All Forum Posts by: Tae Nam

Interesting. I'll start tracking Tampa. @Andrew Steffens, if you see any and you are not going to pursue it or want a money partner, please let me know!

 @Christopher Zebrowski, I would love to ID markets where revenue:price ratio is 20% and higher, which sounds like is what you are looking for. 

Have you identified markets where this threshold is met? 

Piggy backing off @Chris Seveney, I would consider what I could do with the equity. 

To further that thought, I would consider where in your investment portfolio allocation this sits in the overall nest egg, but reading between the lines, it sounds like this is not cash you need anytime soon but can allocate toward long-term investment, in which you can be more aggressive. 

It sounds like your IRR is pretty low-- low cash flow and low appreciation (but don't forget to factor in the mortgage paydown to your return calc!).

Are there other investments available that will generate better risk-adjusted returns than just keeping your home? 

In my view, the focus should be on the overall risk-adjusted return and not get stuck on the fact that you have a low-interest loan. At the end of the day, your loan is still a liability, not an asset. 

Example: Burrow at 3% to generate 5% return vs. burrow at 7% to generate 12% return. If that was my option, I take door #2. 

That all depends on the deal. You need to be more specific about the deal structure, what kind of play it is, and what you mean by "a return". 

Are you talking about cash on cash or IRR? Does it factor in appreciation and/or exit?

Are you talking about a value-add, opportunistic turn-around, redevelopment, etc.?

With that said, if you are talking about a standard "value-add" people have been pitching the last 5 years (put a lipstick on the pig, renovate each unit, minor amenity upgrade, and pencil in rent growth), 100% return in 5 years would be challenging given the current interest rate environment and that the rent growth rates have come back to reality. 

However, I would not say it is not realm of possibilities if they have genuinely identified a gem and has a legitimate value-add business plan. 

Be careful of exit caps and rent growths. just a minor tweak here or there can make a huge difference. 

@Alice Horn and @Andrew Steffens,

super helpful! thanks for that insight

@Sarah Kensinger, yes, I agree with you that it is very hard to start, so honestly, I am leaning towards buying a reputable company with strong know-how and clients.

The main challenge I see is the business I am looking to acquire really is a one-man shop. The owner is remote, and there is one main person running the business locally, so the challenge is how to replace this local person without losing existing business/clients (no, this person is not looking to stay for the long haul).

You all sound like very experienced managers. What's your thought about the ability to retain the customers and replace the main person? This person will give me up to a year for the transition. 

They have fantastic ratings (5 stars across the board) and pride in providing high-touch, high-end service. 

I own and manage a few STRs. I invest in a market where many newbie investors jumped in, thinking they can self-manage and not doing too well or realizing it is a lot more work than they thought. 

What is your thought on starting or purchasing an existing STR management company?