All Forum Posts by: Bobby Paquette

First official post! Any advice on finding mentors in this field? I'm relatively new to Real Estate and got involved around a year back. Not really looking for networking, would be nice, but definitely not a priority. Does anybody know any good mentors or people who would be interested? Help finding where to find a mentor would also be appreciated! Thanks! 

I've owned a condo at the Hard Rock Hotel for a decade now.

https://www.redfin.com/CA/San-Diego/207-Fifth-Ave-92101/unit...

I can only speak for the HRH. They have been by far the best maintenance free rentals I have purchased. It's dedicated for investors. Items are fixed and maintained by the HOA or reserve account unbeknownst to me. Way less trouble than my house and even my traditional condo. In fact, I just sold my condo last week to buy another unit.

Info:

- The income split is 50/50 and includes marketing, cleaning etc.
- The city limits your stay to 28 days out of the year.
- Income is consistent year over year +- a few thousand or 5-7%?
- Returns 4.6% at current market value. Mine return 7-10% due to when I purchased.
- The property management company should have a system that evenly rotates all units. I can confirm that units at the Hard Rock Hotel average ~70% occupied and the 1099 shows all to be within $3k of each other no matter what level and type i.e studio, queen or 1bd.

Risk:

1) Income is based on tourism. I got crushed during covid. Break even for 2 years If I remember.
2) They can stop leasing the name Hard Rock and who knows what the outcome would be.
3) Like any condo, the HOA fees can skyrocket. Just don't put all your eggs in one basket.
4) Mortgage companies won't lend to these anymore after the recession due to them not being considered a "security" since you can't live in it longer than 28 days a year. Cash only.

If you think about it, it's weird to buy a condo or a house built to live in. It's like buying a car just to put it on Turo and never drive. The condotels changed my thinking on purchasing a house just to invest (not live in) and instead shifted towards multifamily. I'm now selling my SFH as it's a weird and useless style of investment since I never plan to live in it and never visit the area. You can easily multiply your unit count with a multi, consolidate taxes which your CPA will like and put everything under a single roof and pool of resources like maintenance and management. Single families are terrible unless you happen to already own and live in it and have to relocate. Then maybe.

As for traditional condos that you're never going to live in, a condotel makes more sense as you can stay in the condotel for 28 days out of the year. You're never going to properly time your traditional condo around the tenants departure. You'll be responsible for all utilities unles it's a fully furnished urban loft in downtown in which case you'll either pay the $500 utility bill or deal with maintaining all that yourself but I already have a 9-5 which is why I just sold my traditional condo. Imagine managing 10 of them? Paid utilities? Don't worry your tennants will charge up that bill. 

@Bobby Paquette I've helped many many clients purchase condotels in the Myrtle Beach market. The vast majority DO allow you to self-manage or use a third-party property manager... my guys charge 15-20%. Some will restrict access to commercial facilities onsite, such as a gift shop, fitness center, or tiki bar, but the pools, lazy rivers, and hot tubs (what most guests care about) are still freely available. My local lending partners have been financing condotels here for decades and offer in-house portfolio loans. One is often able to lend with 20% down but most will require 25%. I also have a lender who can finance condotels through a commercial loan product with 20% down and her current rate on a 7-year ARM amortized over 25 years is 6.5%... not bad! She can also close under an LLC name. Let me know if I can help with any questions. Positive cash flow is getting harder to find with the 2 and 3-bedroom units, but there's still a handful of buildings where a studio or 1-bed unit makes sense.

@Bobby Paquette, you think raising their rent $200 more per month, then on top of that charging $200 for the garage space? doubt ill see that money 

 3 units, $200 total is $70/Unit for storage, I dont know 

Hello BP, I'm currently in the process of purchasing a triplex. Offer accepted.

Doing the numbers my net cash flow should be between $500- $700 a month with the current low rents.

Im in New Jersey and the current rents are really low, but the area isn't the greatest.

Current rents are

2br/1 bath-$1050

1br/1 bath-$ 950 (section 8)

back apartment-

2br/1 above a 3 car garage $1050

The 3 car garage is also being used for storage, I believe from all 3 tenants

All tenants have been there for a while, all over 5 years and lease right now are month to month

I was looking at the Hud websites for the area and the FMV rent for a 2br 1 bath is $1471 and for a 1br 1bad $1140

Any suggestions on what to do.. I also would like to charge for the 3 car garage use, or have them remove their stuff, so i could store my personal stuff in there and save me 200 dollars a month for my current storage unit.

Thanks

In much of the research I have done I have been struggling to find rental properties that are going to be able to cash flow well in this economy. I am looking at investing for the long term and am okay with getting into a property that only breaks even or only has a small cash flow. At this time I don't have the capacity to try and work on a BRRR or other rehab projects and I am looking at investing in a turnkey property. My main questions are:

- What are your opinions on turnkey properties? 

- Are there any markets you would avoid?

- Do you have any helpful tips you would give to new investors?

I considered it in Myrtle Beach, called around to some units and decided against it. The management takes such a large bite of your top line revenue (40-50%) that by the time you pay your mortgage, $850/month HOA and other bills there often isn't much left. Some will allow you to self manage and bring in your own cleaners, but if you do that then your guests might not be allowed to get towels from the front desk, use the pool etc because you are no longer paying their fees. Requires a lot more DD than a standard SFH purchase.

I didn’t see the upside. The Vegas one I looked had a 2 week per year personal use limit. It’s like buying a business where you don’t control any of the costs or the income. 

@Bobby Paquette you have some good posts above.  I wrote an entire post on this topic specifically that you can find HERE.  There was a time when "cash flow" didn't happen until year 3 when you invested in "buy-and-hold" properties.  We are back to that level again. Read that post and see what you think.

Oh, and the “constant fire in the fire place” aka the pilot light. 

“We dont feel safe so we shut the gas off” and decided to do it late on a Friday night. 

In the process they shut off the gas to the hot water heater so they got to go without hot water, the kitchen stove, and the fireplace until I was able to get someone over to turn it all back on for them.
I also didnt make it a priority and charged them a massive maintenance fee for turning it all back on Saturday evening.