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The Latest “Spooktacular” News about Airbnb

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Image by Myriam Zilles from Pixabay

By Holly Lynn

Enjoy these treats while they last!

If Halloween decorations, costumes, and a smoky punch bowl are in the forefront of your mind for a great party, keep Airbnb off of your list of potential party spots for the holiday weekend.
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Image by Alexas_Fotos from Pixabay

In an announcement made by Airbnb, they are prohibiting large gatherings in an effort to do their part in the spread of Covid-19. Airbnb has stated that they will also bring legal action against certain unauthorized parties. This announcement comes a year after the shooting of five young people at a home–listed on the Airbnb platform– in Orinda, California.
Airbnb posted on their website, “To strengthen our hosts’ protection against parties amid concerns about a second wave of the pandemic, today we’re announcing that we’ll be prohibiting one-night reservations over the Halloween weekend in entire home listings in the United States or Canada. Further, we’ll bolster our existing protections and technologies aimed at stopping as many large gatherings as possible that weekend.”
Starting October 2nd, guests will be unable to book entire homes for a single night on 10/30 or 10/31 in the United States and Canada. For previously booked reservations on these dates, Airbnb will cancel and reimburse the guest. However, hosts that have confirmed bookings will receive a full payment. In addition to the rigid restrictions, Airbnb will be implementing technology that will curtail guests that try to book last-minute, who live locally and do not have a positive history on the platform.
Airbnb also asserted, “Also as the weekend approaches, we plan to remind guests making successful reservations to take place between October 28 and November 1 that parties are not allowed in listings. They will also be required to attest that they understand that they may be subject to removal from Airbnb or legal action if they violate Airbnb’s rules on parties.”
Airbnb will be beefing up their neighborhood support line to take calls throughout the weekend to respond to any issues from hosts and neighbors. With pandemic numbers on the rise and the recent rise in civil unrest, Airbnb is striving to protect hosts, guests, and neighborhoods from unnecessary problems and to keep everyone safe.

Holly Lynn, Queen of Capital ™ is an Airbnb and Short-term Rental Management Professional, author, and media influencer. She can be reached at www.hollylynn.com or by email at [email protected].

To short-term rent your property, you can text her at 415-317-6071.

Wondering What to do NOW In Real Estate? (Part 2)

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Image by Gerd Altmann from Pixabay

By Jimmy Reed

So, what do you do when the market is flooded with so much Competition? How do you really get Wealthy in Real Estate? Getting fed up!?? How about Real Wealth Deals???

