​Hey, this is Jeremy with Sustainable Village Redevelopment. Wanted to talk to you today about Airbnb Investing and our spin on using Airbnb to up the cash flow in our multifamily apartment buildings that we're building or adaptively reusing.

​So jump into it. Why would you want to invest in Airbnb rentals? Obviously, you get more income per unit. In general, we're seeing an additional $500 to $1,500 per month per unit that we have short-term versus long-term. That in turn gives you better cash flows. Your cleaners that you hired can go and inspect the unit more, as opposed to having a tenant in there for three years and thrashing the place or beating it up more, because your cleaners are in there every week or every couple of days or whatnot. Additionally, you and your family can still use the unit when it's not rented. That's been huge for us because we have one of the units in the fourplex. My mom or my friends can still use that apartment, where we can block it, and they can have their own apartment, and still stay with us, and have their own comfortable space that's affordable.
 
Then probably depending on how you feel about it, it's more automated. You're using the Airbnb platform. You can install digital locks that the codes change or don't change however you want it, and then using platforms like guesty.com that automates cleaning, scheduling a handyman, and connecting your Airbnb listing to other platforms as well if you want to use VRBO or whatnot.

​Obviously, where to invest, in my opinion, number one, maybe not these last couple of pandemic years, but popular urban areas, beaches. We live here in San Diego. We're generally pretty busy. Florida and other places, places where people want to go. These last couple of years, probably more popular has been close to national parks, towns that have attractions that are more rural or have scenic beauty around them. Then maybe experiential places, where you're doing airstream trailers, or glamping tents, or you have an adventure ranch. This is one of the concepts that we're kind of playing with for our next property in Tahoe. Things that are unique.

​Then what's the cut-off multifamily versus single-family or condo? We're trying to build or adaptively reuse old buildings and turn them into small multifamily experiential apartment complexes. You can obviously use really sophisticated tools like AirDNA to analyze markets and figure out what the differential in rent is, short-term to long term.

​Maybe, number three, how to differentiate and up your overall cash flow on your Airbnb units that you have. In my opinion, we try and make our listings more of an experience. We give our tenants loaner bikes, surfboards to surf on. Because we live here in San Diego, I've seen people offering golf carts to people if you live in that type of community, having a fire pit. We eve,n include toys for families and high chairs, and things of that nature, fire pits, outdoor games, anything that differentiates you from boring hotels or just ordinary cut and dry listings that are nicely decorated but are just a box with an air conditioner.
 
Number two in that category probably is unique furnishings, books, local art. We actually have photos in our unit from one of my really successful photographer friends that works for National Geographic. She did an expose on San Diego, and we took some of those photos and included them in our art in our unit. It's really cool and amazing and inspires people to go see more of the cool things that are here to do in San Diego. Then obviously, just giving advice or information on what's fun to do in the local area, especially considering we have bikes and whatnot, biking to local breweries or restaurants.
 
Then probably third is landscaping, outdoor amenities, Jacuzzi, pool, yard games. Again, anything other than a standard listing where people have nice furnishings and it's a nice condo. But if you have a beautifully manicured lawn, and landscaping, and trees, and Adirondack chairs, and yard games to play, that makes it a unique experiential place to rent and it's going to help you boost up your cash flows and occupancy.

​Then probably I wanted to go through our fourplex example. We bought this place as a duplex here in San Diego, and then we renovated it into a fourplex of my own design. We live in one of the units with my offices, which we're shooting from now. Then we have three units, two on short-term or two long-term tenants and one Airbnb unit now.
 
In this example, we spent about $1.4 million to build the fourplex. That mortgage is right around $6,800 a month. To make the math easy, we have two long-term rentals in the community, one's a two-bedroom, one-bath that we're running for $2,200 a month. And the other is a two-bedroom, two-bath with a 350 square foot private deck for $2,400.
 
This is San Diego. These rents are well below market rate currently. We could probably be charging an extra $300 or $400 a month. But that's part of the beauty, as you'll see in this.
 
