Short term vs Long term rental investment properties

[Royale with Cheese]

51 minutes ago, Behindenemylines said:

For 263 a month profit I wouldn’t do that deal.  A fridge goes down and it’s three months profit. 

 

not sure if I’m understanding your numbers though 

 

I was doing multiple things at once and can see why I you're confused!

 

I'm currently profiting $263 a month on my current rental here in North Atlanta.  I have a long term tenant there.  I brought up the 12% down just because I'm still making a little bit of a profit on that after just one year.  With about a 75% or more down payment on the beach rental, I should have the mortgage low enough even with a high HOA and management where I could profit much more than that from the beginning.  I think this would only make sense for me if I could net about a $1,000 each month for the first few years and wait for rental inflation to rise.  

 

I emailed a real estate agent to put my on a email list with properties so I can get some early research done.  She specializes in short term vacation rentals.  One property I saw looks like one I would be targeted when I'm ready netted $28,000 last year.

 

I would stay liquid for a good amount for the just in case situations.  I'm hoping this could be a long term investment and start seeing some good rewards after about 5 years.

[Behindenemylines]

2 hours ago, Royale with Cheese said:

 

I was doing multiple things at once and can see why I you're confused!

 

I'm currently profiting $263 a month on my current rental here in North Atlanta.  I have a long term tenant there.  I brought up the 12% down just because I'm still making a little bit of a profit on that after just one year.  With about a 75% or more down payment on the beach rental, I should have the mortgage low enough even with a high HOA and management where I could profit much more than that from the beginning.  I think this would only make sense for me if I could net about a $1,000 each month for the first few years and wait for rental inflation to rise.  

 

I emailed a real estate agent to put my on a email list with properties so I can get some early research done.  She specializes in short term vacation rentals.  One property I saw looks like one I would be targeted when I'm ready netted $28,000 last year.

 

I would stay liquid for a good amount for the just in case situations.  I'm hoping this could be a long term investment and start seeing some good rewards after about 5 years.

Now that sounds a lot better!  
 

good luck.  Rentals can be a great retirement income. 

[Miyagi-Do Karate]

On 3/27/2023 at 1:21 PM, Royale with Cheese said:

Reaching out to those who have invested in rental properties.  I currently own a condo in the hottest market in Atlanta according to my real estate agent and what I'm seeing.

There are still bidding wars and people are paying above listing....even with the interest rates as high as they are.   

 

They are building up the downtown area of my city and property value is increasing the surrounding areas.  My place has increased by $40,000 since January.  I'm 1 mile away from all the bars and hangout areas.  It sounds like it's smart to stick with this place. 

 

However, I'm already not liking long term renting and considering the short term/AirBnB vacation homes.  So I do have a wonderful tenant who pays on time and keeps it clean.

The place is 40 years old and it already has had two issues so I'm net negative so far. 

I spent all weekend getting issues fixed...I don't have a management company.  I expect more issues because of its age. 

 

Has anyone owned a vacation rental?  I feel like they can be much more profitable but I don't know.  I'm looking at condos on the beach in Florida and South Carolina.

I'm thinking about selling my condo when my renter leaves.  If I sold it now, I could probably make $175,000 on it.  My tenant extended his lease for another 12 months so by this time next year, it should go up even more and of course the mortgage will be paid down more.

 

If anyone has good knowledge of this, I would love to talk.  I'm willing to put a major risk on this so it's a little scary.  I want to be able to put down between 60%-100% down payment if I include the equity of my current house.  I couldn't pay cash for a Florida beach house as they are $800,000+ but places like Myrtle Beach, SC I could pay cash for a $500,000 condo there.  I'm seeing places on the beach at condos of that quality going for $175-$200 a night plus cleaning fees.  I believe those onsite rental management companies charge 40%.  20% for those that aren't onsite.  

 

Am I right to assume that I would make a profit quicker with vacation rentals and the inflation would be higher each year?  I currently make $263 profit on my current rental per month. 

 

 

By the way, I assume you know all

About the like kind exchange tax rules? Those would seem to be critical here if you are looking to basically sell your Atlanta rental to buy a different one.  

