With tightened housing stock supply, the competition for home buyers is fierce this year. Low rates and increased demand mean prices are soaring on what stock is available – and what’s available isn’t staying on the market for long.

One issue is that among the low inventory, there are even fewer homes that are move-in ready, said Keith Lind, executive chairman and president of Acra Lending.

“We actually have a lower inventory of homes that people really want to live in turnkey,” Lind said. “The average home age in the United States is about 40 years old, so there’s a huge stock of homes that need to be renovated.”

Given the rising price of lumber and other construction costs, renovations may sound impractical. However, that’s not necessarily an issue for homes that are simply being updated, according to Lind.

“New construction is everything – it’s copper, plastic, plumbing, lumber, roofing – but in a rehab, you’re not necessarily doing all that, there’s not a big spend on that,” he said. “From a monetary standpoint, it’s much cheaper to go in and rehab these homes and get them up to date with living standards of today than knocking them down [and building new homes].”

But not everyone has the time and ability to flip a house themselves, especially given the timing gap between purchasing a fixer-upper and updating it enough to move into full-time.

According to Lind, one way for existing housing stock to be expanded and improved upon is through investors or developers using fix’n’flip loans.

A fix’n’flip loan is designed to cover the costs of purchasing a home and renovating it. The loan is transitional, lasting about nine months to a year, with the end goal of putting that house right back on the market.

“Not everyone can afford a brand-new construction home, given where home prices are,” he said. “It’s more affordable to go the route of working with someone who’s selling homes that have been renovated. We think this is a more economical decision for homeowners, a much bigger opportunity than new-build construction in the U.S.”

Given the inventory shortage and the increase of renters turning to homeownership, Lind sees an opportunity for Acra Lending to join the fix’n’flip lender space. The company plans to launch its new vertical this summer, with the goal of lending to developers with proven experience in the rehab space.

Lind says fix’n’flip integrates well with Acra’s proven expertise in non-QM products, particularly its DSCR or investment loan offering. The transitional fix’n’flip loan can lead to a debt service coverage ratio (DSCR) loan, which Lind says is about 25% of Acra’s monthly production.

Acra Lending will be launching its fix’n’flip offering in the coming months – for more information, visit acralending.com.

The post How fix’n’flip loans could help expand housing inventory appeared first on HousingWire.

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For several years, investors found the promise of Airbnb too irresistible to pass up. They were lured in by high gross nightly rates and the potential to rent out units on short-term services for as much as two to four times what monthly tenants would pay. This dramatically boosted property prices in some areas, as well as rents.

Then came the lockdowns of 2020, shaking up what these investors thought they knew. So, what’s next in this sector?

The COVID-19 effect on hospitality and short-term rentals

When everything started to close down, and people weren’t traveling, those investment models reliant on travel were heavily affected. Think offices, restaurants, hotels, and Airbnb properties—and their owners and investors.

At first, municipalities banned hotels and short-term rentals from accepting guests. As some states began to open up, owners had to maintain vacancy periods between guests, limit the percentage of occupied units, and adhere to new sanitization protocols.

At the same time, many of these owners have been hit with other factors that have pinched their finances, including higher taxes and newly proposed regulations.

This has compounded the risks that the Airbnb model already held. Years ago, I warned that people were overpaying for properties on the speculation that they could get much higher rents through short-term rental platforms. It was the only way they could justify their numbers and offers.

Many inexperienced investors did not account for the high daily maintenance and management costs associated with this hotel-like model. You have to clean, handle ongoing communication with prospective guests, and check guests in like a hotel on an almost daily basis, versus the passive income you’d get from an annual rental. Then between platform commissions and high vacancy rates, the net income is often far lower than these investors imagined—while being a lot more work.

Put simply, the pandemic and its halo effect have meant underperforming income and returns on overleveraged properties that some paid well more than true market value for.

More on short-term rentals from BiggerPockets

Ready to invest in this unique niche? Learn more from the pros at BiggerPockets.

The outlook for short-term rentals

While some business and vacation travel will return, it will likely never be to the extent seen before 2020. At least not for years.

I expect to see these properties sold off at discounted rates. Most amateur landlords may not be able to afford to hold on. Or it will just become such a source of stress that they’ll want to get rid of those properties. Professional investors in this market who may have had more reserves to ride out a storm may also simply become weary of low-performing investments and negative cash flow and decide to restructure their portfolios.

Some will have enough equity to sell at a discount and take the loss. Others may be able to negotiate short sales with lenders to sell for less than they paid. Then it seems almost inevitable that there will be others who fall into default and foreclosure, creating distressed property acquisition opportunities through other channels.

Savvier investors who saw this coming have great opportunities to help these owners shed their burdens while creating value. They can return these properties to more stable annual rentals, adding tangible value and boosting performance. Or, in the case of apartment buildings or hotels, condo conversions to sell off units for lump sums.


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It was barely a year ago that Angel Oak Mortgage and the rest of the non-QM lenders were holding on for dear life. Now, the Atlanta-based lender is looking to raise $165 million as part of an independent public offering.

