All Forum Posts by: Account Closed

@Dan H. I am aware that my lease is no better than any other And that the renter may walk. In that case....I can correct to market rent and absorb the vacancy like any other investor. I don’t see that as a death blow to my strategy. 

New builds are different everywhere you go. You can’t blanket statement their growth. It’s my house...in the absolute worst case scenario, I live in it. 

If we put numbers to it I can better explain. @ 1800/month in rent a 3% escalation clause would yield $54 more per month after the first year. 54 becomes 109 becomes 166 becomes. That is $3,948 over the course of 4 years in missed rent escalation. Which is equal to 2.1 month vacancy or 4.5%. I think that’s a wash personally. And considering the effort, I’d play it may way all over again given the choice (goal is to be hands off after all).

I understand your advice on the new build, but the asset won’t depreciate like a car (at least I hope not). I do however want to make sure my upgrades bring value and are targeted toward a future rental. Any advise there beyond focusing on kitchens, bathrooms and flooring?

@Dan H. thanks for the input! Scottsdale is one of the best markets for STR so there must be something I can do there. I'm open to ideas. It's already 70 degrees here in PHX so our high season can span as much as 6 months

I like the idea of the new build for several reasons. First off, it virtually eliminates the big shock expenses that come with AC failure, water heater, appliances, etc. in these first few start up years with low cash reserves it’s the shock expenses that I’m hedging against. 

For that same reason I took on a 4 year lease with the physician. The idea of one renter, one turnover, one application/showing period...all of that was worth missing out on the escalation in my mind. Bird in the hand kind of situation. Plus one or two months of vacancy virtually wipes out all gains to be had on an escalation clause, if not more.

@Don Konipol what should I know when trying to chose a few?

@Dan Heuschele thank you. I don’t think that this strategy is low risk (I don’t think I ever said that). There are obvious risks when cash flow is not the primary strategy. I am only trying to mitigate those risks. Any advice would be welcome!

Prop #1 is a single family patio home which was built in 2012. The maintenance costs are minimal and with my sell timeline I’m not as concerned about negative inflation adjusted cash flow over the course of the next 2 years. There is not an escalation clause, tho that would be nice! Rents in phx are up 15% from his initial lease rate so I’m missing the boat a bit there.

The condo STR is my biggest concern. I expect I can break even through the summer months. I've also considered turning it into a LTR for 6 months to carry me from May-Aug and then trying to capitalize on a STR again in the high season. After the 6 months is up I could go month to month with the renter until I have another STR lined up. Obviously lots of moving pieces...but as I've demonstrated, I'm not afraid of moving!!

@Don Konipol Beyond securing High limit credit cards and a HELOC against prop #1, what would you suggest?

@Steve Vaughan thanks! I actually am considering selling the 1st property 3 years into the rental term so that I’ll have lived in it 2 of the last 5 and can take the capital gains exemption. I’m curious how selling with renters in place at under market rate will affect my sales price though. I’ve thought about kicking back closing costs to cover the gap for the buyer. Any other strategies I should consider?

@Kerry Baird thanks! So the data I have from Realpage shows rent growth has exploded in phx over the last few years. I expect it will level off at some point in the near term. What’s the most you’ve ever seen rents decrease YOY in those markets barring a housing driven recession?

@Mary Mitchell thanks! STR are limited to 90 day minimums in the condo HOA. They aren't big on enforcement as several of my neighbors run them shorter but that's not really my style. I plan to rent it to traveling nurses through the low season in Phx as its close to several hospitals and there's a breed based on the FB groups I've joined. Traveling nurses typically get 3 month assignments.

@James R aduna Thanks. I am just beginning to read about out of state investing. It’s a gray area for me as I don’t have a clue about the property taxes or rents in markets outside of AZ. How did you go about narrowing that down to select Jacksonville?