All Forum Posts by: Sejin Kim

 @Sejin Kim remember that in most Florida markets, one bedroom condos will compete directly with hotel rooms. Before you make this purchase, research daily rates and occupancy carefully on nearby similar condos (on Airbnb, Vrbo, etc.). If you see really low rates, that likely means your investment will struggle to make money, and will also be difficult to sell in the future. Feel free to reach out if you would like to discuss!

Rent minus expenses = Cash Flow.  The formula to find out what to pay for a property is this:

Rent - Expenses - CF goal = Mortgage Payment.  The mortgage payment is based on the interest rate and term.  Fill in those two numbers into any online mortgage calculator, and it will tell you what the maximum loan is.  Add that to the DP (20%), which actually means divide the maximum loan by 80%, and you have your maximum offer.

I don't negotiate. I calculate my maximum offer, and make that offer.  If it doesn't fly. I leave it with the seller, but move on.  If they come back I win, if they don't I don't lose.

If you are financing 80 percent or more of the property, positive monthly cash flow to start out, is going to be very difficult. That is primarily because the cost of money (interest rate) is twice what it was two years ago.

I suggest that you adjust your thinking about buying a vacation rental just a bit. If you can just break even on it each month, that is still a fantastic investment, because OTHER PEOPLE are paying off the bulk of the asset for you.  And that asset is probably going to be worth a whole lot more in 15 years than it is today.  

Even if it didn't appreciate a single dime, it would be a phenomenal investment.  

Example:

You buy a $1 million rental.  You finance 80% of it ($800,000).  If you put it on a 15 year amortization, your guests pay off the $800,000 in 15 years.  So YOUR investment of $200,000 is now worth $1 million after 15 years, AND you own an income producing property that is completely paid for!  

Find me an investment like that in the stock market, and I'm all in.

Good luck!

I live in ca and purchased a vacation home / STR in Davenport. My realtor provided a video of the drive into the neighborhood, a walk around the house and then through each room, garage and pool. We bought it and didn't visit until verifying it was ready to launch on Airbnb. Did the video thing on a few candidate properties but really liked the layout and location of the one we bought. Keep in mind you could have additional cost for new furniture and fresh paint (cost us just over 15k) for 1800 sqft. We love it there, try to visit a couple times a year. As mentioned insurance has skyrocketed so be sure to check that. As far as cash flow, we have a loan at 3.2% and are just breaking even because we use a management co….they take a significant chunk but the appreciation has been good and it's nice having family gatherings there. Kids love universal and dizzy. I'm setting up to self manage it…hopefully can at least maintain the occupancy rate and keep some cash. Good luck. It is very exciting

Exciting times ahead for you and your husband with your first investment! For long-distance properties, it's smart to use a realtor and ask for a video tour to check out the place. 

Once you find a good one, negotiate like a pro to get the price down for that sweet cash flow. Visiting before putting in an offer can be tricky, so video tours are your best bet. Keep your eyes peeled for a good deal in Florida, even if the market's slow now.

Hey @Sejin Kim, welcome to the fray! :)

Personally I am one who would look at the properties first. In person. I am not sure I am trusting enough to allow an agent to make those kinds of decisions. Not yet anyway.

Florida is a tough nut in some areas. Are you looking for beach stuff? Theme parks?

There are a few people here that I would ask about certain areas.

@Andrew Steffens for Tampa and surrounding areas and @Shawn McCormick for Orlando and surrounding areas. See what they think.

You can also reach out to @January Johnson for some panhandle areas as well. She knows her stuff.

If you are financing 80 percent or more of the property, positive monthly cash flow to start out, is going to be very difficult. That is primarily because the cost of money (interest rate) is twice what it was two years ago.

I suggest that you adjust your thinking about buying a vacation rental just a bit. If you can just break even on it each month, that is still a fantastic investment, because OTHER PEOPLE are paying off the bulk of the asset for you.  And that asset is probably going to be worth a whole lot more in 15 years than it is today.  

Even if it didn't appreciate a single dime, it would be a phenomenal investment.  

Example:

You buy a $1 million rental.  You finance 80% of it ($800,000).  If you put it on a 15 year amortization, your guests pay off the $800,000 in 15 years.  So YOUR investment of $200,000 is now worth $1 million after 15 years, AND you own an income producing property that is completely paid for!  

Find me an investment like that in the stock market, and I'm all in.

Good luck!

I did something similar and my preference was to actually view properties so that I could get a feel for the community and area, which isn't really something you can gauge just from photos alone. I live in NYC and purchased in Western NC. My realtor did also do a few video showings with me as well just because I couldn't get down quickly enough and I wanted to see the properties before they were snatched up. The travel costs do add up, but its good to weigh the costs to benefits. To me it was worth it to make sure I was making the right decision.

Be careful with Florida condos. Apparently prices are diving because HOA fees are like $700 per month and I also read it's tough to get good insurance. Just a few things to flag during your search.