All Forum Posts by: Tim Bergstrom

@Carmyn Cook there are currently 3 flips happening within 1/4 mile of my house right now. (I'm kicking myself a little more not being in on them! Haha). So yes, doing flips is definitely still viable here. Would love to hear how your progress goes. I'm also interested in doing some flips this year!

@Tom Donnelly this is a great discussion (and a hot topic). I second what @Rachel Jacobson said about factoring in your personality. There are definitely ways to do it both hands on and hands off (one of mine I manage myself, the other one I have I have a manager for). But she is 100% right about it being more on the side of the hospitality industry than strictly real estate. 

I think it also just largely depends on what city (or type of city) you live in and where it is located within that city. What kind of travel patterns are there? What KIND of travelers are they? Here in Nashville, as long as it's zoned correctly, permitted correctly, the HOA allows it (if there is one), and its within 5 miles of the downtown, its kind of no brainer (in my mind). But if you're in Ft Wayne Indiana may not be as much of a no brainer? (Nothing against Ft Wayne, haha). Also, like some people have eluded to you also have to take into consideration if it would be a marketable and enjoyable experience for the guests and the neighborhood residents. If its smack in the middle of a residential area it might not be. However, both of mine are and I've not had any problems with neighbor complaints.

I think NOT doing it because you've heard of "horror stories" isn't reason enough to not do it if you have a genuine interest in it. But then again, the "horror stories" will probably scare off the people don't have genuine interest. Haha. But statistically the rate of "horror stories" to non-horror stories is very small. 

That's my two cents :)

@Adam Lowe "good numbers" are determined by the ARV, so it's a case by case analysis. A general rule of thumb (for a flipper) is your all in cost probably shouldn't be more than 75% of your ARV. Some people have slightly different criteria, but it will be in that ballpark-ish the majority of the time. Take your ARV (After Repaired Value) multiply by .75. Then subtract whatever the holding costs, rehab costs, and your wholesaling fee are and what you end up with should be roughly the maximum of what you'd be able offer.

The variable part is knowing what those costs are going to be for your buyers, in which case you typically need to have a relationship with them or at least know what THEIR criteria is. Also you need to be solid on these so people will want to keep working with you.

This is the 40,000 ft overview of this. Many more details go into it but that's the basic gist. I hope that helps.

@Dan Beaulieu So great man! Jacey just followed up with me the other day (I was inquiring with her before the new year). I'm wanting to do some flips this year.

@Michael Greenberg very true! Great point. The more barriers the less competition for sure. And there is definitely a lot of confusion in the system about these hoops. 

The main issue here in Nashville would be whether a Short Term Rental property qualifies for an owner or non-owner occupied permit. For N.O.O. permits this model is plausible for sure. Or if the property has a mother-in-law suite, guest house, or other units but you're buying it as an owner-occupied property.

Good thoughts man. I like your thinking of turning a challenge into an advantage.

@Uriah D. This is a great question to ask on here. @Luke Carl and @Paul Sandhu have great advice and I'll chime in by saying something similar to what they did. I have a STR here in Nashville that is literally on a "developing" street". In the next 1-2 years the whole thing will look completely different with new construction, but for now it's definitely not a pretty drive in (and it's a dead end street to boot!). That being said, we're not just operating at Superhost status but we've actually gotten Airbnb Plus status (which isn't available in every market yet, but I believe Airbnb is working on bringing it to more markets).

But to second (and third?) what Lucas and Paul said its ALL about setting expectations. Call it "Pre-Framing" them instead of needing to "Re-Frame" them once your guests have arrived. My property manager did a great job of framing it up by highlighting the positive attributes of the property while also clearly disclosing some of the not-so-desirable elements of the other properties on the street. If the property itself is really nice and you have great pictures we've come to find that as long as the guests know what to expect then it isn't really much of an issue. And then of course great communication and service while they are there (which you clearly know how to do!).

So I would say don't necessarily hark on the negative elements in your listing, but definitely make it very clear what your guests will see when they drive in and what they'll be getting so they're not surprised by anything. And definitely emphasize the great qualities of your listing. Basically, error on the side of over communicating and be as transparent as possible in a positive way. If you do that I would think you'll do just fine.

@Benjamin Vail Super interesting concept here! My initial thought is that I'm a wishing this model would be possible in a city like Nashville! I'm in the lane of wanting to work with buyers and investors who are specifically interested in STRs here. Unfortunately I don't think your exact model would work here because of the incredibly restricted permitting process and complicated hoop-jumping that is necessary. But I think that this line of thinking is great. I could see it working really well for you once you iron out any kinks you run in to.

I am just curious about what you and @Michael Greenberg were discussing regarding an appraisal. So does your contract basically say that as long as an appraisal gets within "x" percentage (i.e. 5%) of your asking price that then at that point the buyer must proceed as if it had appraised for the full amount and be ready to pay the remaining 5% out of pocket as you already stated? It seems to me that the wording of that clause in the contract would be critical to avoid either intentional or negligent breach of contract if the appraisal comes in under. I know from experience, as I'm sure you do too, that appraisals can get tricky, especially with a scenario such as this one. 

I'd be interested in a further mastermind conversation about this too!

@Craig Gerulski I'll just echo what @Devan Mcclish said. The permitting process itself will about that, 30 days. This is exactly what I did last year around this time. Closed in February and definitely took over a month to be able to be up and running. I'll also echo what @Julie McCoy said as far as having a plan dialed in. I highly recommend hiring or at least getting a consultation from an interior designer/home staging company or a management company that can handle some or all of that. Competition is fierce here along with the regulations and you want a place that will stand out. 

And just like what most everyone in this thread has offered, if you'd like to talk more I'm happy to help you. I'm an agent as well and have two STRs here I've set up myself. Happy to help however I can!

Thanks @Deborah Vahle! That's great info and a great update/addition to what I recapped. That makes sense. Glad you chimed in, by all means! Haha.

@Nick Rutkowski Definitely a spot where being savy is super important! What I did for my STRs was actually get help from my home stager/interior designer. Many people who run those businesses have their own furnishing inventory that they need to change out/cycle through every so often. And if they've gotten their use out of them they may be willing to sell you their old pieces for some good deals. And the great thing is they'll probably be nice "higher end" looking pieces that are in good condition since they've needed to be to show homes.

Plus you may get the added bonus of being able to get their opinion of what would look good in your space. Definitely good to get some professional insight on this as it will elevate the look and give you higher perceived value.