All Forum Posts by: Sergei Gremeniuk

Hi gang, I’m 46 and started building my RE portfolio about a year ago. My goal is to have 10 properties fully paid for by the time I retire around 65 (or hopefully sooner). We currently have 3 townhomes (One on 240m 6.5% and Two on 360m 7% & 7.5% mortgages). My wife and I both have good jobs that we plan to keep as we’re able to have savings that we re-invest in future downpayments.

Seeing how little of principal is paid off in the beginning of the loan cycle, my urge so far has been to throw what I have as extra payments chipping away at that mountain, but I’ve been also thinking lately if that’s a wise practice.

First, I am planning to refinance the portfolio when the rates go down (whenever and if that occurs), so I'll probably not be realizing much of the principal reduction value as opposed to if I kept the loan for the full term.

Second, seeing how RE appreciates, rents go up, and in general $$$ loses value, I am starting to question if I should just pay my mortgages as agreed and instead direct most of my savings towards more acquisitions today. My thinking is if a house that I buy today for $260k will be worth $500k in 20 years and I only have ~ $108k left on the original $190k mortgage, it will be a fairly easy payoff in those future dollars. On the flip side, if I throw in just $100/month more, the whole mortgage will be paid off in 25 years or will have $62k outstanding after 240 months. 

Naturally, everybody has their own plan, risk tolerance and strategy, but what is your general attitude towards paying down debt faster and why?

Why not disconnect electricity to the whole house including the guesthouse, shut off water and whatever you can and go on a month-long vacation? Is sheriff going to come knock down the door to turn it back on?  Playing nice won't get this guy anywhere, he needs to start playing smart. 

Exactly what Aaron said. Your STR is treated as a business and hence grouped with your other active income. LTR are passive and their income/loss is kept separate.

What property profile, price, amenity point do you see working best? Is it basic but nice homes that compete with hotels or all out ultra-luxurious properties, or something in-between? 

What markets are you in?

Economy crashing and my renters losing jobs and/or being unable to afford rent. 

Everything else is primarily in my power and can be factored in my deal analysis, including future tax/insurance increases, but if my rent rates soften without my ability to refinance into lower rates then I get squeezed, that's my biggest worry. 

I would reach out in a non-threatening way and ask him to pay. Something similar happened on one of my properties (minus I opened the bill and it did not go into collections), so I just reached out saying that I got a bill and reminded the tenant that he needed to establish accounts in his own name. It was clear that he missed the step and did not argue, so he just reimbursed me on his next month payment. 

For cleaners, walk into a hotel around noon when they turn-over rooms and start handing out your business cards. 

 That. List it, have a proven record of cash flow and then sell in a year based off those numbers. Otherwise what you're telling the next buyer is you don't believe in the market. 

STRs were the flavor of the month over the last few years, so naturally they attract new players. Smart ones look at the total picture, make forward-looking assumptions and plan for worst case scenarios. From what I read, the STR race lately has been predominantly towards the best-looking, amenity rich asset that commands higher ADR. While it caters to a certain segment of the more affluent population, the majority still wants to just a place to stay that does not break the bank.

I am going to go on a limb here and say that the operators who cater to the later category are the ones who are doing just fine.  You don't need to re-invent the wheel, just keep it simple, clean, be a good responsive host, provide value in whatever form you think your guest demands.