All Forum Posts by: Philip Cook

@Henry Clark 

I made a written offer through by realtor. I believe it technically expired on Friday. I'm assuming that the last updated date on loopnet is when the price was changed, which would be the 16th. That was the same day I signed the offer. 

Their objections to the offer seem to be mainly in the contingencies of the due diligence. My plan for the property would require rezoning. 

The plan at the moment is to try to get a feel for the zoning issue ASAP. The property is township. So we will be dealing with the county and downgrading from General Commercial to Mixed Residential. The odds seem like they should be decent of being able to make that change. Getting that sorted would allow us to take that contingency out off the offer and hopefully get it accepted.

I put in a full price offer on a building last week. The seller made excuses and didn't accept or reject the offer. Yesterday I noticed that the listing price went up 12.5%. From what I heard, there is a fair amount of interest in the property, but mine was the only offer so far. The deal still works for me at the new price.

Is this type of behavior normal? Any strategies for dealing with this type of seller?

@Kyle Parks 

The rules seem to be a combination of zoning and licensing. The current zoning is General Business which allows for motels. This allows for stays between hours and one month, i.e. I couldn't do yearly leases. To do multifamily, I would need to rezone to Mixed Residential. By default I can do 30 day and greater leases. I would need a license for stays between 2 and 29 days. 

It is a bit of an in-between place. 20 miles south is the big city for the region, about 38,000 people. 20 miles north is what I would consider the edge of the "Up North" vacation area, but everyone seems to look at that line differently. 

Double check your general property insurance. I've heard others talk about exclusionary clauses that might cause them to deny claims if they learn you're doing STR out of the property. Or they could just cancel your policy entirely. So be careful and make sure you're covered properly.

@Sabrina Maples I have an offer in on a 16 room motel here in Wisconsin with the same idea. I think I would end up with 7 studios, 5 one bedrooms, and a 3 bedroom after renovating and adding kitchens. It's the 50's style where all the rooms have private doors from the parking lot. 

I would be interested to hear from anyone that has converted a motel or a hotel into apartments. I have to imagine that the hospitality industry is hurting in the rest of the country like it is here. With the right business model and capital, I have to wonder where someone could take this idea?

@Paul Sandhu There nothing that specific that I've found yet. But there is a hospital and there are always random construction projects going on.

@Sean McDonnell That's pretty much what I'm thinking as well. 

@Glenna Wood You bring up some good points. I would have some noise items in the house rules to hopefully mitigate that. I would not be running it as a motel, and will be adding kitchens to turn the units into apartments. It's the older style of building where all the units open onto the parking lot. So it shouldn't have much of the motel feel left. 

@Erica Filippo I hadn't thought about that aspect. It makes the two night minimum sound a lot better. The motel currently does have the reputation as the rent by the hour place, and I really don't want to keep that reputation. 

@Nate Martin

For perspective, I'm nowhere close to the scale your friend is. I have my W-2, a side business, and my wife has her business. On the real estate side, I have an offer in on my first deal. I'm assuming most of the hassle is coming form keeping the books.

I'd say the first thing is online accounts. Pay as many things online as you can either through the individual entity or the bank's. Almost everything goes on the business credit cards and that narrows it down to just a couple of places to pay. If it works the same way for business checking as it does for personal, which I haven't had to try for the above reason, you can pay entities through the bank's website and if there is not a electronic relationship the bank will mail a check at no cost to you. I paid my rent for years this way, and even set it up to go out automatically.

A second thing that expands off of the first is financial management software. QuickBooks is an option, but it's really expensive. I've been using Quicken for a couple decades now. They have a Home & Business version that I'm using. It allows you to split out your personal, business and rental activities. I'm not sure the break point where QuickBooks makes more sense than Quicken. Either way, you can download the financial statements and transactions from accounts and reduce the manual entry time. You can also split different businesses out into different files if things are too confusing in one. I will note that there is a Bill Pay feature in some versions of Quicken, but I've never used it.

When it comes to managing online accounts, a password manager is a must. It allows you to have just one long, strong password to remember, and then use a different long, complex password on each site. A couple good ones to look at are LastPass, 1Password, and bitwarden. You can have family or business accounts with these. It allows for each person to have their own password vault, and share passwords for specific sites with others, without needing to share all their passwords.

That was a bit long and rambling, but hopefully it helps you out some. 

I have an offer in on a property that is currently a motel. The plan is to convert it into apartments, studio and 1 bed. In looking at Airbnb and VRBO there are clusters 20 miles north and south, but nothing local. It's a town of about 9,000. I'm trying to figure out if it's worth doing Airbnb with a unit or two. I believe it would be more of a hotel alternative than a destination vacation business model. County ordinances do limit me to a 2 night minimum though. Has anyone has success with this type of situation?

@Dusty Laurin there is a local investor that I've gotten to know some who has been doing this for something like 51 years. At his peak, he had 50 something units and 80 something tenants. The way he structures his business is to have the properties themselves in LLCs or his name, and has a property management company that I believe is an S corp. The individual properties are then charged management fees. The activities done in the management company would then count towards the professional status and bypass the per entity requirement that was mentioned earlier. At least, that is my current understanding of how it works. Please talk to a lawyer and CPA to figure out what works best for you as there are different legal and tax implications to the different structures.

I'm quite new to all this as well and trying to figure all this out. I know I need to get better at the time logging habit. 

@Luke G.

Something I picked up from somewhere is to git rid of any cord you can for staging photos. It might not be realistic, but it gets rid of visual clutter.