ANSWERING Common Short Term Rental Questions

You guys have lots of good questions and we're going to break a few more of those down this week because I know, I know that there are more of you out there that have these same questions. So stay tuned. Let's jump right in. Welcome to Short Term Rental Riches where we'll discuss investing in real estate but with a specific focus on short term rentals to help you build wealth faster with as little headache as possible.

It's good to ask questions for things that we are unsure about. It helps us continue down our path, it helps us continue to move towards our goals and in the case of real estate, helps us make better decisions and makes us more comfortable with the whole process. So we get lots of questions. Thank you for sending them in. It helps us tailor our content. So keep sending them in. You haven't yet. We do have a website with all of our past episodes and a lot of resources. Str riches.com and you can post questions on there. So let's just go ahead and jump in to a couple here. Here's one from Jake in Pennsylvania and he was actually attendee at one of our last live events. Said in the info you provided at your two day event a nice list of markets to keep an eye on. I'm curious if this list was compiled based on your own research, Air, DNA, maybe a combination of things. Thanks Tim. So yes I do provide a list at our live events and also in my STR playbook and that is based off some of my research. But the majority of that is based off research of other companies providing investment properties across the us. So to let you in on my little secret, what I do is follow turnkey rental providers. They that do a lot of research on different markets and the majority of these providers, for those of you that don't know a turnkey rental provider, someone that buys a property, they renovate it, they usually put the tenant in there and manage it and sell it back to an investor. Now these investors wouldn't be able to buy those properties cash flowing if these properties didn't happen to be an area where the price and rent to values made sense. So these are good markets to start out in mainly because they have good population growth, they have good employment and diverse employment. They're typically landlord friendly and a really big one especially now with crazy prices all over the place is low cost of living. So a lot of these markets that these turnkey providers recommend happen to be in these areas and that's what my list is that I've compiled so you can follow some of those turnkey providers as well. Just go on Google and and search for some big ones and you'll start to see that a lot of these markets pop up. Of course as short term rental investors we got to take it one more step and that's to make sure that any of these markets, any of these neighborhoods, I should say that we're looking for properties in allow for short term rentals. So that is a big, big, very important second step. So good question there Jake. This question is from Michael. I've been following your podcast and listen to most all of the episodes. Thank you Michael. Glad you're enjoying. My wife and I have been in real estate investing together since 08. Starting with conventional one year lease rentals. We bought a multi family property in 2017 that has a main house 3:2 and an apartment 1:1 on the property. My wife had the idea and plans to make it an Airbnb. So remodeled and set it up and by golly it booked up. The little 400 square foot apartment consistently outperforms the three bedroom two bath home that is also remodeled and nice. Fast forward to now, we have three other Airbnb's and make a gross six figure income from them. That is awesome. And this is very common. It doesn't take a whole bunch of these properties to make some serious income. So back to Michael's point there. One of the points he made is that that small little studio rented as a short term rental is way outperforming their long term rental. This is also very common. Of course we've got to make sure we're in the right market. So let me get to his question. Is there a way to leverage this successful business for more properties with a lender? So by successful properties I'm assuming he means to leverage the increased income he's making from the Airbnbs to qualify with lenders to buy in other markets. And I would say absolutely, the longer you're making that income from short term rentals, the easier it's going to be to prove to lenders that that you do have a successful business going. But I've done lots and lots of loans and refinances based off my short term rents. So absolutely. Michael, talk to as many lenders as you can. You can talk to some short term rental specific lenders like one that I just used called Vizio. They were tough to work with but they got the job done. There's some others called Host Financial and any nationwide lender is gonna be a good option for you. These days you just make sure up front that you tell them that you have short term rentals and the more you are able to claim that income and prove that income from short term rentals, the easier it's going to be for you to get loans in other markets and then yep, definitely you can keep on expanding. This question is from a good friend of mine that just closed on a 4 Plex. So congrats to Jameson. Excited for you man. He had a question about converting the long term tenants into short term. There were long term tenants in there and he was asking how to go about that. So my short answer is that if you acquire a property that already has long term tenants and you have the intention of switching it to short term rentals, well first if it's already professionally managed by a property manager, I would let them know, I would let them continue managing the tenants. I would let them know that you would like to not renew those leases and they can let the tenants know and deal with it themselves. The management company is very likely not going to be opposed to continue working with you because they already have everything set up so they're still making that monthly income. Now if there's not a professional property manager in place, well then you just have to simply handle that yourself. Make sure you have a lease. All the copies of the leases when you buy the property, that should be one of your pieces of due diligence anyways and just write a nice letter saying hey, you know, you don't have to give them all the details but I have plans to change the property around or if you are going to be renting it, renovating it first. Well sometimes you can let them know and if it's in a multi unit place, it's not nice to be living next to renovations. So someone may want to leave their lease early, which you could let them do penalty free. You might even go as far as giving them cash for keys, which is something that I've done before. If, if it's really going to be helpful for you to have everyone out at the same time, you might want to give someone a month's rent in advance or some additional money to help them move with less notice. So make sure you check your state regulations. Different states have different regulations on how quickly you can end a lease depending on how long a tenant's been in your property too. So good question there. This message actually came from Instagram and I've got to