56) Hard Money & Airbnb Rule Changes
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House Money Weekly
In this week’s House Money Weekly segment, Lauren and Alan together with guest host Bryce discuss blog 153 - What do I do if my town changes its STR rules? Lauren and Bryce both specialize in short-term rentals (STRs) for their real estate investments. Bryce owns properties in Austin, where a recent rule change now allows property owners to list their homes as STRs without needing to establish them as homesteads first. Option #1 suggests selling your Airbnb if new STR rules prevent you from renting it as an STR. Alan noted that some listings advertise as a "furnished property," meaning they’re selling not just the home but also its furniture. The upside is that a well-updated, well-furnished property in a desirable area can sell quickly. However, the downside is a lot of formerly Airbnb properties are also for sale. If many other Airbnb properties hit the market at the same time, competition could be tough. Alan advises considering selling before the laws are finalized to avoid complications. Lauren sees this as an option but not her top choice. Option #3 (discussed second) is to make sure you can pivot into a mid-term or long-term rental. This means offering stays of 30 days or longer for mid-term, and year-long leases for long-term rentals. Bryce successfully converted his STR into a mid-term rental, hosting tenants for periods ranging from 30 to 60 days. Option #2 (discussed last) is to turn your STR to a primary (or secondary) home. If your property is already furnished and in a desirable location, this could be a practical move. If it is a second home and not a rental property, the majority of the days you're using it is for your own use or your family's own use rather than to make money off of it. Some benefits of this are that you can get cheaper insurance and better loan rates. Preparing for rule changes involves thinking ahead, so have a backup plan for each property!
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Mortgage Minute: Jasmine answers the question: What are the differences between an adjustable-rate mortgage (ARM) and a fixed rate mortgage?
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Real Estate Is Easy Segment
Lauren interviewed Matt Weber, a partner and Chief Revenue Officer (CRO) at Alpha Funding, who transitioned from being a personal trainer to becoming a real estate investor and hard money lender. Matt pointed out common misconceptions about real estate investing, such as the belief that you always need substantial funds to get started. He emphasized that money is widely available and that investors don't need to handle every aspect alone; instead, they can rely on a supportive team. He also clarified the concept of hard money loans, noting their typical duration of 12 to 18 months and the benefit of paying interest only on the loan rather than the principal. Hard money is an asset-based collateralized loan. They’re not owner-occupied loans. Having been involved in lending since 2007, Matt highlighted the risks investors face, particularly from unexpected external events like global pandemics. He stressed the importance of having a solid support system in place to navigate such challenges. Unlike traditional lending where personal finances are scrutinized, Matt's approach involves underwriting the deals themselves, focusing on the viability of each investment opportunity. And lastly, Matt makes real estate easy by putting good people around him. All hosts agree having the right team makes all the difference. Bryce shares a great example.
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Guest Host Segment
Guest Host Bryce talked about creating content about real estate. He met Lauren on X/Twitter during a Twitter Space. Bryce was inspired by how Lauren shared her real estate journey and her quick analysis of rental properties. This motivated Bryce to start doing the same. One of his popular posts was about his experience with his condo’s HOA, which caught the attention of many people who had similar experiences. Unexpectedly, some people have hired Bryce to help them on social media. Bryce wanted to know Alan and Lauren’s thoughts on the impact of writing and posting real estate stuff on different social media platforms. Alan said he gets his best deals because people knew he buys properties in Atlanta, which he talks about on Twitter and in podcasts. Lauren noticed that social media overwhelms some people. She agreed with Alan that some people consume social media, while others create content. Lauren suggested that starting with simple actions, like writing a tweet and hitting send, can be the easiest way to begin. Eventually, you can add other platforms as well. After a while, you have a backlog of content you can repurpose too. Together, the hosts and Bryce talked about how to effectively use social media to share their investing journeys.
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Book mentioned: Story Worthy
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