Hope you enjoyed the last article! Part 1 of “What to do NOW in Real estate?” As we ended last time, we started to mention VRBO’s vs a Standard Rental. We also talked about Hot Markets and that the Dallas/Fort Worth (DFW Area) is one of the Hottest in the country. Since the last article we have also had the Covid-19 Virus which at this time has literally shut our economy down. The timing however is really interesting since we are now about to go into a market that is only 3 hours away from the DFW market and growing at the same pace. Now last time I talked a lot about the Granbury market which was only 30 minutes South of Fort Worth where we are building brand new Constructions all Brick for Rentals. But let’s now switch the mind set to VRBO where we can Double & Triple our Cash Flow! You heard me right! So now we move North of DFW to Broken Bow Oklahoma. And to help me out I want to introduce you to a friend, former student, and a Rock Star on VRBO’s in Broken Bow, Miss Kelli Haus. I asked Kelli to help contribute to part 2 of this piece since she has literally taken the VRBO in Broken Bow to a new level. So first keep in mind we are looking at cabins now verses a standard house. We are looking at Nightly rent vs Monthly rent. And this is where you will see how you could nearly triple your Monthly Cash Flow with a VRBO in Broken Bow. Now I meet Kelli a few years ago when she signed up for our Platinum Program here in the DFW area. She soon informed me she was wanting to move into Vacation Rentals, I told her it was not my specialty at all. A few years later and Kelli has become a Rockstar of VRBOS! So here is a little about Kelli, and some info on Broken Bow, OK.
The How Toos of Finding Deals
Kelli has 6 years’ experience in the real estate field, she is known as the Beavers Bend Realtor. However, Kelli does more than just help her clients buy and sell cabins, her secret sauce is her step-by-step plan for her clients so they can not only enjoy a vacation at their cabin but also turn it into a big money maker. Kelli uses this same plan on her own Beavers Bend investment properties so she practices what she preaches, and she can not only show you how the plan has worked for her, but so many of her clients. Her ideal client is someone who is looking to make memories and extra money.
Hello all, I’m Kelli Haus and I am a cabin investor in Broken Bow, OK and a full time Realtor in the Broken Bow area, specializing in helping families’ and investors purchase an income/second home/vacation luxury cabin that pays for itself.
Did you know that according to a recent VRBO report “71% of millennial travelers say they consider staying at a non-traditional vacation rental”? VRBO rentals are up 30% from last year! Broken Bow, Oklahoma. I am going to assume you’ve never heard of it. It is an outdoorsman’s paradise! It is only three hours away from the DFW metroplex. A perfect family getaway that makes most feel like they arrived in Colorado. The area is also known as Hochatown, Oklahoma which is a few miles north of Broken Bow. Through good economies and bad economies, this place is always a hot market with vacationers packing the area every chance they can. As long people in the DFW want a quick getaway from the metroplex, this market is going to continue to be on the rise until there are enough cabins to accommodate the mass influx of vacationers. Hochatown is approximately 95% luxury investment cabins that are occupied by residents from Texas, Oklahoma, Arkansas and Louisiana that flock here YEAR-ROUND. That’s right, there is not a down season! VRBO’s travel trend report projects that the Broken Bow/Beavers Bend State Park lake area tourism will grow 50% in 2020. If you have never heard of Broken Bow, Oklahoma your first question is going to be why the heck would anybody want to invest in this remote area? The answer is Broken Bow Lake is one of the most gorgeous lakes in the country. Its pristine natural shorelines are not riddled with boat docks and lake houses. Ten years ago, this lake was a hidden gem of a secret for the locals to enjoy. This lake is crystal clear and provides some of the best fishing in the country. The lower Mountain Fork River feeds off the lake has some of the best fly-fishing in the world. Believe it or not most people never even see the lake when they rent a cabin. They’re too busy hiking some of the most gorgeous trails in the state park, hitting up the local breweries and wineries, roasting s’more‘s on the campfire, renting ATVs, horseback riding, kayaking or canoeing on the river, grilling out on the back porch and hitting the cabin hot tub! The Choctaw Nation has recently purchased 700 acres here in Hochatown and they will be building a family friendly casino right here amongst these luxury cabins. This casino is going to draw so many more visitors to the area that have not heard about Broken Bow. It’s rumored to believe that only 50% of the DFW metroplex is aware of Broken Bow. There are more than 7 million people in DFW and Broken Bow is growing in correlation with the growth of DFW. There is certainly a buzz in Texas about Broken Bow and in my opinion, there are not near enough cabins in the area to support the demand of people that want to vacation here.
The How Toos of Finding Deals
Even during this Covid crisis, all the cabins here are full of people “sheltering” at a cabin. And there has been no slowdown of investors inquiring about investing in Broken Bow either.
The question I get asked the most often is which is the best size, price, and type of cabin for an investment? There is not a good answer to that question. One-bedroom cabins are booked more nights per year but at a lesser nightly rate. The big cabins that sleep 25 to 30 people are booked less nights per year but at a much higher rate, up to $2,000 a night!
If managed properly every cabin in Broken Bow can be paid off in 8 to 10 years. So, would you rather have a $300,000 one bedroom or a $1.5 million cabin paid off in 8-10 years? Every single cabin here pays for itself every…single…month. Some months, like February and April, can be a little slow but this year they have not been at all! Each year this area is growing more and that means more net profits, even in what used to be known as the slow months. Cabins are booked every single weekend, every holiday, and every time school is out of session, I encourage all cabin owners to raise their nightly rates 10-30%. Both of my two-bedroom two bath cabins that have a loft, both sleep eight or nine people are booked 18 days a month on average year-round. June and July are the busiest months of the year. Both of my cabins were booked solid in the summer months except for the rare times of a one-night opening between bookings.
The How Toos of Finding Deals
Generally speaking, a cabin will make 45% net profit. If you hire a management company, they are going to expect 25% to 40% of your gross income. 95% of my client’s self-manage their cabins with my proven method of doing so. But that is a whole other and I am certainly happy to answer questions like them, such as:
  1. How do I manage my cabin from 2000 miles away?
  2. How do I minimize phone calls from my guests to the point where I do not get any?
  3. How do I maintain five-star reviews on Airbnb and VRBO?
  4. What do I do if I have a maintenance emergency in the middle of the night?
  5. Do you share your team of people on the ground in Broken Bow to help Cabin Owner’s?
So, let us talk about real numbers. I purchased my “Kiss and Angel Good Morning Cabin” in April 2018. It came fully furnished from a new construction builder with a sales price of $310,000. It appraised for $329,000 and today it would appraise for $360,000 or more. I put 10% down. Mortgage, taxes, insurance as well as PMI totals$2,050 a month. Property taxes are low at about 1%. My monthly average expenses to run my cabin business is $500 a month.
The How Toos of Finding Deals
In my first year I paid down the mortgage with 100% of my profits. I did not pay my mortgage down in 2019. Instead, I used my profits in 2019 to purchase my second cabin. Right now, I have $100,000 equity in this cabin. Nightly rates are between $199 and $350 a night. My first year I grossed $50,000 with $20,000 net profit. My second year I netted $27,000 profit.
I encourage my clients to purchase new construction or a cabin that is less than three years old. That is another discussion for a different day. About70% of cabins for sale can be found on Realtor.com. Not all real estate agents list their cabins on any MLS. New construction cabins cannot be found online anywhere. You must have a connection to a builder to find those hidden gems! 80% of my clients purchase a new construction cabin that has not yet been completed.
The How Toos of Finding Deals
I know I have just scratched the surface with this article and there are many more questions to be asked. I am extremely grateful I discovered the Broken Bow area. I have two young children and with the two cabins that I do own now, I will be able to use the $2,000 monthly net profit to pay for my children’s college education.
I do not see this market slowing down anytime soon as I do not see the DFW market slowing down. It has been rumored that Broken Bow will be the next Branson, Missouri, or Lake Tahoe.
I do not have enough cabins to show my clients even during this possible recession. Construction has not slowed down either. Can you think of a hotter market? I hope to hear from you soon, and Thanks Jimmy for allowing me to contribute to your article! Well I hope you just realized the opportunity you have been presented with. How regardless of where you live you can own a Vacation/Investment Cabin that can produce up to nearly Triple the Cash Flow vs that from an ordinary rental. Yes, I know if you are Old School you understand Monthly Rentals. Trust me I’ve had rental for over 30 plus Years! But go back and read the last article “Part 1”Remember the Make Money vs Wealth? Wealth is what you are looking for in real estate. But I understand if you want a rental, we have them for you as I said back in the first article down in Granbury. By the way you could VRBO the Granbury properties. See these articles were written to open your eyes to see the opportunity of not so much what you invest in but where! Hot, Emerging Markets will always out pace Appreciation and Cash Flow due to demand, and the location with in what I call the Hot Zones. Texas is a Hot Zone always has been and even more so today. Make sure you go back in read the first article from last month in Realty 411. Refresh yourself to what our Goals were. Buying and Selling vs Buying and Holding, real Wealth! Look back at some of those trainings we offer on my site at www.JimmyReed.net. Create some Cash but parlay that into Creating Wealth through Rentals are maybe even VRBO’s so you can Double & Triple that Cash Flow. Well I hope this opens your mind up to investing in Hot Zones. To understand so many people come from all over the World to invest in America because of all the opportunities. My question to you are you willing to travel a few states and end up in the middle of the country and the most lucrative Hot Zone, TEXAS! So if you’re still riding the fence here’s a thought make sure to keep an eye out in the magazine and Realty 411Marketing emails so you can make it to Texas for the Lone Star Expo! Yes in October the Lone Star Expo is right here in my backyard, Arlington, TX. And if you remember from the first article we plan on doing a bus tour down to Granbury to look at those New Construction Rentals. Who knows Kelli may be at the Expo to answer questions about Broken Bow. Fact stay a few extra days and rent a cabin in Broken Bow! In Closing, the main thing is position yourself so you can maneuver positively so no matter where the market turns. If you keep your eyes on the market and not so much on the quick buck, you can become very successful even Wealthy at this real estate game! Be Blessed with Success! Jimmy Reed
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Jimmy V. Reed