[Royale with Cheese]

3 minutes ago, Miyagi-Do Karate said:

By the way, I assume you know all

About the like kind exchange tax rules? Those would seem to be critical here if you are looking to basically sell your Atlanta rental to buy a different one.  

 

I'm not sure what you mean?  I'm going to sell my condo first, get the cash and then look for a condo.  I'm going to take my time until I find the right one so it could be 6 or maybe 12 months later.

[Augie]

1 hour ago, Royale with Cheese said:

 

I'm not sure what you mean?  I'm going to sell my condo first, get the cash and then look for a condo.  I'm going to take my time until I find the right one so it could be 6 or maybe 12 months later.

 

Do your homework on a 1031 Exchange (mentioned above, I believe). You get to avoid taxes on the gain from the sale of the old property if you flip it into a new investment property. I won’t go too deep, because I know just enough to get you into trouble, but it can help you avoid tax implications if you do it within the time limit. It would be worth knowing this before you do anything, just in case. 

 

 

.

Edited March 28, 2023 by Augie

[Miyagi-Do Karate]

1 hour ago, Royale with Cheese said:

 

I'm not sure what you mean?  I'm going to sell my condo first, get the cash and then look for a condo.  I'm going to take my time until I find the right one so it could be 6 or maybe 12 months later.

 

29 minutes ago, Augie said:

 

Do your homework on a 1031 Exchange (mentioned above, I believe). You get to a valid taxes on the gain from the sale of the old property if you flip it into a new investment property. I won’t go too deep, because I know just enough to get you into trouble, but it can help you avoid tax implications if you do it within the time limit. It would be worth knowing this before you do anything, just in case. 

yeah, I am the same as Augie. Know enough to be dangerous.  You will save a lot in taxes if you meet the requirements of the like kind exchange. 

[Royale with Cheese]

1 hour ago, Miyagi-Do Karate said:

 

yeah, I am the same as Augie. Know enough to be dangerous.  You will save a lot in taxes if you meet the requirements of the like kind exchange. 

My tax accountant would have knowledge of this correct?  

[Augie]

1 minute ago, Royale with Cheese said:

My tax accountant would have knowledge of this correct?  

 

Yes. Some real estate attorneys also try to create a niche with 1031 Exchange practices. It’s not super common, but it’s not obscure either. You’ll probably want a closing attorney who has done it before. 

[Royale with Cheese]

4 minutes ago, Augie said:

 

Yes. Some real estate attorneys also try to create a niche with 1031 Exchange practices. It’s not super common, but it’s not obscure either. You’ll probably want a closing attorney who has done it before. 

Would that be Ally McBeal or Saul Goodman?

[Augie]

3 minutes ago, Royale with Cheese said:

Would that be Ally McBeal or Saul Goodman?

 

One call, that’s all!   😋

 

Yeah, he’s not your guy either. 

[Miyagi-Do Karate]

2 hours ago, Royale with Cheese said:

My tax accountant would have knowledge of this correct?  

Tax accountant and also your realtor should be generally attuned to it. 

[Augie]

I’m looking at condos in downtown Sarasota. Watch out for the fees! They have monthly HOA fees around $1,200 and quarterly Association fees of about $3,500. These are 1,300 SF units with 2 BR. That’s before taxes or your personal insurance. In a place like Hilton Head you may be in a “plantation” or gated community. That adds a Master Association fee on top. 

 

I’d LOVE a place in downtown Sarasota, but that is just insane. At least there is no state income tax. 🤷‍♂️

Edited March 30, 2023 by Augie

[Royale with Cheese]

11 hours ago, Augie said:

I’m looking at condos in downtown Sarasota. Watch out for the fees! They have monthly HOA fees around $1,200 and quarterly Association fees of about $3,500. These are 1,300 SF units with 2 BR. That’s before taxes or your personal insurance. In a place like Hilton Head you may be in a “plantation” or gated community. That adds a Master Association fee on top. 

 

I’d LOVE a place in downtown Sarasota, but that is just insane. At least there is no state income tax. 🤷‍♂️

 

I was looking at that too.  I was looking in Clearwater and St. Pete areas and it's pretty insane.

