All Forum Posts by: Tyler Munroe

Popular destinations are pretty easy to identify and well-run STRs will always thrive there. What I don't see mentioned on this thread (and also pertaining to a "recession-proof" STR), is how does your property compare to those around you? Do you have a jacuzzi when 65% of other listings have one? What about a game room? Baths per bedroom? Waterfront? The list goes on. Point is that you can minimize effects of a downturn and/or over saturation by having a property even marginally better than those around you. These differentiators will be the difference between success and failure if/when occupancy slides.

Seems like the days of living for free house hacking in Boston may be gone. With rates and prices the way they are, just look for opportunities where your mortgage payment will be much lower than what your place would rent for. For example, I'm house hacking now in a 2 family bought in 2020. Mortgage is ~3,500 and the other unit rents for 2,450. Difference of $1,250 is what I pay to live in an apartment that would rent for $4,000. I view that 2,750 as a huge win especially considering I have a tenant paying for the majority of the mortgage to help build equity on top of that.

I think analyzing a house hack is more subjective since you'll actually be living there. I've only lived in house hacks for the last 10 years and currently pay $1,250 to live in an apartment that would rent for $4K. Point being that a lot of people say you should live for free, but if that's not possible just aim for the best value based on the mortgage payment vs. rent value. You can then look at it as saving that difference (ex. in my case saving 2,750/month). Add to those savings the equity you build by having your mortgage partially paid down by someone else and you'll be way ahead of any renter or single family owner.

Hi BP!

I'm a full time investor and broker in the Boston area and am looking to expand my network a bit. I've had success finding and executing deals and am now looking for money partners to continue those efforts. I've been in real estate since 2013 and have acquired 15 doors which I own and manage with my wife. I'm looking at deals every day on and off market and am seeking more capital to make them happen. If you are looking for an experienced investor/broker to help you find and execute deals please send me a message, thanks!

Are you in 3 family zoning? If so, then an additional unit may be a better value add than purchasing something else. If you can only add the 3rd unit via the ADU program it may not be worth it based on the restrictions of the program (see previous replies).

Investment Info:

Small multi-family (2-4 units) fix & flip investment in East Boston.

Purchase price: $565,000
Cash invested: $30,000
Sale price: $665,000

Buy and hold turned fix and flip investment in E. Boston about a 6 minute walk to the Airport Blue Line T stop. Heavy cosmetic upgrades needed in the first floor unit, upstairs was rent ready. Idea when bought was to buy and hold but changing market conditions prompted me to sell to use money to invest elsewhere. Net gain AFTER tax came out to $87,306 for a 77% total project ROI. Property also cash flowed when owning it.

What made you interested in investing in this type of deal?

This initially was a buy and hold for me in an area of Boston with some serious upside. East Boston has a fantastic location to the city relative to the prices of properties. This is fast changing which I'm sure helped with the final sale price.

How did you find this deal and how did you negotiate it?

Found on MLS and definitely OVER paid for this. Was able to make it work by spending more hours than I'd like to admit fixing the downstairs unit but was able to keep my costs down doing so. Didn't even get an inspection before purchasing, which would have definitely helped my cause and allowed me to negotiate down a bit. Property was sitting on market for months. Mistakes were definitely made here!

How did you finance this deal?

Traditional 30 year fixed with 20% down.

How did you add value to the deal?

Was able to get away with mostly cosmetic upgrades to the bottom unit, which was in need of dire repair. Basically a LOT of cleaning, painting, and light repair work. I also re-did the finished basement so it could be used as accessory space for a play area or home office. I was able to AirBNB the top floor, which netted great returns until covid hit.

What was the outcome?

I decided to sell to pull my money out and invest elsewhere due to changing market conditions. The AirBNB was heavily dependent on travel to the city, which has all but disappeared due to covid, so there was a real risk of vacancy if my long term renters left in the bottom unit. I could have certainly rode it out, but as my investing knowledge grows I'm looking forward to putting that money into action elsewhere.

Lessons learned? Challenges?

Major lesson here is pick your markets carefully and manage costs. Had no intention to sell the property this soon, but when I did the numbers I realized I could free up some great capital for other projects. That was only possible because it was a strong market and rehab costs were low. All costs considered (buyer's agent commission, cap. gains tax, closing costs) netted a profit of $87,306 on top of getting my down payment back. Came out to a total ROI of 77%, not bad!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I'm a real estate broker so I represent myself in transactions. If anyone would like to chat about investments in the area feel free to reach out!

Anyone received refunds yet? Never received any correspondence in "early April" as the policy stated.

The metro vs. rural comparison can go both ways, in my opinion. If this was an economic crisis instead of a health pandemic, I think we'd see more cancellations in leisure/rural areas as discretionary spending would be the first to be cut. Urban areas with diverse economies would have stable demand since travellers would prioritize holidays, events (weddings, graduations, etc), and family visits. I have four STRs in Boston and there's so much draw to the area due to education, medical, work travel, tourism, conventions, etc. that I consistently had 90%+ occupancy rates for most months. Of course, most of the draw to the city has now been cancelled and we're getting absolutely hammered with guest cancellations and not much, if any, replenishment of bookings. I recently read a short article (link below) about Airbnb petitioning the government that the company and its hosts should be treated as the hotel industry and included in any disaster relief - couldn't agree more given Airbnb's awful cancellation strategy overriding hosts default settings.

https://www.phocuswire.com/Airbnb-asks-for-government-support?utm_source=eNL&utm_medium=email&utm_campaign=Daily&oly_enc_id=3569D8023634I7X

Thanks for sharing that @Mike Dymski! Interesting and well researched read from a reliable source. I have four STRs in an urban area (Boston) and and definitely feeling the effects of cancellations. I do think the urban vs. leisure STR comparison is totally situational, though. If this were more of an economic vs. health crisis (think 2008 vs. now) then I think we'd see the inverse effect where less leisure bookings take place and urban STRs remain stable. Discretionary spending for exotic locations would be the first to be cut by consumers but travel for holidays, work, and family visits would likely be prioritized, making STRs in more accessible locations more likely to be booked. Definitely not the case with COVID, but I don't think an across-the-board assumption can be made, just my opinion.

What can't be ignored are the immense numbers of cancellations and lost revenue (those graphs are scary). I'm hoping the federal government treats all Airbnb hosts as essentially part of the hotel industry and allots bailout funds accordingly. Airbnb is already lobbying for this so hopefully some headway is made and hosts losing ten of thousands of dollars a month due to unfair cancellation policies (whole other argument) can recoup some losses and at least be able to pay their mortgages.

I usually find a good constable in the area for guidance on this. They deal with these situations a lot and can offer great advice on the eviction process (if it comes to that) and notifications needed building up to it. To answer your question about deliveries above, constables are usually the most reliable source to do this, from what I've found.