Angel Oak Mortgage, managed by parent company Angel Oak Capital and Falcon I, is looking to boost its book of business with the capital raise, the lender said in an S-1 statement filed with the Securities and Exchange Commission late last week.

In an update on Tuesday, Angel Oak Capital said it planned to sell 8.1 million shares priced between $20 and $21. If the stock trades at the midpoint of $20.50 a share, Angel Oak Mortgage would be valued at $537 million.

The Canada Pension Plan Investment Board has also agreed to purchase $40 million in shares in a private placement following the IPO. Once it debuts on the Nasdaq Stock Exchange, Angel Oak Mortgage would be classified as a real estate investment trust (REIT).

In its S-1, Angel Oak said it had roughly $535 million in total assets, “including an approximate $481.0 million portfolio of non-QM loans and other target assets, which were financed with several term securitizations as well as with in-place loan financing lines and repurchase facilities with a combination of global money center and large regional banks.”

The lender noted its portfolio primarily consists of non-QM loans underwritten in-house.

Angel Oak Mortgage operates in both the retail and wholesale channels, but it focuses heavily on the broker space. In its S-1, Angel Oak said it sources loans through a network of about 3,600 brokers, roughly 20% of the 18,000-strong channel. About 90% of the company’s loans are through the broker channel.

While most of the mortgage industry experienced a perfect storm that resulted in record origination volume and profits, non-QM lenders such as Angel Oak faced a market with no liquidity. Some pivoted to work on agency loans while others shuttered their non-QM operations or went under. By the latter half of 2020, the non-QM market had begun to rebound.

“We’re seeing continued growth in 2021. I would say we’re back to pre-COVID levels and pre-Covid expectations of where this market is heading,” Tom Hutchins, executive vice president of production at Angel Oak Mortgage told HousingWire in late May.

Self-employed borrowers were particularly disadvantaged during the COVID-19 period, but Hutchens said the lender is seeing “huge growth” in the bank statement loan product for self-employed borrowers.

Angel Oak Mortgage booked $36 million in sales for the 12 months that ended on March 31, 2021, the company said on its S-1. Its loan portfolio had an average FICO score of 715 and a weighted LTV ratio of 76%.

It sees a big opportunity ahead.

“With the continued demand for private capital loan products, including non-QM loans, we believe private capital volume should increase over time,” Angel Oak Capital said in the S-1. “During the 14 years prior to the ‘bubble years’ of 2004 to 2007, private capital volume typically accounted for approximately 10% of annual mortgage production.

“To the extent that private capital volume reverts to pre-‘bubble years’ levels of approximately 10%, we believe there is a market opportunity in excess of $150 billion for private capital volume based on annual residential first lien mortgage volume since 2009, which has generally remained at or above $1.5 trillion. Moreover, we believe Angel Oak Mortgage Lending’s position as a market leader in non-QM loan production will enable us to capitalize on our expectations of growth in private capital volume.”

The company will trade under the ticker symbol “AOMR.”

Managers of the IPO are listed as Wells Fargo Securities, BofA Securities, Morgan Stanley, UBS Investment Bank, B. Riley Securities, Nomura and Oppenheimer & Co.

The post Non-QM shop Angel Oak Mortgage prepares IPO appeared first on HousingWire.

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United Wholesale Mortgage has been aggressively price-cutting loans to put pressure on competitors for months now. It appears they’ve just thrown gas on the fire in the hopes of boosting their second quarter numbers, while hitting their rivals ahead of earnings call season.

UWM said on Monday that they’ll price-match any conventional loan on primary residences up to 35 basis points with that of 15 different competitors: Caliber Home Loans, Cardinal Financial, Citizens Bank, Finance of America Mortgage, Flagstar Bank, Freedom Mortgage, Guaranteed Rate/Stearns, Homepoint, Homebridge, loanDepot, New Rez, One American Bank, Parkside, Penny Mac, Plaza Mortgage. UWM’s price-matching guarantee will be in effect between June 7 and June 20.

In a video message sent to mortgage brokers, UWM CEO and President Mat Ishbia said the price-matching guarantee and combination of UWM’s service, technology and speed-to-close means there’s no reason to lock a loan anywhere else in June.

“We’re unmatched in a lot of those areas, but sometimes, somebody might have a better price on this loan or on that loan,” Ishbia said. “I’m done with it. UWM from June 7 to June 20th, we’re gonna match any price, up to 35 basis points of a competitor, someone that you work with, one of the top 15 lenders that do what 90% of the business. If you’ve [worked with one of the 15] in the last 90 days, and they have a better price than UWM on a conventional primary residence, we’re going to match it.”

The initiative applies to any conventional loan on primary homes, including high-balance adjustable-rate mortgages, UWM said. The lender also said only new locks are permitted; brokers would not be allowed to apply lock transfers or relocks. The pricing initiative matches competitors’ 30-, 45-, and 60-day locks vs UWM’s 15-, 30- and 45-day locks.

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“Relocks and changes to program, occupancy or property type will be subject to worst-case pricing,” the lender said in a statement Monday.

