All Forum Posts by: Peter Stewart

You can certainly ask the agent who helped you purchase the property for advice too ;)

Since you are using a PM to run things, I don't see any need to meet anyone except your PM and the contractor/handyman you plan on using for repairs/updates. I would remain as anonymous as possible to the neighbors. Your PM is there to act as a buffer between you and the property. Let them handle the neighbors, cleaners, etc. That's what they are getting paid for. 

If your PM is handling the furnishings/decor, then I would not worry too much about the placement. If you are handling that side of things, then of course it makes sense to map it all out and start planning your purchases. 

Ultimately I think the main focus of the visit is to familiarize yourself with the property (since you have not seen it in person yet) and check on the rehab work and meet your contractor and PM. I would also drive around the immediate area a bit too, so you can get a feel for the area (check out Butler campus, Broad Ripple, etc). 

I researched all of them before getting into the STR game, and settled on Hospitable. It's fantastic. I've been using it for close to 3 years now managing several properties, and I have not had any issues.

Initial set up was pretty easy. I spent the most time customizing the messages (I use 95% of what they write, just add/tweak a bit to make them my own). 

The automated messaging is the best. I get compliments all the time about how responsive I was. 

Calendar syncing between Airbnb and VRBO has been seamless and flawless - never once had a double booking. 

I use Resort Cleaning and it links perfectly to Hospitable to automate my cleaners.

Ultimately though, all 3 platforms are excellent and will do what you need them to do.

Quote from @Wes D.:

Hi @Krysten Zarembski!

This is a really good question and one I was asking a year ago when I decided to jump into the MTR business. My conclusion then was this: if an investment pencils as cash flow breakeven or a small positive cash flow, using conservative underwriting assumptions, it would be worthwhile to buy despite the high interest rates.

Real estate investing has three main sources of wealth building: cash flow, appreciation, and tax benefits. So I figured that if I could avoid negative cash flow, the other two sources would carry us until rates declined and we could refinance to lower interest expenses. Lower expenses means higher cash flow. Furthermore, if rents rise in the coming months/years, this too would increase cash flow. 

When underwriting, I did not use these positive assumptions about declining rates or growing rents. It needed to be at least cash flow neutral to meet our "buy" requirements.

One year later our thesis is working. Our net operating income (NOI) margin is 54%. After subtracting interest expenses from NOI, our cash flow margin is only 7.4%. But it's positive!

With a half point rate reduction by the Fed, our HELOC rate was reduced by the same amount, and we've begun the refinance process. The property appraisal came in at a 5.3% increase versus our purchase price.

On tax benefits, last year we had a tax loss on our MTR business that lowered our personal taxes by an amount equal to 20.8% of our MTR gross rental income. In other words, this is cash we didn't need to spend (to pay taxes) due to our MTRs.

Taken together, cash flow of 7.4%, appreciation of 5.3%, and tax benefits of 20.8% is a promising start for us. The tax benefits have been the largest source for cash income so far; in future years this will likely be lower because much of our tax savings has been due to one-time costs related to purchasing and furnishing a new property. Depreciation will continue to provide tax savings for years to come, of course.

Appreciation isn't cash earnings, of course, until the property is sold, but it does factor into the overall wealth building opportunity in real estate investing. And it grows tax free.

I hope this is helpful to you, Krysten, as you figure out how to proceed. I recommend Real Estate Rookie by Ashley Kehr; she covers these topics better than I've done here. For MTRs specifically, I recommend 30-Day Stay by Zeona McIntyre and Sarah Weaver; they helped us run a lean operation. Both are published by BiggerPockets.

All the best!

-Wes

Totally agree - Wes nails it here. There are many ways to make money in real estate, and cash flow is only one of those ways. That strategy is the more dependent on the current market conditions (specifically interest rate). When your strategy is more on the tax/depreciation side of things, you can make a lot more money and the current market conditions don't factor in much. So, you can absolutely make money now with real estate, and the mid term strategy is a great one for both cash flow and tax/depreciation. My personal investing strategy is more in line with what Wes is doing and I make WAY more on my properties through taxes and depreciation than I do in cash flow (specifically my short term rentals that I self manage). 