After rent, we owe about $2,200 with the long-term rentals left on our mortgage. Then our short-term rental is bringing in no less than $2,900 to $4,000 plus per month, especially during the summer. You can see that the cash flow is anywhere from $700 a month to $1,800 a month. We're living in the building in one of the biggest units, so we're living for free. So that's pretty amazing.
 
The extraordinary benefits, I think, of doing it in a fourplex situation, especially where more affordable housing is needed, is you can increase your profits by turning one of the units into an Airbnb. It allows you to rent the long-term to long-term tenants at an affordable rate or below market like we are and provide much-needed affordable housing which is cool and helps your fellow man.
 
In our scenario, my wife can work less because she's a nurse, so she works two days a week and can stay home with our small children more, which she's excited about and it's not stressful. Then ultimately, we still live mortgage-free in this building and this can be replicated in other places.  We're now saving money to either do a fourplex or some sort of an adventure ranch in either Lake Tahoe, my hometown of Bass Lake, or Mammoth Lakes near Mammoth Mountain ski resort. All these places need more rental housing, more affordable rental housing, new or nicer rental housing.
 
I believe this strategy with Airbnb Investing can allow us to still generate the cash flows that we need to continue to build and save and build more buildings but also afford us to be generous and give affordable housing back to the market where it's needed most.
 
Anyways, that's my strategy. I hope you liked it. We're looking to grow. We're looking to collaborate. If you're interested in any of this, I'd be happy to talk you through it a little bit more specifically, or if you're interested in some of our future products, please reach out to me. I can be reached at 619-885-8188 or jeremy@sustainablevillageredevelopment. I hope you like this and make it a great week. Talk to you soon.
 

Hey, this is Jeremy With Sustainable Village Redevelopment, here to talk to you today about the developmental process for real estate, something near and dear to my heart after our first development, something that I know pretty well after having gone through the complete process recently and some of the pitfalls tricks and tips that I would offer anybody who's looking to get into this exciting and rewarding field of real estate redevelopment in your local town or community.
 

First and foremost, I think you absolutely have to understand the zoning in your local town or community. Basically, what this constructed of are these six line items.

1)The height limit: how high can you build the building? If you can build higher, that allows you opportunities to add and augment the structure so you can get more floor area.

2)The floor area ratio pertains to how many square foot of building you can build compared to how many square feet of lot you have. If your floor area ratio is higher, you can build a bigger building.
 
3)Setbacks, obviously, is how far out you can build the building to the lot line. If you can build further out, or if you have an alley behind the property and that allows you to use some of the alley to comply with your setbacks on the back, you can build the building farther towards the rear of the lot and build it bigger or better situated so that you can use more of the land for a courtyard or whatever.

​4)Obviously, how many units you can build is huge because the more apartments you can build, the more rent that the building will bring in, and the better it will offset your pro forma in that.
 
5)Is there an opportunity for a density bonus? Generally speaking, in San Diego, I think if you can get up to five units or over five units, you can apply to the city to get a density bonus. Usually, this entails giving them some portion, usually 10 percent of your apartments at market rate rent or affordable rent, and they'll allow you 20 percent more apartments. You give them one, you get two, something like that, depending on how many units you're actually building.
 
6)Then probably lastly, I know a lot of architect developers, and there's architectural trickery involved in this. Can you build a two story apartment that you can chop into two after final by building duplicate fuller plans and putting an interior stairwell and doors that lock? Can you turn a garage into a living space after final by plumbing it, pre-plumbing it, things like that? Just ways to monetize your development in different ways so that your overall cash flow is better, setting you up better for future developments.

​Secondly is buying the property. I mean, obviously, you're going to try and be looking for some sort of deal. We're looking for maybe something rundown, distressed, the owners behind on the payments, or it's bank owned, or it's obviously hopefully just not built to the highest and best use, which is what you're going to be looking to do by developing a property, or it's raw land. That's something that I'm not completely familiar with, but we're going to be getting into probably later on.
 