There was one place in which I could afford cash.  I plugged in 100% down payment and with taxes, HOA fees, management fees....it was still $2,200 a month without a mortgage!

 

I've got to start smaller and work up.  I'm a little more open to 1 bedrooms....probably in Hilton Head or Myrtle.  My friend said he might be open to partnering up.  His brother in law screwed him over on the last rental and wants to get back into it because it had potential making money.

 

Are 1 bedrooms harder to rent?  I've seen some right on the beach for about $400,000.  1 bedroom at about 550 sq ft.  It can sleep 4 because of a fold out couch bed and a bunk bed built into the hallway wall.  

 

[BADOLBILZ]

On 3/27/2023 at 5:57 PM, Miyagi-Do Karate said:

i rented our prior townhouse that was 20 Minutes away for about 10 years. Hated every minute of it. I even had a property manager. Just all the little things popping up at the worst times, and the HOA constantly squeezing me. 
 

Being a landlord is for some and not others. I will never do it again. Such a relief to not even think about it.

 

 

Don't discourage him.   This could result in better content than the time he bought goats because he didn't want to mow his lawn.

[Miyagi-Do Karate]

24 minutes ago, BADOLBILZ said:

 

 

Don't discourage him.   This could result in better content than the time he bought goats because he didn't want to mow his lawn.

haha— good point. 

[aristocrat]

On 3/28/2023 at 12:22 PM, Royale with Cheese said:

 

I was doing multiple things at once and can see why I you're confused!

 

I'm currently profiting $263 a month on my current rental here in North Atlanta.  I have a long term tenant there.  I brought up the 12% down just because I'm still making a little bit of a profit on that after just one year.  With about a 75% or more down payment on the beach rental, I should have the mortgage low enough even with a high HOA and management where I could profit much more than that from the beginning.  I think this would only make sense for me if I could net about a $1,000 each month for the first few years and wait for rental inflation to rise.  

 

I emailed a real estate agent to put my on a email list with properties so I can get some early research done.  She specializes in short term vacation rentals.  One property I saw looks like one I would be targeted when I'm ready netted $28,000 last year.

 

I would stay liquid for a good amount for the just in case situations.  I'm hoping this could be a long term investment and start seeing some good rewards after about 5 years.

 

are you making 263 just overtop your mortgage, tax ins? the general rule is you take your rent and divide it in half and that's the operating cost...taxes, insurance, maintenance, management insurance but not your mortage. so 1k month rent, 500 to operating cost, 400 to mortage=100 is your cash flow. 

 

the basics of a 1031 are you sell the property and purchase a new more expensive property. so sell a 500k place you need to buy a 501k or more new place. You must identify the new property within 6 months and if you defer the taxes down the line. 

[Royale with Cheese]

31 minutes ago, aristocrat said:

 

are you making 263 just overtop your mortgage, tax ins? the general rule is you take your rent and divide it in half and that's the operating cost...taxes, insurance, maintenance, management insurance but not your mortage. so 1k month rent, 500 to operating cost, 400 to mortage=100 is your cash flow. 

 

the basics of a 1031 are you sell the property and purchase a new more expensive property. so sell a 500k place you need to buy a 501k or more new place. You must identify the new property within 6 months and if you defer the taxes down the line. 

 

So if I actually put my insurance into place, I'm actually only netting about $130 a month with everything.  It's a very long term investment at this point.  It's a place I want to build up a little more and then sell.  

 

With the short term rental, I would see benefits sooner.  I will not really making anything monthly on my long term rental...I'm just basically having someone pay my mortgage.  I probably won't see any real gains monthly until year 5.  I feel I should make immediate money if I buy the beach rental and then grow from there.

 

My property now is growing and the investment has been worth it.  I think after year one, I am realizing that this is going to be a long commitment without immediate benefits.  I have a great tenant too....I can't imagine the headache I'm going to have if I get a bad one. 

So if I'm going to put a lot of investment into something, get immediate returns and just have it grow....and have a place I can use too.

 

I'll pay for the best short term rental property management so they can take all the stress.  I know it will cost more but it's worth it.  I'm doing it all now myself and it sucks.