Jimmy V. Reed of Fort Worth, Texas has been investing in real estate since 1987.  In 1991, he started conducting full-day training sessions on Wholesaling.  He then began teaching and mentoring others throughout the country. He is currently the founder of the Fort Worth Real Estate Club www.1REclub.com and has his own real estate training company that includes Wholesale, Probate, Mentoring & a Biblically based Debt Free training course and more! More info available at www.JimmyReed.net

The Secrets of Being a Successful Landlord

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By Kathy Kennebrook (The Marketing Magic Lady)

You’ve all heard the tenant horror stories from people who have had tenants in properties, but being a landlord doesn’t have to be difficult as long as you learn some strategies for handling your tenants. My husband used to say that handling tenants was like having a group of children that you have to train and discipline. But it doesn’t have to be that difficult.

You do have to make some specific rules for your tenants and stick to them. Every time you change the rules you give your tenants the upper hand. You must also have an iron clad lease that specifically addresses the issues that you may have with tenants including getting your rent paid on time.

rule-1752625_1280This is one area in which I am steadfast with the rules. I don’t care what the tenant’s situation is, their responsibility is to pay me on time and in full or they are stealing services from you without paying for them. My tenants are responsible for having the rent in our post office box or direct deposited through zelle or paypal on or before the date it is due or they are served with a three-day notice the next morning as required by law where I live in order to begin the eviction process. There are no exceptions. We even have tenants who send their checks to me priority mail to make sure they get to me on time. Most of our tenants have been with us a long time and many pay early.

You must also take the time to pre-qualify your tenants’ right from the beginning so you can avoid some problems right from the start. Don’t just accept a tenant into your rental property because they have the money to move in. Don’t let greed be your guide. Have your tenants fill out a specific rental application. Then you run must a tenant check with a reputable company. Don’t try to do this yourself just by looking at public record. You will miss credit issues and anything that may have occurred out of state. You need to find out the information you need to know about your tenants’ right from the start before renting them your unit.

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For example, if the tenant check shows the applicant was just evicted from another premises, this certainly isn’t going to be a tenant you want in your property. Or if your tenant has had recent felony convictions, this isn’t a tenant you want in your rental unit. If your applicant has multiple animals, this is also not someone you want in your rental unit. I will mention however, that I will allow a tenant with a small dog or cat to rent my units. I find that usually a tenant who has a pet that they have had for some time will make a good tenant who will stay longer in your unit.

I also have a separate pet lease which addresses specific rules regarding pets in my units. The pet lease requires that the dog or cat is an indoor pet and I have an additional non-refundable amount of security deposit for the pet lease and additional pet rent of 25.00 per month. I find that this works out very well. If the tenant gets a pet that is not on the lease, this is grounds for immediate eviction, and we do have someone who checks our units about every 60 days for us to make sure all is well with our rental units.

puppy-1903313_1280I also check out where they were living before by going by the address and checking it out and I talk to their previous landlord. I want to see how they have been treating the place where they were living before. If it looks like a pig pen or if they have multiple animals, this is not someone I want in my unit. If they don’t give me this information on the rental application, I won’t even consider them to rent my unit.

I know some of this is just common sense but it bears discussion. If a tenant makes it through my rigorous screening process, I also have them pay first month’s rent, last month’s rent and the security deposit either by cash, cashiers check or by money order. I do not accept personal checks for the move-in amounts.

During the following months I do not accept personal checks from them for the rent, we only accept money orders or direct deposit. The first time a check bounces for insufficient funds or any other reason, they must make it good immediately or I will immediately begin the eviction process. This is all covered in the lease they have signed. I also make sure that the person I have putting tenants in units for me thoroughly covers all the items in the lease with them before they sign it.

If a tenant does get their rent to us late, they are responsible for additional rental fees of one percent per day. These fees are in our lease as additional rental fees as opposed to late fees since some courts won’t allow you to get a judgment for late fees. Within the body of our lease we also require our tenants to have renters insurance and I want to see proof of the policy before they move in. This way I can’t be held liable for any injuries or the loss of their possessions due to an accident, fire, hurricane or any other natural disaster.

sale-3701777_1280Additionally, once my tenants sign a lease with me, I will not give them keys until I see proof of utilities in their name for the unit. In certain counties like ours, the landlord can’t turn off utilities in their own name. The only way the name changes on the utilities is with a new lease and then utilities get put in the tenant’s name. This rule may be different where you live, but a lot of the time if the tenant doesn’t pay their utilities it falls back to the landlord. This is just one way for you to protect yourself.