UWM has been outspoken about capturing the opportunity that it sees in the wholesale market, which it believes can be about one-third of the overall mortgage market by 2025. It currently has about 35% of the wholesale market, and is eyeing 50% in the next few years.

UWM made its most aggressive play in early March when it told brokers they could not continue to work with both Rocket Pro TPO or Fairway Independent Mortgage and still work with UWM.

Since issuing its ultimatum to brokers, the lender has shown a willingness to drop prices to increase its slice of the pie. Where UWM was not previously in the top 10 on pricing on LoanSifter, it is now a mainstay.

It would appear that UWM is betting that its slim model — analysts have estimated UWM’s cost to originate a loan around 50 basis points, the lowest in the country — will muscle out competitors that won’t want or be able to sustain lower margins. UWM had $1.6 billion in cash on hand at the end of the first quarter of 2020.

With the exception of broker-only lender Homepoint, 14 firms also operate outside the broker channel.

UWM didn’t mention Rocket Mortgage, its biggest rival, in its price-matching promotion.

Rocket has also been sweetening the pot for brokers as the mortgage market slows down. On March 10, the lender began its “broker freedom” promotion, which gave brokers a 35 bps credit on all loans, whether they were primary, secondary or investment. A month later, it increased the promotion to a 50 bps credit on all loan types.

Asked why UWM didn’t include Rocket in the list of 15 lenders it would match prices on, a spokesperson said simply, “It’s because UWM clients do not do business with Rocket.”

The post UWM goes on the offensive with price-match guarantee appeared first on HousingWire.

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This week’s question comes from Joaquin on the Real Estate Rookie Facebook Group. Joaquin is asking: When you purchase a property with a tenant already in the middle of their lease can you increase their rent or do you have to wait until their lease is up?

Inevitably, you’re going to come across some deals that have renters in place, but whether you want to keep them on as tenants is up to you. During this time of eviction moratoriums, you may be questioning whether or not an inherited tenant is worth the hassle. Here’s what Tony and Ashley think:

If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).

This is Real Estate Rookie episode number 84.
I’m Ashley and I am here with Tony Robinson. We are your co-hosts of the Real Estate Rookie podcast and today we are back with another episode of The Rookie Reply.
Tony, what is going on today?

Life is good today. I can’t complain. You know what? Actually, I haven’t told you this yet, but I got recognized in person for the first time by a Bigger Pocket audience member. I was at my brother-in-law’s restaurant-

You can say fan. It’s okay.

I was at my brother-in-law’s restaurant. He owns a restaurant here in SoCal, and someone comes up to me and they’re like, “Hey, are you Tony Robinson?” And I’m like, “I am Tony Robinson. How did you know that?” And then yeah, he said, “Oh, I listen to the podcast.”

Are you sure they didn’t say, “Are you Tony Robbins?”

He was like, “Aren’t you Ashley’s co-hosts? I can’t really remember what your name was, but”-

Oh, that’s exciting. That’s so cool. I bet it was really nice to talk real estate a little bit with him.

Yeah, just for a little bit. Yeah, it was cool.

Cool, cool. Yeah. Let’s get into our Rookie Reply today. Today, we’re going to be talking about inherited tenants and what it is like when you purchase a property and there’s tenants already in place. Today’s Facebook question, now we pulled it from the Real Estate Rookie Facebook group, so if you are not a member, make sure you search Real Estate Rookie on Facebook and join our group. We are continuously growing every day. Tony, what are we, around like 30,000 members?

Yeah. We’re a little over 30,000 I think now. It’s creeping up every day. And what’s more important, guys, is that it’s a very active group as well. Ashley and I talk about this. Sometimes we try and go into the group to add value, but so many people have already commented on posts that there’s not even a whole lot for us to say that hasn’t already been said, so super engaged in an active group for sure.

Okay. Today’s question is when you purchase a property with a tenant already in the middle of their lease, can you increase the rent or do you have to wait until their lease is up?
That’s pretty straightforward answer is depends on the lease. Is it a month-to-month lease or a one-year lease or a two-year lease? If their lease is not up yet, you have to wait until their lease is up. If they’re on a month-to-month lease, you can give them notice that you’re going to increase their rent or you can give them notice that when their lease is up, you are going to increase it if, say, they have six months left on the lease.
And look at your state laws, because some states like New York state, they have different requirements as of the time period for you to give notice that you’re not going to renew a lease or that you are going to increase the rent. I believe … I don’t know exactly, but it’s something like if the person has lived there for less than a year, it’s 30 days notice. If they’ve lived there for two years, it’s 60 day notice. Any longer than that, you have to give maybe 90 days notice. Make sure you know, your state laws and regulations, too, when you are giving notice that you’re going increase the rent.
Tony, what do you have to add?

