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Old 05-24-2018, 07:14 AM
 
3,325 posts, read 3,260,957 times
Reputation: 8433

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You're gonna have trouble convincing a bank that the townhouses are your primary residence. That means 25-30% down, with a higher interest rate.
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Old 05-24-2018, 08:48 AM
 
10,265 posts, read 6,495,798 times
Reputation: 10842
Quote:
Originally Posted by parentologist View Post
You're gonna have trouble convincing a bank that the townhouses are your primary residence. That means 25-30% down, with a higher interest rate.
He can marry conjoined twins and say he wants a household with each and they alternate residences.
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Old 05-24-2018, 09:37 AM
 
125 posts, read 61,992 times
Reputation: 150
Quote:
Originally Posted by RoamingTX View Post
Neither. You havenít factored in vacancy, maintenance or damage.

If you cant do it with cash, then donít.

You wonít listen anyway.


As a previous landlord, I agree about the vacancy, maintenance and damage part. If you use a management company to do the legwork for you then it'll skim another 10% or so off the gross rent. If you self manage you'll save some money but you'll deal with the occasional aggravation of being a landlord.


As for the townhouses option, I'm guessing you'll also be paying a monthly HOA fee multiplied by 2?
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Old 05-24-2018, 11:27 AM
46H
 
843 posts, read 472,710 times
Reputation: 1590
Quote:
Originally Posted by RoamingTX View Post
Neither. You havenít factored in vacancy, maintenance or damage.

If you cant do it with cash, then donít.

You wonít listen anyway.

This.

43,800 / 120 = 365 days. If you are delusional enough to actually think you will be renting out a lake house every day of the year, you should stay away from rentals.
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Old 05-24-2018, 12:07 PM
 
Location: Alaska
2,594 posts, read 2,284,480 times
Reputation: 4280
Quote:
Originally Posted by AznDragon533 View Post
Hello,

If I am qualified for an additional $400k (30 year fixed) mortgage on top of my current primary resident.

Which Scenario would you rather do?

1) Buy Two Townhouses

Two townHouses: $200k each , sale value: $400k
20% down payment: $80k
Estimated Gross Monthly income: $3,200 (Fixed $1,600 per house ,12 month lease), total yearly income: $38,400


2) Buy Lake house

Sale Value: $400k
20% down payment: $80k
Rent out the house Airbnb, estimated $120 a day ( prices varies per month, $80 to $300) Total yearly income: $43,800

Edit: I changed income for airbnb based on this:

https://www.eliotandme.com/vacation_...a_USA/estimate
I would buy the two townhouses because it gives you more flexibility.
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Old 05-24-2018, 12:28 PM
 
8 posts, read 3,845 times
Reputation: 15
Quote:
Originally Posted by 46H View Post
This.

43,800 / 120 = 365 days. If you are delusional enough to actually think you will be renting out a lake house every day of the year, you should stay away from rentals.

well i felt personally attacked by your post, to my reply, are you delusional enough to think that the math doesn't factor in vacancy? $120 is the average between all the months , with vacancy factored in, at the end of the day, the total value doesnt really change.
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Old 05-24-2018, 12:32 PM
 
8 posts, read 3,845 times
Reputation: 15
Quote:
Originally Posted by AznDragon533 View Post
Hello,

If I am qualified for an additional $400k (30 year fixed) mortgage on top of my current primary resident.

Which Scenario would you rather do?

1) Buy Two Townhouses

Two townHouses: $200k each , sale value: $400k
20% down payment: $80k
Estimated Gross Monthly income: $3,200 (Fixed $1,600 per house ,12 month lease), total yearly income: $38,400


2) Buy Lake house

Sale Value: $400k
20% down payment: $80k
Rent out the house Airbnb, estimated $120 a day ( prices varies per month, $80 to $300) Total yearly income: $43,800

Edit: I changed income for airbnb based on this:

https://www.eliotandme.com/vacation_...a_USA/estimate

NOTE: These are rough math numbers, clearly I didn't pinpoint maintenance, HOA, Taxes, etc.

I just want people opinion IF you have Airbnb and rental experiences.
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Old 05-24-2018, 12:42 PM
 
8 posts, read 3,845 times
Reputation: 15
Quote:
Originally Posted by JanND View Post
No logic. why borrow money to rent out properties to break even? Maybe buy your next home, and rent out the one you currently own.
I wouldn't say Break even...

given $200k house, $40k down payment, $2400 a year in taxes, $450 insurance, $600 HOA fee

Total Monthly Payment: $1,138.08
Rent income: $1600

~$462 a month in Gross income
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Old 05-24-2018, 01:27 PM
 
Location: Mt. Lebanon
1,793 posts, read 1,825,101 times
Reputation: 1745
Short answer: 2 houses to rent seems like 2 sets of problems, with airbnb you'll have just one.


Long answer: I was a landlord, I got bad renters and I had to pay 20k of repairs so now I do Airbnb. Mind you it is very labor intense and once in a blue moon you get a weirdo who will make you regret that you ever got into this business, but overall the guests were ok.

You have to answer some questions before deciding. It is not a simple math calculation because in the first scenario even with the most wonderful tenants things will go havoc and the house you get back after they leave is still will not the one you rented out.

Properties in both scenarios won't be occupied all the time, so your math is wrong.

Is your lake house in a touristic area? who is going to be in charge to get the house ready, clean, do the laundry if you do the airbnb? Do you have someone reliable? Count in their payment. If it is you, how close do you live from the property? Factor in gas price too because you'll have to go there very often.

Also factor in situation in which you or whoever is cleaning will have to deal with blood, vomit, poop. broken things, stolen things, house left in disarray.