These are just a few of the basic techniques that will make you a happy and successful landlord. Monthly cash flow is a wonderful thing if your properties are managed correctly.

For more information on becoming a successful landlord and finding all the deals you need for your real estate investing business, check out my website at www.marketingmagiclady.com. While you are there be sure and sign up for my Free Monthly Newsletter!!

U.S. Department of Justice Files Sexual Harassment Lawsuit Against Landlord

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By Stephanie Mojica

The U.S. Department of Justice recently filed a lawsuit against an Iowa landlord alleging that he sexually harassed and committed acts of retaliation against a female tenant.

The defendants in the lawsuit are Juan Goitia and 908 Bridge Cooperative in Davenport, Iowa, according to a press release from the Department of Justice. The reported incidents occurred between March and August 2018 and are blatant violations of the Fair Housing Act, according to the Department of Justice.

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Goitia, an owner and manager of residential properties, allegedly touched a female tenant’s body on multiple occasions without her consent and made repeated and unwanted sexual remarks, according to the Department of Justice. When the woman filed a fair housing complaint with the Davenport Commission on Civil Rights (DCRC) and the U.S. Department of Housing and Urban Development (HUD), he engaged in acts of retaliation against her, according to the Department of Justice. The press release did not elaborate upon what those alleged acts of retaliation were.

“No woman should have to endure sexual harassment to keep her home,” Assistant Attorney General Eric Dreiband of the Civil Rights Division said in the press release. “The Fair Housing Act protects tenants from sexual harassment and retaliation by their landlords, and the Justice Department will vigorously pursue those who engage in such reprehensible and illegal conduct.”

After the DCRC and HUD investigated the woman’s fair housing complaint, they forwarded it to the Department of Justice for further action. The lawsuit filed on June 29th calls for the woman to be compensated financially. Also, the Department of Justice asked for a court order to be issued to prevent further discrimination against the woman.

“Women have a hard enough time finding a decent affordable place to live without having to be subjected to unwanted sexual advances,” Assistant Secretary Anna Maria Farias of HUD’s Fair Housing and Equal Opportunity Office said in the press release. “HUD applauds the action the Justice Department is taking in this matter and remains committed to working together to protect the housing rights of women when those rights are violated.”

Vacation Rental Investment Opportunities

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By Rick Tobin

In 2019, the travel and tourism sector represented 10.4% of the global GDP (Gross Domestic Product), including vacation rental properties. Over the past 12 years back when the best known vacation rental company named Airbnb was formed in San Francisco, each consecutive year for vacation rentals had record growth. However, the current 2020 year has experienced some significant economic challenges related to the global pandemic designation that slowed down travel tremendously.

airbnb-3399753_1280Airbnb is the best known vacation rental company in the world because it’s the largest. However, there are many other popular vacation space rental brands under the names of HomeAway, VRBO, Booking Holdings, Trivago, Booking.com, Homestay, and TripAdvisor.

Vacation rental ownership can become either a part-time or full-time career for property owners if they are consistent with their marketing efforts, treat their guests fairly, and have affordable monthly mortgage payments and maintenance expenses. With today’s record low mortgage rates, many property owners may be able to refinance and reduce their mortgage rate by 2% or 3% while increasing their net cash flow by $500 or $600 per month, depending upon their loan amount.

Let’s take a look below at some of the latest vacation rental data trends:

Vacation Rental Properties, Income, & User Numbers

  • Worldwide, an estimated $57.669 billion (USD) was generated in 2019.
  • The projected number of vacation rental users was over 297 million.
  • According to the National Association of Realtors (NAR), 30% of vacation rental or second-home property homeowners also leased them as short-term rentals in 2018.
  • The NAR reported that 32% of investment homeowners were likely to lease them as short-term rentals.
  • Of the nine million second homes in the US, approximately 44% were professionally managed and upwards of 25% to 35% were rented out, per Hostfully.
  • There are more than 23,000 vacation rental companies across the nation.
  • As per VRM Intel, 45% of investment property buyers purchased their property with the intent to generate some rental income instead of just “fixing and flipping” or holding long-term for price appreciation.
  • It’s projected by Statista that the number of vacation rental users may surpass 57 million by 2023.
  • The average revenue per user (ARPU) reached $438.49, according to Statista.
  • Vacation rental income comprises about 24% of the average owner’s total overall annual income, per VRMA.
  • VRBO estimates that 29% of vacation properties are owned by more than one person.
  • Approximately 63% of investors and 52% of vacation property buyers purchased a detached single-family home with a median size of 1,500 square feet, according to VRM Intel.

Airbnb Statistics

  • businessman-2682712_1280In the US, there are more than 660,000 host properties.
  • Since the formation of Airbnb in 2008, there have been over 500 million Airbnb stays.
  • There are more than seven million listings in over 220 countries and regions.
  • There are 150 million users worldwide.
  • There were over 100,000 host cities worldwide as of January 2020.
  • Each night, there are over 2 million people staying at Airbnb rentals worldwide.
  • On average, six guests check into an Airbnb every single second.

Top 10 Profitable Airbnb Regions

Surprisingly, many of the most profitable Airbnb areas were located outside of a major tourist hub, crowded metropolitan region like in New York City, or in scenic coastal regions, according to an analysis by the investment property exchange company IPX 1031. This is partly because the host’s property maintenance and mortgage costs are generally more reasonable than in pricier metropolitan regions.

