patrick.net

Not everyrhing you read on the interwebz is true, duh!

A younger friend, who used to work for the State of CA with a pension, quit his job at the age of 30, after he has built a 22 unit AirBnB biz. He did master leases with landlords like myself and other investor friends. We get 100% occupancy with 3% annual rent increase on 3-5 year leases.

Most of his AirBnB are travel nurses with occasional short term to fill the gap. He said he was netting $750-$800/unit after paying all costs. He has a couple VA’s help him run the biz. He’s been traveling the world since 30 till now. I asked him when he plans to settle down. He said likely never. 😅

The point is that most people are happy with a government job with a pension and would never let it go while this guy has been dreaming of traveling the world at the age of 30 and it became a reality for him.

Eman says

A younger friend, who used to work for the State of CA with a pension, quit his job at the age of 30, after he has built a 22 unit AirBnB biz. He did master leases with landlords like myself and other investor friends. We get 100% occupancy with 3% annual rent increase on 3-5 year leases.

Most of his AirBnB are travel nurses with occasional short term to fill the gap. He said he was netting $750-$800/unit after paying all costs. He has a couple VA’s help him run the biz. He’s been traveling the world since 30 till now. I asked him when he plans to settle down. He said likely never. 😅

The point is that most people are happy with a government job with a pension and would never let it go while this guy has been dreaming of traveling the world at the age of 30 and it became a reality for him.

Is that netting $750-$800/unit a month? Where at? Sacramento?

@1337irr,

Yes, net $750-$800/mo/unit. He said cost of living overseas is $1.5-$3k/month, and he’s living like a king.

His AirBnB units are in San Jose, Mountain View, Redwood City and Oakland. He rents 3 units in SJ from us, 8 units in Mountain View and 4 units in Oakland from another friend, 2 units in Redwood City from another friend, and 5 units in Oakland from another.

His rent on the studios started at $1,450/month/unit and increased 3%/year as agreed. He rents to travel nurses for $3-$3.3k/month on 3-6 month contracts with all utilities included. It costs him about $6k to furnish each unit with mainly IKEA furniture.

He invests his excess cash in apartment syndications with other investor friends and also buys dividend stocks…mainly publicly traded REITs. Can’t believe it’s been 8 years and almost 2 months since he quit to travel the world.

He rented various places overseas and invited friends and relatives to join him. He spends 6-9 months overseas and comes back to the US for 3-6 months. He’s been in IL for the last few months helping out family.

AirBnB IPO price in December 2020 was $139.

Its stock price is now $125.

I see it gradually going the way of Yahoo, etc.

Maybe it will get bought out like Home Away did. Or perhaps the vacation and short term market is so saturated that it won't get bought out.

As with so many things I can think of...get in early.

I see a boatload of clear AirBNB units (welcome signs on the kitchen counter, etc.) being put on market. Many neighborhoods and especially Condo Units are cracking down.

ad says

AirBnB IPO price in December 2020 was $139.

Its stock price is now $125.

I see it gradually going the way of Yahoo, etc.

Maybe it will get bought out like Home Away did. Or perhaps the vacation and short term market is so saturated that it won't get bought out.

My friend on the hotel development side of airBnB doesn't like them, but they keep them honest.

Booger says

News to me. I'm missing something?

GNL says

News to me. I'm missing something?

Short Tandem Repeats? Microsatellites?

GNL says

Booger says

News to me. I'm missing something?

Booger is good with his memes in general, but this one is not applicable. I don’t know of any bank doing NINJA loans to Short Term Rentals. Maybe @Booger does?

@Booger is the best memer on the internet. That's a fact. But, I simply cannot fathom the banks doing NINJA loans for any RE let alone STRs. Maybe I'm wrong.

I have heard of NINJA loans from some sources based on revenue.

1337irr says

I have heard of NINJA loans from some sources based on revenue.

There are some creative loan products out there with no income, or no employment verification, but they require a big down payment with higher rates to compensate for the risk. There are also loan products that only require income revenues and bank statements, but the lenders will charge higher rates to compensate for the risk. NINJA loans are 100-105% financing to anyone with a pulse at market rates.

just_passing_through says

Short Tandem Repeats? Microsatellites?

@just_passing_through Short Term Rentals

Eman says

1337irr says

I have heard of NINJA loans from some sources based on revenue.