Yeah, I guess the only thing I’d add is that sometimes there are situations where maybe there isn’t a lease in place, right, like the owner, the landlord, their current owner doesn’t know where it’s at or can’t remember what it was. And I haven’t purchased a property where I’ve inherited a tenant, but in talking with some of my other investing friends, one of the things that they use is called an estoppel agreement. And basically you just get the current party, so the owner, the landlord, and the current tenant to sign this estoppel agreement saying, “Hey, here’s where we believe the current terms of the lease to be.” That way, when you step into it as the owner, you’re not surprised by, “Oh, the owners told me that this was what was happening, but the tenant thinks that this is what’s happening,” and then you’re stuck in between a rock and a hard place, so an estoppel agreement as a way to get past that ambiguity.

Do you want to spell that for us real quick?

Yeah. I actually had to look it up too because I wasn’t sure either, but it’s E-

No, it’s E-S-T-O-P-P-E-L, right?

Oh, there you go. All right, you got it.

Yeah, no, I have used these before, and I’m so glad you brought that up. I didn’t even think about that, but that is such great advice. And you can just Google it online. That’s what I did when I used one. But yeah, it is great to verify what that seller is telling you, especially if they don’t have a written lease. That’s such a great point.
And you can do that before closing. Ask the seller’s permission to send these and you send them to the tenant and you have them mail them back to you directly or maybe you meet them in person, but that way you’re getting a sense of what they think that their lease terms are and what they say so that if there is a mismatch of information from the tenant and the seller, you can figure that out before you actually close on the property, because there’s been instances where I’ve taken over management of a building and they’ve said, “Well, my security deposit was this much. I put this much more down,” and I actually had to pull out the estoppel agreement and say, “Here, you signed that it was this amount way back then, even though you didn’t have a lease agreement with that landlord.” Definitely can be very useful to you, and also getting the condition of the property, too.

Yeah, always good to just CYA and make sure you’re covering all your bases in that sense. Ash, I guess I want to get your opinion on something, right? Right now we’re still in the middle of this pandemic and there’s still a lot of eviction moratoriums going on in places. Would you be more hesitant today to purchase a property with an inherited tenant than you would be early 2020?

Let me tell you a quick little side story first. I saw this news article, and it was from a Lancaster, which is outside of Buffalo, New York, and a landlord had two tenants inside that were not paying rent and so he spray painted their names on the roof so that everybody that drove by could see that, “So-and-so owes me $11,000 in rent,” and it made the news and it’s a big controversy like, “Was this right for him to do or not to do?” But yeah, our property management company had sent an email to the owner recently just saying, “This is going to be really detrimental to a lot of landlords not getting rent and not being able to evict.”
For me personally, if I was buying a property with inherited tenants, I would do the estoppel agreement and I would ask the seller, “What’s rent at?” And that’s something to put on the estoppel agreement, too, “When’s the last time you paid?” And you can also ask for bank statements to verify that the tenants actually did pay. If they were paying tenants, I would purchase the property. If they were not paying tenants, I would look at, am I getting a deep, deep, deep, deep discount and can I offer them cash for keys, give them $1000, pay for them to get a U-Haul and help them move somewhere else? That would be my take on it, but I definitely wouldn’t stop buying or stop looking at properties just because there was inherited tenants in there.

We’re looking at a property in Joshua Tree right now off of direct-to-seller marketing that we’ve been doing. And the owner lives, I don’t know, somewhere on the east coast, and he’s like, “Hey, you guys can have the property for almost whatever price you can figure out if you can get these squatters out of the property.” He was like, “I don’t really know how long they’ve been there.” He’s got no grasp of what’s actually happening there. We’re going to see if we can, like you said, maybe offering some cash for keys to get out, and then we will get the property at a pretty steep discount because he just kind of wants it off his hands, so ways to be creative.

Yeah. You have to keep us all updated on this and how this pans out for you.

We’re also a little nervous to go to the property because he doesn’t even really know who these people are. Are they going to try and run us off when we get there?

Right. Oh yeah.

Yeah, we’ll see.

Huh. Well, be careful.

If you guys see me posting on my Instagram story running out of breath in the desert hills of Joshua Tree, you’ll know why.

Doing your last testimonial on Instagram Live. My name is Tony Robinson. It is May 25th at 4:00 PM. I’m being chased through Joshua Tree.
Okay, well, we’ve gotten way off track for today’s Rookie Reply, but we hope we gave you guys a little bit of tips, tricks and advice for dealing with an inherited tenant, but do not be scared of an inherited tenant. If you’re going in and you’re looking at properties before you’re purchasing, you can see if they’re taking care of the property. You can talk to the neighbors to see if they are a problem tenant if issues do come up, if the cops do come there. There’s definitely ways to do your due diligence because buying a property with tenants in place can be really nice because you’re getting that cash flow right away and you don’t have to place a tenant in there.
Hey, anything else Tony?

No. No. I think you hit it all, Ash. I feel like we gave them a lot of good stuff today.

Thank you guys for listening to today’s Rookie Reply. I am Ashley at Wealth From Rentals and he’s Tony at Tony J. Robinson. And even though he was just spotted recently, he did have another huge compliment here. David Green, host of the Bigger Pockets real estate podcast, complimented him on his smooth voice.

My smooth DJ radio … Hey ladies and gentlemen. No.