In 2019, the Top 10 cities for highest profit margins for property hosts included:

#1 – Moreno Valley, California: $33,720 annual profit
#2 – Virginia Beach, Virginia: $32,208 annual profit
#3 – Pasadena, Texas: $29,988 annual profit
#4 – Garden Grove, California: $29,772 annual profit
#5 – Fremont, California: $26,700 annual profit
#6 – Grand Prairie, Texas: $24,432 annual profit
#7 – Columbus, Georgia: $23,820 annual profit
#8 – Oxnard, California: $23,256 annual profit
#9 – Orlando, Florida: $22,020 annual profit
#10 – Shreveport, Louisiana: $19,992 annual profit

Top Airbnb Destinations for Summer

beach-1838501_1280In the summer of 2019, the top Airbnb destinations in the entire nation for the peak travel season were ranked as follows:

#1 – Los Angeles
#2 – San Diego
#3 – Phoenix
#4 – San Francisco
#5 – New York City

In San Diego, Airbnb reported that there were 345,000 guests that generated upwards of $79 million in revenue for the property hosts. For the smaller neighborhood regions in San Diego County, the most popular areas for Airbnb travelers included:

#1 – Pacific Beach
#2 – Mission Beach
#3 – East Village
#4 – North Park
#5 – Ocean Beach

The Global Pandemic’s Effect on Tourism and Investments

In February and March 2020, the Dow Jones stock index experienced eight of the 10 worst all-time trading days in history due to investor fears about the coronavirus pandemic. Between February 12th when the Dow peaked at 29,551.42 on February 12th and March 23rd when the Dow plummeted to a low of 18,213.65, the Dow lost 38% of its overall percentage value in just over five weeks. However, stock prices have been moving much higher through the end of June as the Dow Jones had the best quarter since 1987 and the S&P 500 index had the most positive quarter in 22 years.

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Unfortunately, the travel and tourism industry has been hit hard during the first half of 2020 due to so many hotel, motel, theme park, and transportation restrictions or complete shutdowns. For many vacation rental owners, they have seen their income fall to lower levels than in previous years. If so, the loss of rental income has inspired some vacation property owners to think about either selling or refinancing their property to generate much needed cash or to hopefully improve their monthly net cash flow.

Surprisingly, real estate continued to have much more positive news than perhaps any other investment sector during the 1st half of 2020. Specifically, the fact that 30-year mortgage rates reached all-time record lows in the month of June was probably the primary reason why as some rates hovered somewhere in the mid-2% rate range. By comparison, the 30-year fixed mortgage rate hit a whopping 18.63% in October 1981.

profits-1953616_1280Other positive first half of 2020 trends for real estate and mortgages included:

  • Mortgage application numbers reached 11 year highs.
  • Home purchase applications also rose to 11 year highs while home inventory remains low.
  • Suburban home market regions are expected to hit record boom sales highs because so many people want out of crowded metropolitan regions while realizing that they can work from home.
  • US home prices rose for the 9th consecutive month in April, per Case-Shiller.
  • Prices of the most affordable third of US homes increased 5.5% during the 2nd quarter, per Redfin.

In the second half of 2020 and beyond, more people will likely be very eager to start traveling again after being restricted from travel for much of 2020. As a result, the revenue streams for vacation rental hosts may continue back towards historic highs if the annual positive data trends continue like they have over the past 12 years.

 

Rick-Tobin-Professional-Pic-sharperRick Tobin

Rick Tobin has a diversified background in both the real estate and securities fields for the past 30+ years. He has held seven (7) different real estate and securities brokerage licenses to date, and is a graduate of the University of Southern California. Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), equity funds, and foreign money sources. You can visit Rick Tobin at RealLoans.com for more details.

3 Unique Ways to Turn Your Property Into a Money-making Machine

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By Ashley Lipman

Almost any property is capable of turning a viable ROI if managed with savvy and foresight. Even bare vacant land can turn a profit if you know where to look for the right kind of customer.

Making money through real estate is as old as real estate itself (which is to say, “as old as dirt”), but we want to present here three often un-thought-of ways you can turn a profit from your land and/or building.

  1. Contract With a Cell Phone Company

There are some 300,000 cell towers in the US at present, and that number is growing by around 10,000 new towers per year. If you have vacant land in a strategic enough location, given the right zoning requirements are not an obstacle, you can make a lot of money by letting a cell phone company build a tower on your land and then collecting ongoing rent for the use of your land.

If a cell phone company approaches you with an offer, that makes it a lot easier (and gives you more “negotiating clout”), but you can also advertise or contact companies to make offers.

But don’t cut yourself out of a solid profit margin needlessly. Rent is this niche area varies greatly, from $100 to $50,000 per year (not month). In fact, you’re better off talking to an expert consultation firm to find out how to get the most cell tower rent before making any final decisions and signing on the dotted line.

  1. Run Your Rental “Empire” Smarter

Owning rental property is about as common a business venture as you’ll find, but the fact is, many landlords aren’t getting the full benefit out of their investments. There’s quite a learning curve involved in taking on land-lording, and so, it isn’t surprising if new landlords (and even experienced ones) have significant room to improve their profit margins.

The number one reason that property owners lose money on leases is, harsh as it may sound, that they lease to the wrong people. Having a unit sit empty can be frustrating, but you’re much better off being patient and upholding high standards. You need to combine two elements: an attractive “deal” to draw in good tenants and a thorough screening process to keep out bad tenants.

