All Forum Posts by: Trevor Schmitt

Higher cost of funds + higher operational costs = larger focus on operational efficiency

A positive that is sure to come from the rise in virtually all expenses associated with running a business is that owner/operators will be forced to tidy up their operations. The use of AI is one way that investors are attacking this new environment.

IMO there will be some rock-solid owner/operators created from this period in time! The contenders and pretenders are set to be revealed.

What changes are you making to increase operational efficiency and/or cut expenses? 

 That's great! A team member just helped a client close on an industrial property in Sioux Falls! 

Looking to connect with investors in North Dakota, Minnesota, and South Dakota! 

Main goal is to simply expand my network and nurture new relationships in the industry. If we are able to do business someday that would be a great added bonus!

I am currently a business banker here in Fargo and primarily work with real estate investors... both big and small... SFH rentals -> new construction -> existing & ground up multifamily up to approximately 75 units. I also hold a real estate license in ND & MN.

My personal portfolio consists of 4 rental properties and a total of 8 units, with 5 of those units being utilized as a STR.

Send a message or connect with me on LinkedIn! 

Did you know that short-term rentals only account for 15% of the stays for travelers? Hotels still account for 85% of all total stays.

After all of the buzz the last couple of years, one would have thought that STRs took over half of the market share, and according to the headlines that is about to come crashing down.

Jamie Lane, Chief Economist of AirDNA recently spoke to this on a podcast. He dispelled the notion of an Airbnb bust like some headlines are showing by using actual data. And lots of data. 10 million listings worth of data per day to be exact.

What is actually happening? A regression the means more or less. There was a boom towards the later part and after the pandemic as far as number of listings, average daily rate, and occupancy rate. Overall, the rise of average daily rate and occupancy rate has slowed down, while the number of listings has continued to rise.

All in all, the STR market is settling into the trajectory it was on pre-covid, not falling off the face of the earth. According to Jamie and his team, the STR market is healthy, strong, and sustainable at this point.

As an owner of STRs and advisor to clients who are also owners, this was a refreshing listen on BP. 

First and foremost, focus on making money... 

Learn how to analyze deals, and start networking with investors in your area, potentially finding ways to help them out in the meantime. But absolutely, focus on making and saving money. Don't get caught up in all of the IG and FB gurus saying you can get rich without any of your own money in real estate. 

You are in a great spot in that you realize the power and potential of real estate! Focus on becoming a great income earner and you will be much better off. After becoming a master at analyzing deals and have grown a network you could potentially start raising money from other people to get your first deal done. Until then I would focus on earning and saving... this game is a maraton, not a sprint! 

A condo can be a great first investment property! The reason being is that they are low maintenance, and a lot of your potential problems (exterior insurance and maintenance) are taken care of by the HOA.

You absolutely need to verify that the HOA does indeed allow rental units.

The potential revenue may be lower, but the number of headaches is also lower. I have two investment properties in an HOA and they are by far the easiest to manage, a lot less stressful when comparing to an older single-family home or small multi-family.

What is the value of the home? 40k seems like a very high number for a bathroom remodel.

The advice that I was given and have shared with many clients, and have seen firsthand, is that "minor" updates to the kitchen and bathroom give you the best ROI. If you start getting too custom and outlandish with your updates, the ROI will fade away.

The thought being that each person has their own taste... you may stick a ton of money into something, and half of your potential buyers may not even like it, let alone value the upgrade the way you do. 

1031 exchange is a great strategy in any market. Inventory is down, but you also have less competition right now which will help lock down a property. A great way to do this is to get into contract with an off-market property where you will have more control of the terms to help you navigate the exchange process successfully. 

The 1031 exchange timelines are clear and hard deadlines. If they are missed, you will completely lose out on the benefit of doing an exchange. 

Hi Jennifer, no worries... there are options for you! 

You need to find a lender that will do a "bank statement loan" and/or lend based on the property performance. This will help solve the problem you are running into... many self-employed individuals are in the same situation!

The goal should be to talk with as many lenders as possible... I would target local banks and credit unions. They are most likely to do an inhouse loan for you based off of your bank statements where you can show your sufficient income! 

Don't be discouraged if you don't find the answer you are looking for right away... you may need to talk to a dozen banks! 

Hey Ricardo, 

Nice work! Sounds like you have put yourself in a great position. 

As @Ryan Muska commented on... if you are going to purchase and live in a 1-4 unit property, you will be able to get into that property with 3.5 % down. Additionally, you are now able to use the rental income you have received for the last two years towards your DTI numbers, and most lenders should allow you to use up to 75% of any income the property you purchase is currently generating.