Which I 100% agree. Well, thank you guys and we will be back on Wednesday with another episode.



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Real estate tech firm SImpleNexus announced Wednesday that founder Matt Hansen will be stepping down as CEO, with current president Cathleen Schreiner Gates replacing him.

Hansen told HousingWire that he stepped down to lead a team of software developers and sales staff for upcoming research and development tactics within SimpleNexus. This new role will give him more time to focus on his passion for product and development, he said.

“I love solving product problems, that’s what makes me happy, and I think it’s really important to realize where you’re happy,” said Hansen. “With Cathleen’s expertise coming in, and being in a place where she can run the organization, which wasn’t the original plan but it worked out that way, it just ended up working out perfect.”

Schreiner Gates previously advised the tech startup as a board member in April 2020 before her appointment as company president in September. Prior to SimpleNexus, Schreiner Gates served as the EVP of sales and marketing at digital mortgage technology provider Ellie Mae (now ICE Mortgage Technology).

Hansen wouldn’t describe the “skunkworks” project that he’s leading, which is outside of the 15 teams SimpleNexus currently works with. In the interview, he spoke of creating an “end-to-end” mortgage experience, a common refrain in the housing fintech space.

“We have started to label ourselves as a homeownership platform,” Hansen told HousingWire. “We are going to go earlier in the process with realtors and later in terms of people moving in to their homes. And its already resonating with lenders, they want that one spot for consumers to be able to do everything and I’m anticipating its going to continue to be a future trend.”

The Utah-based software developer offers a private-label digital mortgage platform and mobile app designed to connect lenders with borrowers and real estate agents. The SimpleNexus platform allows loan officers to become “mobile originators,” using their smartphones to view applications, pull credit reports and oversee all aspects of the loan process while connecting in real-time to their LOS, and investors have taken notice of its success.

In January, the company picked up a massive $108 million in a Series B funding round led by Insight Partners to help increase marketshare within the eClosing and mobile mortgage segments. SimpleNexus said in April that its platform now supports remote online notarization (RON) and has partnered with Notarize.

With Schreiner Gates’ ascension, Hansen said she will work to scale up what SimpleNexus has already established, and is currently working in their go-to markets to increase marketing and customer organizations.

“SimpleNexus started as a passion project — an app to help my brother-in-law expand his mortgage business — and it has since grown beyond anything I originally imagined,” said Hansen. “Over the past seven years, I’ve had the great pleasure of building a better homebuying experience for consumers and lenders with the help of hundreds of dedicated, passionate professionals.”

The post SimpleNexus founder drops CEO job to lead skunkworks project appeared first on HousingWire.

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Short-term rentals (STRs) have become increasingly popular investments over the past several years, and for good reason.

Recent data has shown that short-term rentals have weathered the pandemic better than their hotel counterparts and are poised for even greater growth in 2021. As my colleague Jason Allen wrote recently, rural/mountain regions and beach/lake communities are doing particularly well.

A lot of market factors signal that it’s a good time to be an STR investor, so now might be a good time to consider the strategy. But if you’re thinking about investing in an STR, you need to learn how to analyze a deal properly, as it’s a bit different than analyzing traditional rentals.

The concepts and metrics are the same in the end, but gathering the right data to input into your analysis is a bit trickier, and there extra factors to consider.

When I started searching for a short-term rental a few years ago, I knew that the foundations of deal analysis were essentially the same: income, rehab costs, utilities, property management, etc. I quickly realized the problem was finding good data. I was unsure how to alter the assumptions I regularly make when analyzing a traditional rental to account for the nuances of an STR.

But being the data enthusiast that I am, I obsessively hunted down the best information for running STR deals and walked away with a great deal. Here’s what I learned.


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Unlike traditional rentals, STRs have variable income. Meaning you don’t have a lease with a fixed amount of rent coming in. Instead of being able to estimate rent, I learned that I needed two inputs to estimate my income: occupancy rates and average daily rate (ADR).

Occupancy rate = the percentage of nights per month you have a guest in your property.

ADR = the average price the guest pays for a night in your property.

In its simplest form, all you need to do is multiply occupancy rate by the number of days in the month by ADR to get your estimated monthly income.

Occupancy Rate x Calendar days in month x Average daily rate = Estimated monthly income

If you are analyzing a deal in a metro area where bookings are consistent year-round, that’s all you need to do. You have your estimated revenue!

But if you’re like me and are considering an STR in a vacation area (mine is in a mountain town) you’ll want to get a bit more sophisticated in your analysis and account for seasonality.

What is seasonality?

Seasonality is a statistical term that measures patterns in data over time; it doesn’t actually have anything to do with the seasons. Many STRs experience what is known as annual seasonality—revenue follows a similar pattern each year.

For me, that pattern is a huge spike in revenue during the ski season (December-March), followed by a slowdown in the spring mud season (April-May). Then I have my best months over the summer, from June-August, followed by another down season from September-November.

Because this pattern of peaks and valleys occurs every year, it’s important that I factor in seasonality to make sure my analysis is as accurate as possible and ensure I am not at risk of cash flow shortfalls during my slower periods.