That means you make it clear that you will promptly respond to legitimate tenant complaints, make all reasonable and necessary repairs, don’t invade tenants’ privacy, provide (if possible) a tenant-only laundry facility and a game room/social lounge, and of course offer only well renovated and attractively decorated units. You charge slightly more than your target ROI, then you grant a year’s-end discount for paying rent on time or otherwise reward reliable, timely payers.

But also have strict rules for not disturbing other tenants, not destroying your property, and as to late fees and eventual evictions. Also monitor tenants for illegal subletting and other ploys. If all that sounds like work, don’t be afraid to hire a property manager: with the right policies in place, you can still do well. And you can still afford to be reasonable, patient, and generous with tenants with legitimate reasons for occasional late rent. It’s all a matter of having reliable, good renters in general, not perfect renters who never have a problem.

  1. Use Your Home to Generate Extra Cash

Another angle for homeowners is to simply use their home itself to generate extra cash. There are many ways to do this, so we can’t quite be exhaustive here. But here are a few prime ideas:

  • Set up a home office. Renovate, say, your attic or basement, or simply use a spare bedroom. If you can work from home even part of the time, you will save lots of money on transportation expenses. You’ll need a computer and Internet connection, but most people already have that anyway, so it’s not an extra cost. And you can typically deduct the cost of your home office from your taxes each year as well.
  • Offer storage and/or parking. Storage facilities are very popular these days, and they charge a hefty price monthly in many cases. If you have an extra shed, garage, or room, (or if you’re willing to put a new outbuilding up for the purpose), you may be able to attract people willing to pay a much-lower-than-normal monthly storage-space rental fee. Or, if you live in a neighborhood nearby a sports stadium, concert hall, or other popular venue, you may be able to advertise cheap, convenient parking and frequently get takers.
  • Take on a roommate. Anyone with a spare bedroom and bathroom, and who is willing to share their kitchen and living room with a “reasonable person,” should consider taking on a roommate. It’s easy to advertise online, in the newspaper, or on local bulletin boards, and you can save your new roommate money with lower rent at the same time you make extra money yourself and maybe gain a new friend.

 

Are Investments in Temporary Rentals a Good Investment?

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By Edward Brown

With the popularity in Air BNB [for discussion purposes, we are using Air BNB, but there are other similar companies that could be substituted in] gaining traction in the market place, many real estate investors have been looking at purchasing residential real estate for the specific purpose of renting the real estate on a short term basis similar to the hotel model.

Rather than attempting to garner a month to month tenant or a longer term lessee, some real estate investors have been looking at a model wherein they forgo the security of known monthly rent in exchange for the hope of higher income per month by renting to vacationers on a short term basis. This type of rental is especially the case in popular vacation destinations such as San Francisco and the Napa Valley as well as the outlining areas.

There are pros and cons to this model. From a pro standpoint, many times, renting to vacationers for less than half a month can earn more than a full month under a typical month to month tenant. In the Bay Area, monthly rental may be $3,000 on average, but the nightly rental of an Air BNB for the same house may average $300 per night. Also, eviction is not usually a factor in the vacation model. Most vacationers are not squatters by nature, and lessee evictions [especially in tenant friendly states such as California] can be expensive in time, aggravation, and money. Although there will always be the horror stories of the vacationer who does a fair amount of damage to the house, these instances are much less than the usual monthly renter.

On the con side of renting via Air BNB, there is no security of rental income surety. One never knows how many days the house will be rented. Also, some months may be more seasonal than others. For instance, attempting to rent your Napa Valley place out in February may rent for far fewer days than in August when the vineyards are more in bloom. Other cons include the movement by cities to either tax the income via a “transient” tax or to not allow rentals for shorter than 30 days. This has recently been a big issue as neighbors complain about noise, constant flow of traffic, and so many different renters coming and going as well as the belief that property values go down when living next to this type of rental. Since the number of renters using Air BNB for more than 30 days is much smaller, the odds of getting a renter for more than 30 days to make up for the lack of days being rented in totality as compared to the desired occupancy of the Air BNB rental are very slim. In addition, someone desiring to rent under these circumstances is usually not willing to pay the typical nightly rent for the whole 30 days. Either the “landlord” will advertise a bargain rate for 30 days, or the prospective renter will negotiate a lower rent. A typical $300 per night rental using Air BNB might go for $150 per night for a 30 day rental.

Security deposits are normal for both Air BNB and typical rental situations, but Air BNB will most likely have an additional cleaning fee that may or may not match the actual cost of cleanup. In addition, the Air BNB rental will need to be furnished including bedding, towels, and other necessities whereas most typical rentals usually come unfurnished. This adds to the cost of the set up and continuing maintenance of the Air BNB as well as having someone keep an eye on the rental to make sure the unit is in the same condition from tenant to tenant.

As with Uber, Air BNB has gained traction. With Uber, it took some time for the general public to see that this was similar to taking a taxi and, once people got the hang of it, it became the norm. With Air BNB many vacationers feel comfortable staying in someone’s house that they know has been prepared for them in the same way a hotel makes up a room. There is no room service with Air BNB, nor are the sheets changed on a daily basis, but the costs can be quite attractive to the renter as well as the usually much larger space they get by staying in a house versus a hotel room.

From a lending standpoint, most lenders will severely discount the anticipated rent expected from the borrower who wants to buy a house to place in the Air BNB system. In fact, many traditional lenders will not look at lending in these circumstances with unknown income. Traditional lenders may impute income if the rental is a typical leased situation [although usually discounted somewhat], but Air BNB income is not like a hotel that has many rooms. Either the Air BNB unit is 100% rented or 100% vacant. Hotels have the luxury [from a lenders point of view] that the hotel’s experience may show 60-80% occupancy.  Especially if the Air BNB owner is a first timer, most banks will be very wary of lending to borrowers looking to buy a house for Air BNB income. How does the new owner know how much to charge? These and other questions will make banks turn down more often than approve these types of loans.

