#5: The most common question I get is ANSWERED 📣

April 28, 2023 • Estimated Reading Time: 7 minutes

Hi everyone!

As mentioned in last week’s newsletter, I’m working on rebranding the newsletter that sums up what my content is about: personal finance, real estate, financial freedom. I’m hoping to incorporate the new changes this month so stay tuned!

As always, feel free to DM me on Instagram (@MillennialMoneyVeteran) or Twitter (@MoneyVeteran) on suggestions for the newsletter!

In case you missed my latest posts this week

Here’s a link to my website and links to my latest posts below:

My website got a slightly new look!

The majority of my site visitors are through mobile. I wanted to improve the website experience on mobile to increase traffic and visitor duration. Here’s how:

  1. I changed the Wordpress theme that has a faster upload time. This helps improve the responsiveness of the site in general.

  2. I arranged features and buttons like the menu to be more mobile-friendly by enhancing settings for mobile.

The overall look of the site is similar because I’m not the master of website building. Until I make it big enough to hire a professional, I’ll keep the website simple.

Want a FREE list of 50 ways to save money? WHO DOESN’T?!

I created a list of 50 ways to save money.

Here are 5 of the 50 ways you can save money:

  1. Make sure your tires are inflated to recommended levels, even a few PSIs more.

  2. Unplug your cords when it's not in use or you’ll be paying for phantom energy.

  3. Change your furnace air filter more than once a year.

  4. If you have to pick up medication regularly, ask your doctor for a bigger supply if possible to cut down on copay.

  5. Consider frozen vegetables if your vegetables tend to go bad.

If you want your own copy, follow these instructions listed here and I’ll personally send you a copy.

The most common question I get is how I decide which market to invest in

I get this question ALL the time so I decided to take the time to answer it:

  1. Market demand and supply​Questions to ask yourself are what factors are driving travelers to that market and how many rentals are there currently in the market? There are many ways to answer these questions. Ask people who are familiar with that market on what are the attractions there. Look at rental numbers on AirDNA, AirBnB, VRBO, etc. to see the number of rentals in the market. Don’t let oversaturation deter you from that market completely. Oversaturation means there’s a demand and you just have to beat the competition.

  2. Regulations (Local and HOAs)​Are vacation rentals legal there? If there is a permitting process, understand the process. The application process differs across markets. There are lottery systems, inspections, yearly applications, and tax submissions. Even HOAs can permit or restrict short term rental use. It’s important to understand this before committing to purchase a property.

  3. Cost​​Don’t consider the cost of the average sales price in the city, but in the areas you’d want a vacation rental. A house walking distance to the beach is going to be a lot more expensive than a house in a nice suburb. Is the price within your budget after considering renovations AND furnishings?

  4. Location​Obviously you want a vacation rental near local attractions and what brings travelers there. The location should be accessible to maximize demand for your rental. I have a cabin that’s 7 minutes away from a water park and 8 minutes away from the main attractions. I have no problem filling up my calendar with bookings because it’s in a great location and meets the needs of typical travelers.

  5. Profitability​​The most important is profitability. You want to calculate how the property will likely perform given reasonable assumptions. I used this spreadsheet that I created to calculate profitability:

While there’s more that goes into the entire analysis, which we can go over in a consulting session by scheduling here, it’s a very simplified way of assessing markets.

By following this, you should be able to come up with several potential markets.

I’m selling one of my rentals AGAIN

That’s right! If you recall, I sold 2 of my long term rentals in 2022 to reinvest into 2 short term rentals. The one I'm selling is currently a short term rental and I have about $100K in equity in this property.

The reason I’m selling is to consolidate my markets. I’m currently in four markets and this one has been the most troublesome as I’ve had contractors in this market being unreliable and I’ve had the most issues with this property.

I had a water line break TWICE, had to resolve mold issues from a water leak that I wasn’t informed about, and quite a few cleaners have been unreliable.

While this property generates about $1,500 in cash flow a month, I’m hoping to generate more with the next property. It’s just been annoying to deal with and I’m trying to be a semi-passive investor.

So what’s next? I’ll be doing a 1031 exchange. This will give me about $100K to reinvest in another property. I’m looking to add another property in one of my other three markets since I have reliable contractors there so it’ll be fairly easy to add into my operations.

Once renovations are complete, I’ll have a cost segregation study done to accelerate depreciation and deduct it from my W-2 income. This would allow me to get a huge tax return depending on how the study goes.

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