All Forum Posts by: Sean Bramble

Sure! I’ll give a partial update (and hopefully remember to recap once finalized)

Situation is evolving, but we're leaning towards bringing my mom in to co-sign and pursue a traditional construction-to-permanent loan that takes her DTI into consideration. We were hoping to do an $800K loan and build a larger property, but it's looking like she likely won't be able to qualify for that large of a loan. Still, we're interested in making whatever we can work. The benefit of getting 1 build under our belts seems worth it so that we can qualify for commercial construction loans in the future

I spoke to Host Financial recently about their construction-to-perm loans. They require at least 1 build or fix & flip over a certain $ amount within the last 36 months to qualify - similar to other commercial lenders. But the beauty of Host is that they can qualify you based on Airdna revenue estimates. So we’re thinking ahead and hoping to be working with lenders like this in the future. 

OR… who knows, maybe we’ll learn that we hate the construction process so much that we decide to acquire existing homes instead. Not sure what will happen, but as of now I’m extremely attracted to the idea of reverse engineering exactly what we know guests want, rather than trying to repurpose an existing home. Really hoping this ends up working out!

@Camile Case thank you! I’ve heard this from a few lenders about having the builder co-sign. The language they have used is that the builder would essentially need to be a “co-borrower”. I brought this up to my builder, but he had never heard of such an arrangement. I didn’t press further.

Question: how common is it that builders will co-sign these sorts of loans? What are the risks for them in doing so? Does this only pertain to the construction loan itself? I.e., not the permanent loan I would transition to after construction wraps up.

Any details about how it works and especially the likelihood of actually getting a builder to agree to this would be much appreciated! 

thanks again 

@Alexander M Dant thanks so much for sharing! Super helpful. You’ve inspired me to start attending networking events :)

Not sure if this helps, but I’ve seen a few furnished apartment companies pop up where I live (Brooklyn). That’s probably where I would start here since I would likely be buying an apartment to MTR, but not sure if your market has anything similar … NYC is a unique market for sure

I’ve been wondering about this myself. It’s hard enough to comp STRs bc less-than-optimized pricing can suppress total revenue significantly even if the property & mgmt are otherwise comparable to what you feel you can deliver. I wouldn’t even know where to start for MTRs. Seems like the Wild West when it comes to underwriting, but my hunch is there is profit waiting for you on the other side if you persist.

I’m sure this will evolve over time as more municipalities ban STRs and operators convert them to MTRs. Hopefully the big data companies will start tracking statistics as that happens 

Really interesting to read this! Well done

this post really caught my attention since it was your first deal with an investor. Can you tell us how you found the investor, and also what you’ve done to position yourself over time to be working with investors? I’m just starting out, and once I run out of capital myself am interested in starting to do JVs/ syndicate, but am wondering if there is anything I need to be doing now to position myself for that in the future (beyond simply doing great deals)

Thanks! 

Lots of thoughts here …

first off, make sure the condo building is ok with STRs (and will stay ok with STRs). Also check long-term rents to make sure you can cover your costs if the STR plan falls apart somehow - this gives you a backup plan

as for estimating revenue, I suggest looking at comps in the area using Airdna or Pricelabs. Comping STRs is tough bc revenue isn’t only driven by location, home type and bedrooms, but also interior design, photo quality, customer service, and dynamic pricing. So you’ll want to look for comps that match what you think you can deliver. What’s especially hard about this is the dynamic pricing bit - there are near flawless properties on Airbnb that underperform significantly bc managers set a single price all year - booking out constantly in the high season (but leaving money on the table bc the price is too low), and sitting empty in the low season (bc the price is too high). This can create the illusion that revenue potential is much lower than it really is. Lots of variables and nuance underwriting STRs, especially for revenue. 

So you’ve really got to do your homework, look at a TON of comps, and get a sense for what an “average” vs “great” revenue is for your type of property. Hope this helps!

I’ve seen some very upmarket Airbnbs offering this with their units. Forgot the name of the company, but it’s a remote work concept in beautiful locations - stunning homes, great design, lots of workspace, computer monitors, etc. A Tesla comes with the home when you rent. 

In this instance, the Tesla supports the price premium they charge for the home. A modern-day status symbol that adds to the consumer’s perception of luxury in the experience overall, and increases their willingness to pay when they book. 

In this instance, I could see the added liability and headache the car brings as a potentially worthwhile tradeoff bc it boosts revenue for the home (not unlike a pool). But for other Airbnbs with a less cohesive brand/ consumer experience I wouldn’t imagine the car actually adds to the home’s revenue … instead it functions as a separate revenue stream altogether. 

I imagine your home is more like the second scenario, in which case it makes the decision easier to compartmentalize. Is it worth the added headache and liability to rent the car in this way in the first place? Ignore the Airbnb altogether and pretend you're renting this car from that location. What's the ROI in terms of dollars and time? Only you can decide

Hope this helps!

Happy to help! One thing to keep in mind is that rates are changing so fast that quotes from lenders may be obsolete within a day or so, so definitely ask about how long they can guarantee the rates they're quoting you

you can definitely get a slightly lower rate. I spoke to a company called Valor Lending the other day. They do 80% LTV refis based on DSCR. Not sure if they offer a product that lumps properties together in one loan but it's worth looking into. Lots of other alternatives out there that will do 75% refis too.

Here's a growing list I have - most of these are DSCR lenders as that's the type of loan I'm shipping for. hopefully this is helpful as you shop around!

-Visio

-Host financial

-Lima One

-Mofin 

-American Heritage

-Financemyrental.com

-Valor Lending

-FBC Funding

-The Mortgage Shop
-Maximumlending.com