If the buyer of an Air BNB house has experience and other rentals in their portfolio, the bank may be more inclined to take a closer look. Otherwise, the buyer of the Air BNB house will have to look for alternative lenders. If the buyer/borrower puts a significant down payment, the alternative lender may be able to be convinced to make the loan since this type of loan would be considered a non-owner occupied [no consumer] loan and not have as many restrictions in its lending practices due to Dodd Frank, TRID, ATR, and other regulations. The alternative lender is more willing to look at what can be done with the house upon a foreclosure. Can the property be sold easily to an owner/user? Can it be rented to a normal tenant lease? Most likely, the alternative lender will not look at keeping the house [upon foreclosure] as an Air BNB; that is a business rather than a rental and in need of more management.

The prospective buyer of an Air BNB should look at what a typical lease would look like should the Air BNB model not work for any number of reasons previously mentioned. If the typical lease income is too far below what is prudent from the standpoint of NOI, the buyer may decide to choose a different property to Air BNB if that model is so desired.

Edward Brown

Edward Brown currently hosts two radio shows, The Best of Investing and Sports Econ 101. He is also in the Investor Relations department for Pacific Private Money, a private real estate lending company. Edward has published many articles in various financial magazines as well as been an expert on CNN, in addition to appearing as an expert witness and consultant in cases involving investments and analysis of financial statements and tax returns

 

Warning to All Renters: Renting a House Could Cost You A Million Dollars

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By Lex Levinrad

The Distressed Real Estate Institute has a report called “Warning to All Renters: Renting a House Could Cost You a Million Dollars!”

The report was based on the findings of a Distressed Real Estate Institute study that looked at data on thousands of single family homes in South Florida. “We looked at historical price data for these houses and completed a market analysis of how a typical first time home buyer could benefit by purchasing one of these houses today instead of renting the same house” said Lex Levinrad Founder of the Distressed Real Estate Institute.

“What we found is that prices have actually declined so much in South Florida over the past few years that in many cases it could actually be cheaper to purchase the house than to rent it” said Levinrad. “Even after accounting for property taxes and insurance in many instances it could still be cheaper to purchase a home than to rent it”. “This is a great time to buy real estate – especially if you are a first time home buyer and you can qualify for an FHA loan” said Levinrad.

The basis of the study was a comparison of the costs of a typical 3 bedroom 2 bathroom South Florida house which would appraise for approximately $100,000. There are houses in this price point in many South Florida Cities especially in Broward County cities like Fort Lauderdale, Pompano Beach, Margate and Deerfield Beach. These houses would typically rent for approximately $1,100 per month and would cost about the same in monthly mortgage payments if they were purchased with an FHA Mortgage Loan. “Our specialty is low priced single family starter homes which are most attractive for renters and first time home buyers” said Levinrad. “We know this market well because we purchase these houses directly from the bank and we often fix them up and then sell them to first time home buyers or renters that are looking for a rent to own home”.

“Many people that are currently renting in this price point have decent credit and could get approved for an FHA Mortgage” said Levinrad. “They simply do not know that they can afford to own their own home and in most cases there is no one that is marketing to them and informing them of this fact”.

The findings of the study indicate that a typical $100,000 house could be worth as much as $1,000,000 by the year 2041. This is when the 30 year FHA mortgage would be paid off assuming that they purchased in 2011. “Owning real estate always pays off in the long term” said Levinrad. “People have very short term memories and ten or twenty years from now they will wish they had purchased a home.  Making the decision to buy a home versus continuing to rent will result in a substantially better retirement” said Levinrad.

“In many cases this will be the only opportunity in their lifetime to purchase South Florida Real Estate at an affordable price where the monthly payment could be the same amount or even less than the equivalent rent. This market crash and foreclosure crisis has created a unique situation where for the first time in many years housing is actually affordable. It is a great time to buy real estate – especially for first time home buyers” said Levinrad.

 

Should I buy my own home first, or rent and buy investment homes?

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By Adiel Gorel

A classic question I get when talking to a would-be real estate investor is: “Shouldn’t we buy a home to live in first before buying investment homes?”

The answer, of course, depends on where you live.

When considering owning your own residence, there are various layers of reasoning. Some are logic and numbers-based. Some are emotional, traditional and familial.

Owning your own home can be associated with safety, security, having “arrived”, satisfying family members’ aspirations, the stability of having a (hopefully) permanent place to live, and so on.

Of course, everyone has a different set of emotional considerations when it comes to owning a home.

These vary from person to person and, needless to say, are hard to quantify.

In this article I will address the logical, numbers-based approach to the question of whether to buy your own home as your first real estate move, or rent and buy investment homes instead.

The numbers tell the story

If you are considering buying your own home, the price of the home matters, the rent required to rent that same home matters, the local property taxes matter, the mortgage interest rates matter, dwelling insurance rates matter, and even the new 2018 tax law weighs in.

If you live in a market where property taxes are relatively low (say, between 1 and 1.7 percent of the home price per year), and insurance rates are reasonable, then if you are considering buying a home under about $400,000, that should be a “no brainer” as your first step. Between $400,000 and $500,000 would still be a reasonable range to consider buying the home. In such a market, once you step up to the $500,000 range and above, the math may well start to turn as you climb higher in price, in favor of renting a home in the area in which you live, and owning rental homes in more optimal places.