    Then understanding the loan programs. Obviously, the 203K and the home style renovation loan are fixer upper loans and allow you to really economically build up to four units. Whether it's a single family house you're buying and you're adding a few units, you can go up to four units with three percent down financing, and it generally goes up to 1.2 to 1.3 million top. You build whatever you're going to build. If you can build four units for that, you can build four. If you can only build two or three, you add an additional one or two units.
 
Then there's obviously traditional construction on lending, which requires a much higher down payment. Hopefully, these beginning programs, the 203K and the home style renovation loan are the baby step that gets you to the point where you can afford to do bigger buildings, which is where we're looking at, leveraging your first couple of properties and then building up to the point where you could build a little bit bigger community or whatnot. As far as the nuts and the bolts of the developmental steps, in my opinion, there's a lot of them, but these are them.
 
There's not many books on this, so I'm going to go through them and hopefully this adds value for you building a home for yourself, or building a duplex, or building a fourplex, or whatever your intention is. Whether it's income property, or to live cheap or whatever, have a developmental plan. This entails understanding the zoning, buying a property, knowing your loan programs and more or less what you can do on the property. Tie up the property, buy it. You could use maybe a zero down loan, or an interest only loan, or a variable loan to get into the property cheap, because the whole intent is just to lock it up and start turning the wheels to get ready to redevelop it.

Get prequalified for your expansion or developmental property loan, one of these programs or something like that. Start getting those wheels turning so you're pre qualified. Meet with architects. Develop an architectural plan of what you can build within these constraints of the zoning for the highest and best use. Generally speaking, making huge apartments doesn't get you that much more rent, and it all costs you per square foot. Just threading that needle and that balance of what you can build nicely that's affordable to the consumer and makes you money and is the highest and best use.

​Find contractors to bid on the project. Obviously, you need somebody to build it. Submit to the plan check in your local county or city. In my experience, this takes two to three months to go through plan check, so they will review your plans, approve what you're proposing to build, and then give you a permit. Sign the contractor after you're already in plan check and you're starting to head down that direction or some variation thereof.

​ 
Get your building permit once it's been processed through plan check and they approve. You want to get your building permit so you can break ground. Get the loan funded right around in the same time frame. Break ground on your project and start building.

​One thing that we messed up on was not working on the utility upgrades. If you're augmenting the structure, they're probably going to ask you to augment the water, gas, and power links to your property, and meters. So I would get working on that immediately. We got stuck at the tail end of our property and it almost dragged us under.

​Getting close to final, start with the pre-leasing. If you can get some of the apartments pre-lease, that will help you with the refinancing at the tail end of the loan if you want to do that for your cash out refi. Get working on that as soon as you can, as soon as you have a viable product and marketing material. Begin the refi process, so you're starting to get prequalified to refinance into a long term loan, or cash out refi loan, or whatever that looks like for you.

​Consider a cash out refinance. That's what we did just because generally, you want to try and build the property for less than it will be worth so that you can either refinance into long term more economical money or pull some money out to roll into the next project. Maybe another thing is the difference between a portfolio lender versus traditional banks and mortgage lenders. Portfolio lenders are usually local credit unions that have much more flexible terms and can offer you reduced rates or more flexibility of cash out refis.
 
We were looking at going into a jumbo loan that was going to be five percent to six percent interest on this fourplex that we built here in San Diego. I called every credit union in town and I found a front wave credit union here in San Diego that would do a $1.4 million cash out refi, $100,000 back to us at 3.1 percent. Traditional lenders just couldn't do that. They we're operating within the very strict Fannie Mae and Freddie Mac guidelines or whatnot.
 
Then just what's your exit plan? Are you cashing out? Are you pulling cash out of the building? Are you getting an equity line against the property, saving, partnering, and then rent and repeat, if you're going to go on and build more stuff, or maybe just build an income property and then use some of the equity and money that's coming from the income property to buy a nice house for your family or just continue the process?