Estimating monthly revenue

In order to do this, you need to create a table to estimate monthly revenue. It should look something like this.

rental income chart

I’ve used my occupancy rate and number of days in a month to calculate my occupied days and then multiplied that by ADR to get my estimated revenue.

Note: This screenshot is taken from the Excel calculator I made. Just put your numbers into the green cells.

Having made this table I have a good idea of what my cash flow will be for the entire year and for the individual months. Seeing the data laid out this way helped me realize that I would need to keep extra reserves on hand during the mud seasons. For a normal rental, I try to withdraw and reinvest excess profit as much as possible. With my STR, I am a bit more conservative.

How to find out occupancy rates

If you’re wondering where to get data on occupancy rates, there are two good places.

Option 1 is AirDNA. AirDNA is a company that provides all the relevant data you need to run a good analysis of an STR deal. You can see an example of one of their dashboards below.

airdna dashboard

Not only do they show high-level stats about the market, but they also show occupancy rates and ADR by month, enabling you to conduct a thorough analysis as we outlined above. Prices depend on which market you want to look at, but generally run about $30-$50 per month per market. Not bad for helping you make a good decision on an investment.

If you don’t want to pay for the data, it’s time to start counting. Go on Airbnb, VRBO, or wherever and calculate these numbers yourself.

As you see in the picture below from Airbnb, you can figure out occupancy rates by clicking on any property’s calendar. From this example, I can see that this property is occupied for 25/31 (81%) days in May and 30/30 days in June (100%)—that’s great occupancy.


It also tells me the rate per night.

rate per night

If you’re going to go this route, make sure you are thorough. Look at several properties that are good comps for your deal and look at their calendars year-round to account for seasonality.

But honestly, buy the data from Airbnb and save yourself this headache.

So that’s it. To estimate rental income, figure out ADP, occupancy rate, and seasonality. Once you have those numbers, you can plug them right into the calculator and start analyzing your deal.

More on short-term rentals from BiggerPockets

Cleaning fees

Another source of revenue is cleaning fees. Some hosts choose to engage in cleaning fee arbitrage by charging the guests slightly more than it costs the host to have the place cleaned.

Personally, I don’t do this. I just charge what I want to make and make my prices transparent. But if you want to do it you can enter those numbers into the calculator below.

cleaning income

In order to get this data, it’s as simple as just calling around to some cleaning services to get a quote. If you’re going to clean your property yourself, then you just put in what you think your time is worth and is a reasonable price for guests to pay.

And with that, we have figured out the revenue half of the analysis equation. On to expenses.

Estimating expenses

When examining expenses for an STR, the inputs are basically the same big categories: financing, taxes, insurance, property management, rehab costs, and utilities. You do also need to add one other important category as well: furnishing. Let’s go through these one by one.

Furnishing costs

Let’s just start with the biggest challenge for me: furnishing. Furnishing my STR was extremely stressful and time-consuming (but worth it!). My STR is big–five bedrooms—and I completely underestimated the cost and time it would take to furnish. I kid you not, at one point I picked up 187 boxes from IKEA. Breaking down those boxes and hauling them to the recycling drop-off took me eight hours.

furnishing 1

Oh yeah, and this casual delivery from Wayfair.

furnishing 2

I’m showing you this because I miscalculated my budget by about 35% even though I thought I was being diligent. Luckily I had built in some contingencies, but I would highly recommend spending a good amount of time creating a furnishing budget for any STR you plan to purchase, then adding 25% to it. There is so much you forget. Here is a good list to get you started. Put this list in a spreadsheet and start shopping.

Mine looked like this.

furniture spreadsheet

IKEA, Wayfair, whatever you want to use–just be diligent to add up all your costs. You can be thrifty, but don’t be cheap. People want to feel like they’re in a nice place when they’re traveling. Buy durable, nice products for a good value. It’s an upfront investment, but it will pay off with good reviews, higher occupancy, and a higher ADR.

When you’re still in the deal analysis phase, you still should do this. If you know you’re looking for a two-bedroom, you can add up the costs of furnishing a generic two-bedroom. Add up kitchen expenses, linens, towels, and everything else. Then add 25% to ensure you account for whatever unique items will be required when you find the actual property you’re going to purchase.

Do not overlook the furnishing. It’s hugely important and an entirely new expense that needs to be added to the traditional rental analysis. Make sure you have the cash on hand to properly furnish an STR. Going cheap here will hurt your revenue and diminish your returns.


Financing for an STR is really not that different from other types of deals. Of course, you cannot get an FHA loan or any other type of owner-occupied loan, but for all intents and purposes, you can calculate financing the same for STRs as you would for a traditional rental property.


For the most part, taxes won’t change whether you’re using your property as a traditional rental, owner-occupied, or STR. You do, however, want to check what taxes your municipality may levy on STRs. Many towns, for example, have STRs pay an occupancy tax similar to what hotels pay. Others, like the town my STR is in, have you pay a flat annual fee for a license. Make sure to build these costs into your analysis.


