All Forum Posts by: William Lokar

My quickest "back of the envelope" is is gross rents x 100 is at or above the purchase price then it could be a good deal and is worth exploring deeper.  Then you can look at how you can cut costs, increase rents, or strategically finance the property.

The Kwikset halo does hav that issue.  We have had the same problem.  If the lock is lot aligned properly it will "jam" alot.  I realigned the lock and the bore in the jam and the amount of jamming has decreased and the battery life has increased.  Nevertheless, I keep plenty of batteries in the owners closet and have them replaced by the cleaners/PM when battery life drops to 60%.  

If it has good investment potential why are they selling?

I generally use AirDNA to identify markets and get a first estimate for rental potential.  On my STRs I've been getting about 80% of the AirDNA estimate, with updated properties in different markets.  A lot of this may be due to having longer term tenants, which lowers revenue in most cases.   I just wanted to share my numbers.  As a starting point, it's always a good idea to make decisions based on conservative estimates.

I may be biased since I'm and investor and Realtor in the Tri-Cities (Kingsport-Bristol-Johnson City), but the appreciation potential is very strong in this market and the price points are much lower than other the other markets you mentioned.  Higher quality MFH are moving quickly and the cap rates are rather low compared to where we've seen them in the past, but there is potential to grow those cap rates with a little investment.

It's good to consider cap rate, but understand how it was calculated.   Some cap rates are presented as current using current rents, while others are Pro Forma using projected rents.   You will have to do work to achieve the Pro Forma rate, so I would not pay for Pro Forma cap rates unless you love the appreciation potential.   Keep in mind that if you finance the deal and the interest rate exceeds the cap rate, then you will have negative cash flow on the deal.  For multi-family I still like to think cash-flow and Cash on Cash return first, then cap rate third.

By "rent out". do you mean as a long term rental (1 year or longer lease)?   If so this will be more passive, but produce lower income in most instances.  Airbnb can be more lucrative, but I agree with @Amanda Chandler that quality STR managers can be hard to find. Check out the BiggerPockets Airbnb calculator (https://www.biggerpockets.com/...)to get a quick estimate of income for your house, but bear in mind that as an Airbnb you will need to pay utilities, TV, internet etc. like you live there, where as as a long term rental tenants can pay those expenses.  

Ultimately it depends on your goals and comfortability with each approach.  Good Luck with the decision!

I personally do not allow sublets for my LTR properties, due to potential liability issues and wanting to know whois in my property.  If you were to explore this I would suggest:

1) requiring a larger security deposit.

2) Asking to be included as a Co-Host on Airbnb so you have a pulse on what is going on.

3) Ask for a percentage of rents (maybe 10-20%).  Being a cohost will allow you to keep tabs on the income and have them add you for direct deposits.

Just a bit further north from the Smokies the Tri-Cities (Kingsport, Bristol, and Johnson City) offers some low price point STR potential. You don't have a main stream vacation crowd, but it reduces some seasonality and there is always something going on in the lower price-point area. The Bristol Motor Speedway is a big draw and a new Hard Rock Casino is being built in Bristol, not to mention strong growth in East Tennessee. You can get good cash flow in your price range.