​For us, we built our first fourplex in San Diego. I'd like to build another fourplex in Lake Tahoe next so that we can have a cheap or economical home up there. In San Diego, where the rents cover most or even provide us some profit, and we even inject some short term rentals into the buildings just to keep the rents low for our long term tenants. there's a lot of play in what you can do, tons of creativity involved in this process. But it can be amazing to be able to design and build structures of your own imagination and see it come to life, build your own house to live in with units to support it. It's something that we're very excited about and are in the beginning stages of this rents and repeat cycle.
 
If you have any questions or you'd like to talk through more of this in depth, I'm open to talking to anybody who's interested in creative. This is just another company that we're building and we'd be honored to talk to you if you're interested in this. I can be reached at 619-885-8818 or Jeremy@SustainableVillageRedevelopment.com, and then obviously, you can see more out our first project here in San Diego at SustainableVillageRedevelopment.com.
 

Today we overview the 203 k rehab loan that allows you to "renovate" up to 4 units for 3% down payment.  This low down payment rehab loan program is an awesome way to buy run down homes most loan programs will not fund.   With a low down payment of 3% you can renovate or add up to 4 units on properly zoned properties.  Allowing you all kinds of creative way to live cheap or mortgage free in a cool newly renovated homes of your own design!

     So enjoy this overview of all the key great ways you can capitalize on this 203 k loan rehab loan program. To grow your wealth, live in-expensively, and build cool homes of your own design in your neighborhoods!

Let me know what you think about some of this new content related to the projects we are doing ourselves in San Diego currently!

Yours in creating cool new communities!

​Jeremy

       I have wanted to build fun, architecturally interesting, sustainable communities that add value to the communities we love to spend time in for years.   Ever since I spent 3 years as a volunteer in the United States Peace Corps  I have been enamored with village-style living.  Perhaps this is why when I returned from Nicaragua small town living, I was rudely awakened to the “communities” most Americans live their daily lives in.   Since returning from the Peace Corps I have dreamed of slowly re-building communities in a more social, fun, and sustainable manner.  Tieing in ideas I most enjoyed from the slower paced village-style communities I experienced in Latin America.
 
     I knew I wanted to redevelop run-down properties in the towns we most love, lived in, and visited like San Diego, Lake Tahoe, Mammoth, Crusted Butte, and Jackson Wyoming.  However the financing, and knowledge on how to start seemed daunting.  Furthermore most resources I found just talked about the process in a theoretical manner. 
 
     Well my friends, I am here to layout one of the more economical loan programs and ways to house hack, possibly building cool new housing of your own design, using the 203 k loan program or home style renovation loan.  The 203k loan program is especially powerful allowing you to purchase run-down homes or duplexes and “renovate them” up to 4 units for around 3% down.   We used a similar loan to redevelop our duplex home into a new 4 unit community of our own design this last year.  

​      Allowing us to design and build our ideal community and a nice home for our selves.   Ultimately providing us a creative path to house hacking, living for free or very cheap, in a brand new build we owned with 3 rental units to pay for all or most of the mortgage.   Not to say that it was without its stresses initially, but living close to mortgage-free using this creative house hacking method using the 203k loan is worth its weight in gold long term!
 
   Best part of it is you can do it again and again if you really want to add value and nice rental units in your community and build your wealth along the way part-time.
 
Initial Duplex Basic Numbers:

• The original Purchase price for our Duplex in North San Diego 2013  $570,000. I put down around $15-18k 3% down with fha first time home buyer program.  You can buy up to 4 units I believe with this loan still depending on purchase price limits
• Total mortgage initially was around $2500 a month or so I believe with mortgage insurance
• We lived in front house and rented the 2nd 2bed 1 bath house for around $1950 a month
• Living for around $2,000 with insurance and utilities and maintenance included which was pretty inexpensive in san diego for having a fairly nice home at the time
• Once we refinanced and got the PMI off our mortgage in a year or 2 our total monthly expensive was more like $1200 which was less than a studio apartment rent in san diego at the time!

