communities events, etc) ; Austin has SXSW, ACL, COTA, etc

Some things we liked about Galveston are its pro-tourism market, close to Houston, and rich history. One area we looked at that didn't require flood insurance was around the Woodrow and Ave S. It was a former landing strip for the military and it's raised land above the flood plain. That could cut down long term costs. One other thing was to have a 2nd unit on the lot so that increased revenue can offset the higher maintenance of a beach property. The salt will eat most anything!

I'm a proponent of keeping your income producing assets if it makes sense. If you ever need help in Austin or consulting on that, let me know.  Don't throw away your ATM machines (rental properties), lol!

Hey Z. City of Austin (COA) has put a moratorium on Type 2, non-owner occupied residential properties. That means you cannot rent it out if it's not owner occupied. Room sharing is permitted but you will need to apply for a permit and follow COA's rules. Type 3 is available but more for commercially zoned properties. Also, prices here have skyrocketed and it will be tough to get your ROI. I'd recommend going outside of COA into other cities that are more STR friendly. DM me if you need further help - be happy to consult on it. I do STR's on a national basis with proven systems to self manage them. Much success to you!

STR's are my specialty. Unfortunately, Austin is no longer a STR friendly city if it's a Type 2 license/non-owner occupied. However, good news was that the Texas higher courts have ruled some of Austin's STR ordinances illegal. I think it's still in limbo at this point but don't hold me to it. You're better off doing it in STR friendly cities close by such as Round Rock and Pflugerville. San Antonio has its restrictions too but a little better off then Austin. Good luck!

@Karen Couch I would agree with Thomas S wholeheartedly.  Why not refi and make your money work for you, especially at current market interest rates of 4-5%! Can you leverage more by buying another property and renting out your current residence to create more cash flow and build long term equity?  Have you thought about expanding to apartment investing? How about corporate or short term vacation rentals to obtain major cash flow vs long term rental rates.  Be sure to check local ordinances. Make that money and those homes work for you!  And try to make those bi-monthly payments instead of one monthly payment. That's an extra payment per year. Imagine how much interest you can knock off in the long term -- even just 10 years from now when you plan to retire.  Good luck!

Q

@Zachary R. all of the above comments are great points. However, if you're looking to building your asset base, selling them off doesn't help.  In this case, it's about coming up with a workable solution that will allow you to keep your asset.  Name of the game is cash flow of course.

Have you thought about corporate rentals (aka Medium Term Rentals)? Any rentals above 30 days falls out of Austin's "progressive" short term moratorium ordinance. Usually MTRs will allow you to charge 1.5 - 2.5x long term rates. Getting it furnished with new used furniture here in Austin is not expensive. I've done it for our 2,200sf 4/2.5 STR property in Round Rock for under $4k! With so many people moving into the Austin metroplex and businesses flying in employees for training, etc, you should not have a problem getting it filled.

Here's a website that focuses mainly on this market:  www.corporatehousingbyowner.com

Just another potential solution to building your real estate empire.  Good luck with your house purchase.

Q

Hi Garrett. Congrats on your new venture into REI. It's a big step and can free you from the rat race but if done wrong, it can set you back quite a bit.

To answer your question and provide some insight based on my personal experience, let me recount my first investment property.  It was a duplex in a working class neighborhood but in a decent location and school district.  It easily cash flows about $400/mth for both doors.  We still have it and that was purchased 10 years ago. The property was only 7 minutes from our residence. I'm glad we had bought local because of all the issues that I had with learning to be a good landlord. We had bought it with Section 8 tenants, which we tried for 3 years but decided to terminate that class of tenants. We hired people to slowly update the property and now drive market rent.  It's almost never vacant.

LESSONS LEARNED: huge learning curve no matter how much you read. try to get a mentor. shadow other experienced landlords. determine what class of tenants you want. make sure it cash flows with reserves for emergencies. buy in a good location and/or school district and you will weather most real estate corrections. this property doesn't appreciate as fast as SFRs but cash flows really well.