say I'm not super on top of all of our social media but but one of my virtual receptionists that Helps me with all that is so we do get all those questions. So check us out there if you haven't already on Rest methods on Instagram we post lots of great tips. A lot of them are little bite sized chunks that come out of these podcasts. So check us out there, find us, follow us, all that fun stuff. And here is a question. I was looking for your advice. I'm active duty, Air Force, thank you for your service and I'm ready to get into the short term rentals. I'm currently renting and I'll get out of this lease in July. My plan is to buy a small single family home for now and then use that to begin my STR journey. I'll buy another house using my VA loan in June 2022 when my lease is up. I've done research and I can't seem to find a lender that is willing to give a reasonable loan for investment properties. I find that people are wanting 20% down for conventional loans or like 5% down on a 15 year mortgage. So in general you're probably going to be required to put down anywhere from 3.5% to 20%. Now if you have a veterans loan, you can probably put down less than that, but it's got to be on your primary residence. So primary resident loans are where we can put down the least of money. Now remember, you can buy up to a four unit building for your primary residence. You can, you can live in one unit. You can use that same great financing. So that is a really good option. In fact, that's the first investment property that I ever bought years and years ago. So check that out as an option. There's also an option to buy a secondary residence with 10% down. Now there's some limitations on that. You do, from what I understand, have to spend part of the year in that property and it can't be in the same area as your primary residence. So check with lenders on that. But that could be another option. But in general investment loans are usually 20% down. Now that doesn't mean you can't partner with your friend, doesn't mean you can't partner with family or whoever it is. So if you do have someone else that's interested, I highly recommend reaching out to them and seeing if you can work up something together. So he also says, would you recommend Sprout Mortgage or House Max that provide investment specific loans? I'm not familiar with those two lenders, but I can tell you that there are hundreds and hundreds and thousands of lenders in the US you just gotta do your research. Check with your local market lenders first. They can be really good options. But then there's a ton of nationwide ones as well. We do have quite a few of those. We've got a few of those in our recommended resources@restmethods.com this question is from Vishal in California Said hi Tim, I hope all is well. I'm interested in your four week challenge. Since I just have one short term setup, I would prefer to have a VA handling messaging and QuickBooks bookkeeping. Do you think I'll have success in finding that from a va? So Bishol's referring to I have a four week replace yourself challenge. It's called that you can find on our website@restmethods.com and that's all about from start to finish, how to hire your own VA to replace yourself from your short term rental business in terms of everything that you can do virtually messaging, all of that. And yes, you could go as far as having them doing your bookkeeping. But I would say when we're looking for a virtual receptionist, we want to have one main goal first. We want to start with that, we want to get that dialed in and then we can branch out from there. It's not realistic to find a jack of all trades, someone that's an expert in QuickBooks accounting and an expert in customer service and guest reception. So I would start with your main goal first, but I would say with appropriate training and the right communication, you can really, really have a ton of success with your virtual assistants helping you with all sorts of things, you name it. My virtual assistants help me with everything from this podcast to our guest reception and everything in between. So good question. Visual. All right, this last question comes from Ryan, and this is a little bit more of a fun question. And I get this one all of the time. Not really related to short term rentals, but I just want to share it anyways. A lot of you know, I've been living in Colombia for years now and these questions related to that. What is it like to live in Colombia? Well, that could be a really long answer. But I'll tell you the main reasons that I came down here. They call it the City of Eternal Spring. So it's basically like 72, 74 degrees all year long. It doesn't really fluctuate that much. And it feels like spring. We get a lot of rain, but not crazy Central America rain where you can't go out for a week at a time. We get little afternoon evening rains and occasionally we get a couple days a little more piled up. But the weather is fantastic. The cost of living is very, very low compared to the US and the quality of life, I would say, is super high. The people are super friendly. Colombians are super friendly in general. But. But I would say after being here for a few years, one of my favorite things is the network that I've built with my friends here from around the world. There's tons of entrepreneurs here that have all different types of businesses that have come here because they also enjoy living here. Second part to his question. What's the cost of rent for a class B apartment in Medellin? Well, that's interesting. I would say it's probably a lot higher than what you would expect. And this comes down to supply and demand. There's a lot of demand coming into Medellin right now. People love it here. They come and they want to come back. But there's not as many short term rentals because of regulations. And we talk about this a lot on this channel, but most buildings do not allow for short term rentals, which means the supply is a little lower. It says Columbia shows up on a list where you can live for fifteen hundred dollars a month. But I'm a little suspect of what to expect for 6 to $800 USD. I would say $1,500 a month. Yeah, you could find a lot of options for less than $1,000 a month to live. And you could get by with another $500 a month for food and all of those expenses. I would say to live more comfortably down here, you'd probably want to have at least $2,000 in spendable money each month. And then, you know, if you get into 3, 4, 5 and up from there, you, you can literally live like a king.

It's pretty crazy really, but you can live very comfortably at a lower base there. 1,500 to $2,000, I would say. Of course, I found this place after traveling around the world a lot, visited over 70 countries, and I've lived in a lot of different cities. So I love it down here. Short term rentals have given me the freedom to be able to live down here. Of course, we have lots of systems set up to manage all the properties passively. But short term rentals can, can be so powerful. They can be such a great piece to your portfolio. They can allow you to live wherever you want. So I hope you guys continue to ask good questions and continue to tune in. Don't be shy. No question is a stupid question. So I hope you got a little more insight here. And until next time, have a wonderful day.

Sam.