There are some creative loan products out there with no income, or no employment verification, but they require a big down payment with higher rates to compensate for the risk. There are also loan products that only require income revenues and bank statements, but the lenders will charge higher rates to compensate for the risk. NINJA loans are 100-105% financing to anyone with a pulse at market rates.

Interesting. I could get a $10,000,000 loan as long as I can prove the asset will generate a revenue stream high enough to cover the payments? With a NINJA loan?

GNL says

Interesting. I could get a $10,000,000 loan as long as I can prove the asset will generate a revenue stream high enough to cover the payments? With a NINJA loan?

what happens as far as loan recourse in case you can't pay and default (i.e., walk away) ?

.

Patrick says

Short Term Rentals

Thanks Pat! I just couldn't resist a biotech nerd joke. Complete with space picture.

GNL says

is the best memer on the internet.

Certainly on Patnet at least!

I read, some years ago (I've been trying to find the story again) about a guy who was a boat mechanic. Eventually he figured out how to get shipping contracts then go to the bank for a loan based on the contract then buying a ship that needed refurbishment and then being able to fulfill the contract and pay the loan. He (I don't remember his name) became one of the wealthiest unknown people in the world at the time.

GNL says

Eman says

1337irr says

I have heard of NINJA loans from some sources based on revenue.

There are some creative loan products out there with no income, or no employment verification, but they require a big down payment with higher rates to compensate for the risk. There are also loan products that only require income revenues and bank statements, but the lenders will charge higher rates to compensate for the risk. NINJA loans are 100-105% financing to anyone with a pulse at market rates.

Interesting. I could get a $10,000,000 loan as long as I can prove the asset will generate a revenue stream high enough to cover the payments? With a NINJA loan?

This is called asset based qualification. If the asset doesn’t qualify, the lender would ask for a couple things: 1) reserve set aside, to be held in the bank account by the lender, and the time frame it would take for the asset to perform. The lender will release the reserve once the asset has performed as previously agreed/determined, or 2) based on the borrower’s global debt service/performance. This is NOT a NINJA loan. NINJA loan = false documentation and no qualification at all.

GNL says

I read, some years ago (I've been trying to find the story again) about a guy who was a boat mechanic. Eventually he figured out how to get shipping contracts then go to the bank for a loan based on the contract then buying a ship that needed refurbishment and then being able to fulfill the contract and pay the loan. He (I don't remember his name) became one of the wealthiest unknown people in the world at the time.

There’s a saying “riches are in the niches”. This individual figured out a niche and made money with it.

I have the pleasure of having a few group of friends: 1) good friends, who are still holding down their W2, but hate or don’t care for their job. However, they either need their job, or wouldn’t know what to do if they quit their job, 2) sports friends, who are also holding down their W2. It’s just a job to pay for living expenses. They don’t care for it and looking forward to retirement, 3) entrepreneurs, who run their own business. They like/enjoy what they do and have flexible schedule. They don’t talk about retirement. These people have their own niche, are doing well, and generally the happiest.

ad says

GNL says

Interesting. I could get a $10,000,000 loan as long as I can prove the asset will generate a revenue stream high enough to cover the payments? With a NINJA loan?

what happens as far as loan recourse in case you can't pay and default (i.e., walk away) ?

.

You don't walk away - you crawl away because they'll send Tony and Silvio to break your knees.

ad says

GNL says

Interesting. I could get a $10,000,000 loan as long as I can prove the asset will generate a revenue stream high enough to cover the payments? With a NINJA loan?

what happens as far as loan recourse in case you can't pay and default (i.e., walk away) ?

.

There are two types of loan, recourse and non-recourse. The rate on non-recourse loans tends to be slightly higher. If the loan is non-recourse. The borrower can give the keys to the lender and walk, or the lender has to foreclose. On recourse loan, the lender can sue the borrower to recover the losses. Whether the lender will sue the borrower is another matter.

Eman says

ad says

GNL says

Interesting. I could get a $10,000,000 loan as long as I can prove the asset will generate a revenue stream high enough to cover the payments? With a NINJA loan?

what happens as far as loan recourse in case you can't pay and default (i.e., walk away) ?

.