Fast forward 10 years and I now live 1,600+ miles from my properties. I employ reliable contractors to help me with maintenance and improvements. I fly back when needed. I've slowly converted my properties to Short Term Rentals (STR's) to increase cash flow by 2-4x. I've employed smart home technologies to easily control and monitor access to my properties. No keys whatsoever!

LESSONS LEARNED: now that i'm much more experienced and paid my dues, i've learned to leverage through equity and partnerships. i know what type of investments i want to do or to avoid. my purchases are mainly based on location, easy access to freeways and conveniences, and good school districts. i know my numbers. i am targeting growth markets that are landlord neutral or friendly. my tenants and guests are my goose eggs and i treat them well and in turn they pay me well ;-)

Hopefully, that helps. Much success to your journey in REI and hope to see you more here on BP.

Q

So sorry to hear about this Jenessa.  Especially when you're also living there.  The impact of meth can be serious so definitely get that properly remediated, especially if you have younger children and for the health of future guests. 

It's doesn't surprise me of AirBnB's position. They are totally pro-guest and have left many hosts out to dry. Read their stories online. Their $1M guarantee is not worth the paper it's written on either. We've had a weed smoker at one of our STR property and called AirBnB to see if we can get compensated for properly cleaning the house and repair some property damage. They needed someone to be there in order for us to even submit a claim even though our cleaner can smell it. In the end, they only put report on our file and promised to follow up with the guest. That was that.

I hope you are able to pin down the perpetrator and hold them accountable.  Involving the police is a good first step. Use that report and get an attorney to pressure AirBnB to pay for it. Maybe the attorney's letterhead will get their attention if you decide to go that route.  This is not acceptable, especially when it involves the health and safety of your family!

We are here to support you so good luck!

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Austin Real Estate Experts

Hi Kim.

Congrats on jumping into the STR world. It certainly can be a lucrative business if properly managed and marketed.

I've been doing STRs for about 3 years now and have expanded from PA to TX and looking beyond into international markets. I think it's important to know what demographics you want to target as that will help you drive your marketing and acquisition strategies. For instance, I like family and expo bookings in my PA homes. We buy 3/2's or larger for those groups. And I hate HOA's as they can turn on you by changing the bylaws. I try to avoid them at all costs unless they are vacation rental friendly. Along this line, you have to pay particular attention to the local climate of STR ordinances and laws. I live in Austin and they have had a moratorium on Type 2 permits (non-owner occupied) so these types of investors are dead in the water. Believe it or not, Nashville recently passed ordinances doing the same thing and possibly phasing out STRs. As STR investors, we need to be vigilant and active in local ordinance hearings. That is another topic I will post ;-)

Moving forward, I will be experimenting with a MF unit in Puerto Vallarta, Mexico soon. I've learned to use home automation access and controls from having to be at my properties. I also have a Guest Handbook at each property to help guests with check-in, recommendations, WiFi and electronic access, check-out, etc. This has greatly reduced questions that I would otherwise have to waste my time responding to. Yet, it has improved guest experience and referrals!

We hire top notch contractors to help us maintain and clean our homes. Without them, we're dead in the water. I'm half way across the country managing our properties remotely and they do a wonderful job of reporting back as my eyes and ears. That requires training and setting the right expectations with your vendors too. Reward them for their hard work such as a gift certificate.

Anyways, hope that helps in some way. Good luck on your STR journey and much success in 2018 and beyond!

Q

Hi BP peeps.

I love real estate! And I love residual income even more. With that said, I tend to focus on long term holds for my real estate strategy. However, I also have in depth experience with fix and flip, assignments, etc. If you come across any deals that fit the "general" 70% minus repairs and they are in good neighborhoods or school districts (preferably both), send them my way. I prefer a city that is doing well for economic development or people are flocking to, like Austin. For STR's, I'm also looking internationally. Open to JV's as well. I also have investor clients that are looking for deals. For MF's, only 150 units or larger suits my group. We like asset class C or higher but prefer an underperforming property for value add. Hit me up with any questions or inquiries. Love to help.