Hey everyone! Kalei McMahon here with the latest updates from our eBike, along with Hayley and Jason Bible from Mr. Texas Real Estate. We’ve got some exciting news and insights to share about our ongoing real estate ventures. From portfolio updates to war stories and lessons learned, there’s plenty of juicy information to get into. Let’s dive in!
Current Deals
Closing on Four Beach Houses in Surfside
We’re thrilled to announce that we finally closed on our four beach houses in Surfside. This deal is particularly exciting because we’re turning these properties into short-term rentals. Here’s a quick rundown:
- Purchase Price: We secured the properties for $330,000.
- Income: Currently, the properties are bringing in $65,000 annually in gross income.
- Financing Terms: Initially, traditional lenders were hesitant due to the unique setup of four properties on one plot of land. However, the seller agreed to a 20% down payment and 7.5% interest over 20 years.
The most fascinating part? The seller recently increased the rent, now bringing in $1,800 a week. Net cash flow will be approximately $3,500 a month. We couldn’t be happier with how this deal turned out!
Evaluating a Deal for Airbnb Near Dallas Love Field Airport
Next on the list is a promising Airbnb opportunity near Love Field Airport in Dallas. Here’s what we’re looking at:
- Property Details: This is a three-bedroom, one-bath house situated just five minutes from the airport gates.
- Potential Rental Rates: Similar properties in the area rent for $60-$100 per room per night.
- Financing Plans: We’re considering two lenders for this property. The plan is to use a hard money loan for three months, finish the renovations, then flip it to a permanent loan with long-term financing.
We’re estimating a net monthly cash flow of around $1,900, even under conservative assumptions. The total investment, after updating the property, should raise its value to between $180,000 to $199,000.
Calculating Potential Returns
Net Cash Flow Projections for Airbnb Deal
For the Dallas Love Field property, let’s break down the numbers:
- Rental Income Assumptions: Renting the entire house first, then possibly by room.
- Expense Estimates: We’re looking at $27,00 a month minus expenses and mortgage payments.
- Financing Costs: With a hard money loan followed by a refinance, the cost structure will be beneficial.
Comparing to Long-Term Rental Returns
The cash flow potential for Airbnb far surpasses traditional rentals. If this property were rented long-term, it might only yield around $300 a month after expenses, which is barely a break-even point. But as an Airbnb, even conservative figures point to a much more lucrative return.
Additional Ongoing Deals
27-Unit Apartment Complex
We’re also under contract for a 27-unit apartment complex:
- Purchase Price: $895,000
- Rehab Costs: $190,000
- Appraisal: Subject to appraisal at $1.5 million
Financing this deal involves a capital partner for part of the capital and a bridge loan for the rest. We’re looking at an upfront cost of $250,000. After rehab, we plan to refinance into a 30-year portfolio program.
Houston Duplexes
There’s a lot happening with our duplex investments in Houston, too:
- Market Overview: Duplexes are valuating between $80,000 and $110,000 per door.
- Acquisition and Rehab: We’ve completed about half of the rehabs, with rents climbing from $600 to nearly $1,200 a month.
- Cash Flow: Each duplex is yielding around $1,000 a month in net cash flow. We’re also planning to build more duplexes on some lots for over $1,800 a month in rent.
Unique Airbnb Horror Story
Airbnb can be incredibly lucrative, but it’s not without its challenges. Here’s a hair-raising story from one of our properties:
Guest Incident Details
- Incident: A guest fired a firearm, breaking a water line and causing flooding in our unit and 11 other units.
- Insurance and Liability: This became a complex issue involving commercial insurance, personal insurance, and Airbnb’s host protection.
Resolution and Payouts
- Commercial Insurance: Covered the building damage.
- Personal Insurance: Took care of our unit.
- Airbnb Host Protection: Covered the remaining damages, eventually totaling about $60,000 in repairs.
It was a stressful process, but knowing the procedures and protections helped us navigate through it.
Corpus Christi Beach House
One of the more fun acquisitions is our beach house in Corpus Christi:
Property Description
- Layout: A garage apartment with a full suite and a main house with multiple bedrooms and bathrooms.
- Amenities: Crow’s nest offering panoramic views and proximity to wildlife refuge.
Purchase and Rehab Costs
- Cost: Purchased for $245,000 with an additional $65,000 needed for work.
- Planned Use: Will serve as a rental property when we’re not there and double as our office space.
Income Projections to Cover Costs
By renting it for just 10 to 15 weeks a year, we can cover the entire annual cost, making it both a functional office and a revenue-generating asset.
Using Rentals for Office Space
One amazing strategy we’ve employed is using part of our rentals as office space:
- Benefits: Cost-effective, leveraging property value appreciation.
- Financing: Easier to secure a 30-year fixed-rate mortgage on residential property compared to commercial space.
Challenges in Small Multifamily Deals
Small multifamily deals come with their own set of challenges:
- Expense Assumptions: It’s crucial to verify exact costs.
- Sellers: Asking pointed questions to get accurate numbers.
- Due Diligence: Essential to dig deep into numbers to avoid surprises.
Conclusion
In conclusion, our recent ventures in real estate have been both challenging and rewarding. From the successful acquisition of beach houses in Surfside to exploring new opportunities like the Airbnb near Dallas Love Field Airport, we are continually learning and adapting. Our ongoing projects, including the 27-unit apartment complex and Houston duplexes, demonstrate our commitment to growing and diversifying our portfolio.
While the journey is not without its hurdles, such as the Airbnb incident, our experiences and strategies equip us to handle whatever comes our way. We’re excited about the future and look forward to sharing more updates and insights with you. Stay tuned for more adventures in the ever-dynamic world of real estate!
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