Airbnb is a company that was put together by people without Computer science background. It grew without a vision. Things are pacthed, don;t make sense. Their website lacks many, many things. Their review system is bad. People are allowed to give you one start review without comments. They are able to tamper with your internet, to lie to you and AIrbnb and get their stay for almost free. You will see.
There is not much support for the hosts. You have to learn from your own mistakes. Trial and error. You will discover the company always side with the guest and there will be moments when people will give you bad reviews both deserved and undeserved. This means that it's not all a bed of roses and you really have to work to keep your status and reviews. Also, from time to time you as a host having no support from them will be cause of frustration. Mark my words.

Only you know what time you have at your disposal. Yes, you make a bit more money with Airbnb but my property is booked like 50% of the time. Initially when you join they feature you on the top page so you could get guests and reviews and money, than if you get a bad review (meaning 1,2,3 stars) it's very hard to recover. when your ratings drop you wont appear on the first pages anymore and you wont get as many bookings. Consequently you will have to work extra hard to get a 5 star review when you get a booking.

OK I should shut up because I could write a novel here about my experience as a superhost. Look, there an Airbnb community group where hosts discuss things, sort of like a forum. Look there, read, get educated. Also if you know people who rent try to talk to them and compare the experiences.

You will make more money with airbnb. Damages are less. But it is a lot more time consuming and occasionally nerve recking. Also you have to check your area and find out if short rental is allowed. Get necessary permits. There are disccussions and the hotel industry lobby agains airbnbs.

However, if you think Airbnb is for you, go with it.

advice: there's this guy who has a blog. search for mr money moustache. he was a landlord for a while. now he has only one property left and he really wants it to make it upscale. with upscale hopefully you will attract more affluent people who - supposedly - will treat it better.

perhaps you could buy those 2 houses and do airbnbs but will the association let you? I mean my neighbors wrote to the municipality that I do airbnb and I got a letter saying I need an occupancy permit. I had to have the house inspected, put smoke detectors in every room etc.

On top of the expenses you need to furnish the airbnb so please factor that in too. Plus 2 sets of bed sheets per room (if not more). Plus a bunch of towels, pillows, pots and pans, glasses... Keep in mind you have to furnish tastefully an entire house, so factor that in on top of your initial investment. Plus carpets, TVs. games, internet etc.

Last edited by XRiteMA98; 05-24-2018 at 01:44 PM..
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Old 05-24-2018, 02:36 PM
 
Location: Texas
1,890 posts, read 1,243,823 times
Reputation: 6440
Quote:
Originally Posted by XRiteMA98 View Post
Short answer: 2 houses to rent seems like 2 sets of problems, with airbnb you'll have just one.


Long answer: I was a landlord, I got bad renters and I had to pay 20k of repairs so now I do Airbnb. Mind you it is very labor intense and once in a blue moon you get a weirdo who will make you regret that you ever got into this business, but overall the guests were ok.

You have to answer some questions before deciding. It is not a simple math calculation because in the first scenario even with the most wonderful tenants things will go havoc and the house you get back after they leave is still will not the one you rented out.

Properties in both scenarios won't be occupied all the time, so your math is wrong.

Is your lake house in a touristic area? who is going to be in charge to get the house ready, clean, do the laundry if you do the airbnb? Do you have someone reliable? Count in their payment. If it is you, how close do you live from the property? Factor in gas price too because you'll have to go there very often.

Also factor in situation in which you or whoever is cleaning will have to deal with blood, vomit, poop. broken things, stolen things, house left in disarray.

Airbnb is a company that was put together by people without Computer science background. It grew without a vision. Things are pacthed, don;t make sense. Their website lacks many, many things. Their review system is bad. People are allowed to give you one start review without comments. They are able to tamper with your internet, to lie to you and AIrbnb and get their stay for almost free. You will see.
There is not much support for the hosts. You have to learn from your own mistakes. Trial and error. You will discover the company always side with the guest and there will be moments when people will give you bad reviews both deserved and undeserved. This means that it's not all a bed of roses and you really have to work to keep your status and reviews. Also, from time to time you as a host having no support from them will be cause of frustration. Mark my words.

Only you know what time you have at your disposal. Yes, you make a bit more money with Airbnb but my property is booked like 50% of the time. Initially when you join they feature you on the top page so you could get guests and reviews and money, than if you get a bad review (meaning 1,2,3 stars) it's very hard to recover. when your ratings drop you wont appear on the first pages anymore and you wont get as many bookings. Consequently you will have to work extra hard to get a 5 star review when you get a booking.

OK I should shut up because I could write a novel here about my experience as a superhost. Look, there an Airbnb community group where hosts discuss things, sort of like a forum. Look there, read, get educated. Also if you know people who rent try to talk to them and compare the experiences.

You will make more money with airbnb. Damages are less. But it is a lot more time consuming and occasionally nerve recking. Also you have to check your area and find out if short rental is allowed. Get necessary permits. There are disccussions and the hotel industry lobby agains airbnbs.

However, if you think Airbnb is for you, go with it.

advice: there's this guy who has a blog. search for mr money moustache. he was a landlord for a while. now he has only one property left and he really wants it to make it upscale. with upscale hopefully you will attract more affluent people who - supposedly - will treat it better.

perhaps you could buy those 2 houses and do airbnbs but will the association let you? I mean my neighbors wrote to the municipality that I do airbnb and I got a letter saying I need an occupancy permit. I had to have the house inspected, put smoke detectors in every room etc.

On top of the expenses you need to furnish the airbnb so please factor that in too. Plus 2 sets of bed sheets per room (if not more). Plus a bunch of towels, pillows, pots and pans, glasses... Keep in mind you have to furnish tastefully an entire house, so factor that in on top of your initial investment. Plus carpets, TVs. games, internet etc.
^^^^^
This, Excellent.
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