As always, the only way to get a good idea of insurance costs is to call a broker. Do that! STR insurance can be a bit higher than other forms of property insurance. When deciding if you want to use a property management company (more on that next), check whether they offer any type of insurance. My PM company offers damage insurance for furniture and the contents of the house, which definitely comes in handy.

Property management

This is a big deal with STRs, and coming from self-managing my other rentals, it was a big change for me. But I have to say, I love it. I hired a full-service property management (PM) company that does all the interactions with the guests, coordinates cleanings, handles maintenance, sets prices, restocks things that break, applies for and maintains my licenses, prepares my tax documents at the end of the year, and more. It’s great.

But of course, they charge me a lot for that. I pay about 20% of revenue for this service (as opposed to 8-12% for traditional property management), and PM fees can actually go up to 40%. Prices are coming down due to increased competition in the market, but I recommend Googling and calling around to get some quotes.

Reviews are everything in the STR game, and if you are going to hire a PM company, guests are essentially going to be reviewing the PM company’s performance. Remember that you get what you pay for and pick a good company.

Rehab costs

There’s no difference between rehabbing an STR and another rental. Since BiggerPockets has tons of great content on how to estimate rehab costs, I am not going to get into that here. My only piece of advice: Go durable.

The wear and tear on an STR are higher than in a rental. Buy stuff that will last, even if it’s more of an upfront investment. It will save you money in the long run, trust me. If something can break, an STR guest will find a way to break it.

Repairs and maintenance

Double what you think you’re going to need for repairs and maintenance just to be safe. While the majority of guests are good people and mean well, people use STRs hard. They are on vacation! They want to party, or cook an overly ambitious meal, or disassemble a retaining wall to build a fire out in wildfire country in the middle of a drought. Who knows what they do in there!

Get used to it–it’s just the cost of doing business. Ten percent of revenue should suffice in most cases. I reserve 15% because my house is definitely a party house.


Utilities, unfortunately, cannot get passed along to tenants, as is common with traditional rental properties. You’ll need to Google or ask your property management company for insight into how much utilities will cost.

Estimate high. People are on vacation! Sometimes they want to watch TV while sitting in a hot tub while running the air conditioning with the doors open. You can’t stop them!

Putting it all together

Now that we’ve gone over how to estimate your revenue and expenses, it’s time to analyze the deal. And lucky for you, you can use the calculator I made to do this in under five minutes.

Simply adjust the green cells on the inputs tab.

calc image

And then click on the “Results” tab to get your analysis! It’s as easy as that. From there you can evaluate the results the same as you would for a normal rental, cash-on-cash return, and compound annual growth rate being my personal favorites for looking at the long-term returns on an STR.

Taking on this new strategy was a really interesting process for me, but I am so glad I did it! My property has been doing really well, generating great returns, and staying really hands-off because I hired a full-service PM company.

I also think it came out looking great.

mountain house

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Volly, a mortgage tech company that offers customer relationship management and point-of-sale services for lenders, announced Wednesday the acquisition of mortgage and real estate tech startup Home Captain for an undisclosed amount.

According to a release from Volly, the acquisition of Home Captain’s technology will extend the company’s reach into the real estate realm.

Co-mingling of the two companies previously took place in October 2020, when the tech providers announced an integration partnership. At the time, Volly cited the union as a means for the company’s lending clients to utilize Home Captain’s concierge and technology offering throughout the homebuying and mortgage origination process.

This was just one month after Volly announced an $11 million Series B growth equity round led by Camden Partners and backed by existing investor, New Capital Partners. Jason Tagler, General Partner and Managing Member of Camden Partners, joined the Volly board as part of this investment.

There is no word yet on how the Home Captain team will be ushered in, however, Halbrook expressed excitement over Home Captain CEO, Grant Moon joining the team.

“Home Captain’s solutions are an exciting extension of Volly’s approach to delivering relevant, leading-edge technology solutions to our clients,” said Halbrook.

Founded in 2013, Home Captain put its name on the digital mortgage map after being one of the first initiates to complete Flagstar Bank and the FinTech Consortium‘s MortgageTech Accelerator program. The initiative was originally launched by Flagstar to guide late-stage mortgage tech startups in an effort to evaluate the viability of future investments and partnerships.

“This opportunity further solidifies our ability to grow together and improve our industry-leading products and services to help lenders and servicers solve for their ever-evolving obstacles,” said Grant Moon, Volly’s new CRO. “I believe we are on the cusp of making meaningful changes in the financial and real estate tech space and am thankful to play a role in that transformation.”

The post Mortgage tech firm Volly scoops up Home Captain appeared first on HousingWire.

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A Supreme Court decision which will determine if the Biden administration can fire the Federal Housing Finance Agency (FHFA) director will arrive before the month’s end.

The court recently updated its calendar indicating its session will extend through the end of June. It has not yet specified when it will issue more opinions for the cases, like Collins v. Mnuchin, it has already heard.

Compliance attorneys are anxiously awaiting the court’s decision. Although many expect the decision to align with last year’s ruling which found the Consumer Financial Protection Bureau’s structure unconstitutional, some are feeling uneasy.

