All Forum Posts by: Zane Cress

I think you need to be certain you can increase the rent in all units within the first year. I would imagine under this deal if an AC unit goes out then it's on you to fix it. That would destroy any potential cash flow you might have. Also a bank will not look favorably on this deal if these are your numbers. They are not interested in risky deals at the moment and I agree that rates in the next 5 years do not look promising. Is there an option to do medium or short term rentals in this area to boost your returns in the first few years? If you can improve the property and gain some appreciation you might see lower interest rates by bringing the bank a 60/40 or 70/30 deal they can lend on. 

A non-refundable deposit of $200 which is what it costs me to deep clean after an animal. A $300 refundable deposit in case of damages. 

If you don't have any experience in STRs I would not trust AirDNA on a simple numbers run. So many factors go into this asset class and while the data is a good place to start each house is radically different in attraction and ultimate returns. If you get into a place but don't have the capital to make it as "nice" or "attractive" as the ones around it you won't see the same returns. Also if you don't invest in the software that manages daily pricing and works the algorithms on Airbnb then you won't see the same returns. In addition it takes time to gain reviews and become a super host, which will alter your returns. So the numbers you are seeing might take several years to achieve.

If you base numbers off a STR return and they don't work then you could lose money by having to revert to a long term strategy. Be cautious and double check every number.

House hack in college and rent rooms to your friends. If I had this knowledge base when I was in college I would have been so far ahead of the game when I graduated.

A local bank or credit union should be able to finance this deal, you need to ask around a few places that are local and show them numbers that make sense. They will likely want to see a return of 1.2 or more before loaning on this. There is no rule that "commercial" has a minimum amount. 

If you take the Pace Morby advice you take all that wholesaling energy and look for seller financing and sub2 deals to attack. He has a great Youtube master class series for free that can educate you on all the aspects of this strategy. Also even if you are self employed you can always work more. Could you drive for Uber or get a W2 job for a few months to bolster income and provide a traditional lender with a payment stub so they can give you a loan? Once you close then you don't have to keep the other job if you can make the numbers work self employed. 

Anything is a good deal if you can make it cash flow. I would look into short and midterm rental for a few of the units and see if you could boost the monthly income that way. As one or two people move out go renovate the unit and see if you can maximize the income. Value add will also help you refinance it later on and take cash out. 

I would expect setting up a support team would be difficult unless you speak the language or find a fluent management company that specializes in vacation rentals that would give you suggestions on cleaners and handymen. I have considered the same thing but would lean on my connections that are from the countries I want to target to help me set it all up.

 Then I guess they would have to eat the cost of management and be happy with lower cash flow and hope for appreciation over the years. 

Unless you are operating a large portfolio of STRs then self management is the only way that makes sense to me.