There are two types of loan, recourse and non-recourse. The rate on non-recourse loans tends to be slightly higher. If the loan is non-recourse. The borrower can give the keys to the lender and walk, or the lender has to foreclose. On recourse loan, the lender can sue the borrower to recover the losses. Whether the lender will sue the borrower is another matter.

Short sell it. Don’t foreclose. Deed in lieu can work too. It’s not necessarily about getting sued. The bank writes it off and the IRS taxes you for the difference. If you owed $100k and sold for $50k. The $50k difference is taxed as income to you.

I forget the form name but you’ll sign a release of debt that they can’t go after you. Any good RE attorney would know about or accountant. If you couldn’t afford the place a one off tax his is better than losing for years to get above water. Or renting to long term renters where you’re probably losing money if you can’t rent Airbnb.

You have to watch for liens but on your primary home if your Airbnb went under it’s doubtful they go that route. Reality is if you owned the home 3-5 yours the lender is isolated from actual losses outside of 2006. Amortization. And they can claim the loss against their performing loans/profits. The bank doesn’t really lose $50k is the point.

just_passing_through says

That's one of the reasons I use VRBO. An older crowd that has longer stays...

If you use short term rentals than YOU are part of the problem with respect to high housing prices.

After we stayed up at Lake Arrowhead, I looked into moving there because the prices are cheaper, and I really love the area. Remember seeing a LOT of what used to be vacation rentals moving to long term rentals. Guessing the Scamdemic did a number on a lot of vacation rental's, and inflation picked up where health scare left off.

zzyzzx says

just_passing_through says

That's one of the reasons I use VRBO. An older crowd that has longer stays...

If you use short term rentals than YOU are part of the problem with respect to high housing prices.

Get a life! It's a short term vacation rental on the beach in Maui. It has been for the 50 years it's existed. It's zoned for this. It also isn't a house.

https://hotair.com/tree-hugging-sister/2023/07/05/cause-and-effect-san-francisco-airbnb-bookings-tanking-n562685

San Francisco AirBnB bookings tanking
BEEGE WELBORN
July 05, 2023

... San Francisco did this to San Francisco.

The Hilton downtown isn’t leaving because their bookings are full. They’re leaving because the crime is insane, and the real estate is too expensive in relation to plummeting value. Oddly enough, rental owners closest to downtown are also seeing a corresponding drop-off in bookings.

Go. Figure.

The depressed market for bookings is hitting their pricing leverage, too, and that really hurts when you use that extra cha-ching to pay your mortgage or taxes, and many in this story do. The market will dictate, though. When you’re desperate to put a body in a bed, you discount, and that’s what they’re doing across the board.

They can use all that spare Downtown office space to store all the unwanted Bud light cases of beer.

just_passing_through says

zzyzzx says

just_passing_through says

That's one of the reasons I use VRBO. An older crowd that has longer stays...

If you use short term rentals than YOU are part of the problem with respect to high housing prices.

Get a life! It's a short term vacation rental on the beach in Maui. It has been for the 50 years it's existed. It's zoned for this. It also isn't a house.

Yeah they're called vacation rentals for a reason. I grew up going to the Panhandle of FL once or twice a year at least. Everything on the beach was a rental. I wouldn't live there, I'd probably live inland a touch. I don't like not having neighbors and community. Certain areas are just made for vacation rentals. Hotels are fine, but having a full kitchen, potentially grill outdoors, it's somewhat like home. Vacation rentals ain't going away any time soon. The distress sales will just be picked up by other vacation rental owners.

WookieMan says

Yeah they're called vacation rentals for a reason. I grew up going to the Panhandle of FL once or twice a year at least. Everything on the beach was a rental. I wouldn't live there, I'd probably live inland a touch. I don't like not having neighbors and community. Certain areas are just made for vacation rentals. Hotels are fine, but having a full kitchen, potentially grill outdoors, it's somewhat like home. Vacation rentals ain't going away any time soon. The distress sales will just be picked up by other vacation rental owners.

Actually almost nobody is complaining about STR beach homes. I expect to see those. I prefer to go to a beach with ginormous casino hotels and a boardwalk and other stuff to do if the weather sucks.

Patrick says

$373/night excluding tax and fee. BUT, it might still make sense for a longer stay of 5 nights which would come out to $193/night excluding tax and fee.