In markets where the property taxes are high (like in Texas and Oregon), and insurance rates are high (Texas again, for example), the “no brainer” number may shrink to $300,000 or so, while the range above which you may consider renting your own home while buying affordable investment homes in other markets, will likely be $400,000 or above. This is because with high expenses for property tax and insurance, (which as a homeowner you would be paying) the overall numbers and logic “turn the corner” faster.

Certainly, in expensive areas like the San Francisco Bay Area, Los Angeles, San Diego, New York City and others such markets, it is usually far more logical to be a renter, while owning rental properties in affordable markets, where rents are actually quite high as a percentage of the home purchase prices.

Buying homes in expensive markets may not make sense

If you are thinking of buying a home in the San Francisco Bay Area for $1,400,000, for example, and if that same home can be rented for about $4,700 per month (quite typical in 2018), the math is in favor of being a renter living in that house. While $4,700 per month appears to be very high (in absolute terms it is), it is actually very low compared to the purchase price of $1,400,000. While renting the house for $4,700 (and not being responsible for property taxes, dwelling insurance or repairs as a tenant), you might, (in this example) use a similar amount as a 20% down payment on the $1,400,000 home (plus closing and loan costs), to buy about SEVEN rental homes in an affordable market, using 20% down on each – all brand new in good areas, for, say, $180,000 each, in a market with low property taxes and low insurance rates.

Each one of these $180,000 homes will fetch a rent of $1,500 per month. Now that is high rent! (as a percentage of $180,000). Seven such rental homes, requiring a similar total down payment as the $1,400,000 which is rented and not bought, will fetch a gross rent of 7*$1,500 per month = $10,500 per month. That is indeed high rent. And these will be brand new homes which are fully under warranty to boot. In addition, the seven new investment homes can be diversified over a larger geographic area or even over more than one metropolitan area.

Sense of accomplishment and satisfaction in purchasing rental homes

Another example could be a potential home purchase of a residence costing $725,000. That property could most likely be rented for about $3,200 per month. For the amount used to put a 20% down payment (plus closing costs), you can rent this home, and buy four brand new rental homes for $180,000 each rented at $1,500 each. Total gross rent: $6,000 per month for the 4 houses, and they can be new, under warranty, in good locations, and paradoxically each may likely be bigger in size and bedrooms than that one $725,000 home, which is also likely substantially older. Again, the four rental homes can also be geographically diversified.

Even the sense of accomplishment and satisfaction of home ownership, may be fulfilled by owning four brand new, good sized and well-rented homes in an appropriate market, while paying a relatively low rent in an expensive market. In fact, the higher the home prices in the expensive market, the lower (relatively) the rent gets as a fraction of the home price. Thus, the savvy investor can pay a bit more in rent and get a bigger, more expensive home to live in, while investing in more optimally-priced markets and choosing areas that have not yet boomed, and which can yield higher rental rates.

The 2018 tax plan

Under the new 2018 tax plan, taxpayers who itemize will be able to deduct their state individual income, sales and property taxes up to a limit of $10,000 in total starting in 2018. For expensive homes in states like California, New York, and others, the $10,000 limit will diminish deductions which could be used before, making home ownership even less logical beyond a certain home price. In states with very high property taxes, even less expensive homes will reach that limit and become less attractive tax-wise. I am seeing many smart Silicon Valley high-tech people, and others interested in living in expensive areas, opting to rent their residence, and buy several (or many) investment properties in affordable markets where the rent numbers are good.

The deductions available for rental properties have not been affected by the 2018 tax law, and in fact a new deduction, the “pass through deduction” was added, which could benefit many real estate investors. The logic behind renting your own residence while buying affordable investment homes has been taken further by the new tax law.

People do not have to buy rental homes in the areas in which they happen to live. I myself own rental homes all over the United States, as do thousands of our investors. Since we have a solid support infrastructure in many appropriate real estate markets, investing in another state becomes easier, since the local teams in that market will handle the rentals, maintenance and support for the investor.

Local infrastructure makes it doable

The local infrastructure in the various markets is comprised of property managers, local savvy real estate brokers, maintenance crews, insurance agents, and any other function needed to support the busy investor, who may live far away. We have many foreign investors, who live across the ocean, invest in multiple rental homes in appropriate markets in the United States.

Different colorful houses suit house shape holes of wooden board, 3D illustration.

Our company, ICG, has been holding 1-Day Expos for over 20 years every quarter with market teams, expert speakers, extensive Q&A and networking etc. near the San Francisco airport. During these events I always cover many subjects in detail, including the subject of this article.

You can attend for free by mentioning this article in an email to [email protected], register online (icgre.com/events) using the code FREEREALTY411, or call us at 800-324-3983.

Looking forward to seeing you.

About ICG and Adiel Gorel:

ICG (International Capital Group) Real Estate Investments was established in the 1980’s. Adiel Gorel, founder and CEO, has been helping people achieve financial security for over three decades, and in that time worked with investors to purchase over 10,000 homes. Gorel is a real estate broker in several states in the U.S., an international keynote speaker, and notable author of three books: Remote Controlled Retirement Riches – The Busy Person’s Guild to Real Estate Investing, Invest Then Rest – How to Buy Single-Family Rental Properties and Remote Control Retirement Riches – How to Change Your Future with Rental Homes. He has been featured on major television and radio networks across the country and in Fortune Magazine. He has also been featured on Public Television with his show, “Remote Control Retirement Riches with Adiel Gorel.” To invite Adiel Gorel to speak for your group, email [email protected] and visit AdielSpeaks.com. For more information on ICG Real Estate Investments visit icgre.com.