That strategy is market/area specific though. My market (Indianapolis) is an excellent one for this strategy and there is a lot of demand here for furnished mid and short term rentals. It's a strategy that has grown in demand *because* of the higher interest rates due to the higher potential income (vs traditional 12+mo leases). 

I would also argue now is a great time to buy because of the interest rates. Of course this is market specific, but in my market (Indianapolis) we are still in a strong sellers market. When rates drop I anticipate demand to increase and inventory will probably stay about the same, so prices will rise. Like the saying goes - you date the rate and marry the house. I'd rather pay less now with a higher rate that I can refi out of than wait until they are lower and pay more (and probably have worse terms in the contract too due to multiple offers). 

Get a HELOC against the property. Yes, the rate is variable and will be higher than a cash-out refi. But, you can pay it off and the HELOC will still be in place so you can use it again and again. Rinse and repeat. And you only use the amount you need (Ex: $100k HELOC but you only need $60k, so you only use $60k).

If you do a cash out refi then you have the money, but you most likely got more out than what you needed, and you're paying interest on that money. And, if you pay it off, the loan closes out and you have to start from scratch if you want to use it again. 

Without seeing a link to your property it's hard to provide specific advice, but generally speaking it sounds like you need to "optimize" your STR listing.

To boost your activity I would do a few things:

1. Make sure you have professional photos and your staging/decor is top notch

2. Make sure your listing description is detailed, catchy, and easy to read (not just a jumbled mess of a paragraph)

3. Use a dynamic pricing tool (like Pricelabs) to be more competitive - you may have #1 and #2 dialed in, but if your pricing is off (too high) then you won't get bookings.

4. Exposure - make sure your listing is on all the main booking sites. Between Airbnb and Vrbo you probably have 95% of the market covered, but you can also get on sites like Booking.com and Google Vacation Rentals, etc for additional exposure. 

5. Utilize the enemy method - like @Bradley Buxton said, take a look at your competition to see how yours compares and make adjustments accordingly

Quote from @Nathan Gesner:

Quote from @Peter Stewart:

Money talks. The previous PM would probably do it if they were offered enough money to justify the time. I charge $500 a month to manage a property that's listed by another broker. That compensates me for the hassle of dealing with showings, agent questions, etc.

Agreed - that has worked in the past with other companies. For some reason this PM won't play ball. 

I have a duplex listing on the near eastside that just hit the market yesterday and my client (seller) needs someone that can manage the property while it's on the market. The previous PM terminated services when the property was listed. One side is vacant and the other side is rented. Seller needs someone to do the usual PM duties for the occupied side (collect rents, handle repairs/tenant inquiries, etc) and keep an eye on the vacant unit. The larger PM's I work with don't do this type of special arrangement, so I'm reaching out here to see if there are any smaller, 1 man/woman type operations that are more flexible and are willing to take on something like this.

If so please message me directly. 

I have a cabin in Pigeon Forge, TN with a hot tub and it's standard OP to drain/clean/refill the hot tub after every guest. Just think about what happens in hot tubs....

Every management company I spoke with confirmed this, and I've been through multiple cleaners and they all did it as their standard cleaning procedure. They do not charge extra for this service though, it's part of the standard clean. Sure, I cover the water to refill it, but my water bills tend to be pretty "normal" so it doesn't seem to be costing me a ton of extra $$.

Point is - yes, this is completely normal and it's something your cleaners should be doing at every turn. 

Sort if. In theory, more platforms = more exposure = more bookings

However, you have to take into consideration the market share of each of those platforms. Posting on random/obscure booking sites will probably only account for 1% of overall bookings. and the vast majority will come from the big players (Airbnb, VRBO, etc). Maybe add on Booking.com but after that it's the law of diminishing returns - lots of work/time for just a guest or two.

If you are self managing I would limit the amount of platforms to the top few because it could get overwhelming tracking the property on all the various sites because they all work a little bit differently. The smaller platforms will probably account for only a fraction of overall bookings, so the juice may not be worth the squeeze. You can use a channel manager like Hospitable to help manage the listing on multiple platforms - primarily you can protect against double bookings, but there are many other nuances to each platform that the program does not touch.

Hire an experienced real estate broker to help you price and sell the property.