At least one attorney said they felt a “nagging doubt” which stems from the fact that the court took the case up after it decided the CFPB matter. The court’s timing could indicate the justices are thinking about the FHFA challenge differently.

The case stems from the restructuring of the agencies in 2008. A group of GSE investors alleged that the government knew the GSEs would turn a huge profit after a $100 billion bailout from the Treasury in 2008. An agreement between FHFA and the Treasury promised the investors compensation in the form of stock, dividends tied to the amount of money invested in the companies, and priority over the other shareholders in recouping their investment.

But the Treasury modified that agreement in 2012, to require Fannie Mae and Freddie Mac to pay dividends to the Treasury pegged to the companies’ net worth. The arrangement greatly diminished private investors’ ownership interests in the GSEs. Investors cried foul and filed suit in 2013.

“By August 2012, FHFA and Treasury knew that the Companies were on the verge of generating huge profits,” the plaintiffs argued in the suit.

In 2018, The Fifth Circuit Court of Appeals held that the FHFA was within its statutory authority when it enacted the “net worth sweep” of the GSEs’ dividends, but found that the FHFA was not constitutionally structured. This is the issue now before the Supreme Court.

Few expect Mark Calabria to remain the FHFA director if the Biden administration could appoint someone more aligned with its priorities. Even if he stays, a Supreme Court decision could give the Biden administration the ability to oversee operations at the agency.

With Calabria all but out the door, a number of agency changes could ricochet through the housing market. A Biden-appointed FHFA director could renew the GSE Patch, which currently expires July 1, and conflicts with the CFPB’s Qualified Mortgage rule compliance date.

The post Supreme Court decision on FHFA expected at any time appeared first on HousingWire.

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As the real estate industry braces for the end of forbearance moratoriums, housing experts are anticipating an increase in foreclosures and REO activity. In preparation for that influx, asset managers, servicers and investors need to ensure they have the tools and technology to successfully navigate this unpredictable time. Pyramid Platform, Radian’s award-winning asset management technology, can help users swiftly adapt to fluctuations in the REO environment.

Pyramid Platform automates and organizes every step of the REO asset management process through a secure web-based portal. Pyramid Platform users can customize their REO management workflow to trigger tasks based on their unique needs. This helps users execute and manage investment strategies, from listing to liquidation. In addition, Pyramid Platform offers users a variety of other workflows, including deed-in-lieu, short sale, acquisition, rental management, and more.

“Following an unprecedented year like 2020, Radian’s Pyramid Platform allows clients to prepare for changes,  as they happen in real time, through customized and intuitive workflows that help them more effectively and efficiently manage their real estate portfolios,” said Tim Reilly, EVP, Asset Management Operations. 

With features like drag-and-drop uploading, automatic document labeling and expense tracking, Pyramid makes managing a real estate portfolio simple and intuitive. Pyramid Platform also simplifies reporting via customizable dashboards where users can track key performance indicators, tasks, and timelines. 

“Clients can utilize real-time and customizable reporting, as well as direct data warehouse access,” said Rebecca Smith, VP, Sales and Business Development. “Robust, transparent reporting is essential for asset managers who want to proactively manage their portfolios and track progress.”

With Pyramid Platform, clients can also: 

  • Access Radian’s network of thousands of vendors.
  • Prioritize tasks with effective role-based dashboards.
  • Integrate with Radian’s various pricing products.
  • Take advantage of built-in logic and validations that save time and improve data integrity.
  • Reduce delays and navigate the real estate closing process with ease. 

As the market fluctuates, servicers and asset managers need flexible tech that allows them to focus their talent on strategy rather than managing repetitive tasks. Pyramid Platform uses intelligent automation to lift the load and helps improve ROI, whether the user is managing 40 properties or 4,000.

“Our customers choose Pyramid Platform because it allows them the flexibility to design their optimal workflow, manage their real estate assets, and nimbly pivot as the needs of those portfolios may change to match market conditions,” added Smith. “The platform was designed by users in today’s ever-changing environment who understand that the most efficient and effective workflow solutions are those that can be customized quickly and adjusted easily to meet user preferences and specific client needs.” 

Now is the time for savvy asset managers, servicers and investors to prepare for the anticipated wave of foreclosure activity coming and ensure they have the people, processes, and technology ready to meet the challenge ahead.   

“Our award-winning asset management technology is prepared to handle the influx of loss mitigation, foreclosure, eviction, and REO activity when moratoriums are lifted, and with its scalability, the system can quickly help portfolio investors, servicers and outsource providers to be prepared for the rapidly changing real estate market,” said Reilly.


Tim Reilly, EVP, Asset Management Operations

Tim Reilly oversees Radian’s asset management services, including real estate owned (REO), single-family rental (SFR) and technology platforms.


Rebecca Smith, VP, Sales and Business Development

Rebecca Smith supports business growth by managing communications, maintaining strong relationships and leading the company’s initiative of providing the highest level of client service.

The post Radian’s Pyramid Platform automates every step of the real estate process appeared first on HousingWire.

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