 
       Once I found out we could build 4 units we got to work figuring out how we could affordably add 2 additional 2 bedroom apartments to our lot.  I even know a trick now that would have allowed us to build 5 units with some architectural trickery! 😊
 
Adaptive Re-development into a 4 plex process:

• Leveraged our equity in the property after 3 years of paying down the mortgage we used a 203k loan / home style renovation loan to adaptively re-build our duplex into a 4 plex.
• The first phase was coming up with an architectural plan that we liked and fit within the city’s max height, floor area ratio, setback, and other zoning requirements. In our case, our lot was zoned RM 3-5 allowing us to build 1 unit per 1500 sq ft of lot space. We had a lot just over 6000 ft so this allowed for up to 4 units
• Once we had an architectural plan together we began interviewing contractors for bids and entered the review process with developmental services of the city of San Diego.   I took the plans through plan check myself and had the architect help us with any changes.   I would say this process can take 3-6 months depending on your skill and interest. Or you can just pay the architect to help handle it for you which is probably easier but costs more.
• After passing permitting we got our building permit and demolition and rebuilding took around 10-13 months.
• Generally, these 203k loan and home style renovation loans let you come in with a low or now down payment, allow you to borrow up to $1.2 or $1.3 million or 110% of your after repair value.  They also allow you to finance up to 6 months' worth of payments while you are rebuilding or renovating your property.  Generally, they are used for remodeling a home etc, but you can build up to 4 units which is an awesome way to leverage your money saved.
• Our 4 plex took about $700,000 to permit and build leaving us at around $1.3 million all in to acquire/assume the duplex loan of $500,000 and build 4 units out of our duplex.
• I had to do a lot of calling around to portfolio lenders and community banks but eventually found a credit union that would let us cash-out refinance up to 80% loan to value.  So we pulled around $100k out in cash to pay some overage off and get into a more traditional 30 mortgage at around 3.1%
• Our mortgage is now around $6700 a month now and once we rented the 3 units we were bringing in around $7,100 in rents.  Essentially living for very cheap and or free right off the bat.
• To sweeten the deal even more, our tenants are helping us pay down around $30k in equity a year and we can depreciate the 3 rental units “value” over 27 years.  Virtually eliminating another 90-100k in taxable income from my family's taxes.  We basically will not be paying taxes anymore
• Did i mention you also own a business now so you can write off most of your expenses against any income you show. You know laptop, mobile phone, car, mileage, internet, electricity, water, food in your company fridge, and on and on.
• If you wanted to go further we are now applying for a HELOC home equity line of credit against the 4 plex of $250k or so based on a valuation of around $2million for a new 4plex in san diego.
• Save a little more money over the next year or so, combine it with your heloc money you can borrow short term and rinse in repeat to build a few more units and move into those.  Not to mention our unit in the 4 plex will rent for around $3500.  Giving us a cash flow on a new 4 plex of around $2500 a month holding back 1k for capital expenses like re-roofing, repainting etc.

 
 
    I would not say this has been an easy undertaking.  But, we got to design and build a community basically from the ground up.  We included amenities and unique features that were very important to us and our long term concept:   loaner bikes for the tenants, loaner surfboards, solar power to power the entire community.  Vegetable gardens for those who want to grow their own food, and great social community spaces with picnic tables, market umbrellas, Adirondack chairs, etc to make the place cool and unique.   More of an experience than an address as I like to say!   If this house hacking method using the 203k loan or homestyle renovation loan is interesting to you connect with me.   I would be happy to help you with a little front end consulting and share my proforma with you to put you on the right track.
 
      All consulting or one on one coaching fees we would charge further help us to build more cool, sustainable, architecturally interesting communities.  Benefiting the towns we most love that need good rental and affordable for-sale housing desperately.  We hope you found this information helpful and more of the nuts and bolts information you would need to replicate the process.
 
Yours in making our communities fun, cool, social, and architectural interesting again!
 
Jeremy Curran
 

    Currently we are saving up capital and looking for our next project opportunity in the Lake Tahoe or San Diego markets.  Ideally we will most likely be  building a new architecturally distinct smaller multi-unit residential building within the urban re-development zones of South Lake Tahoe.   We intend to keep one unit as our economical second home and rent the rest out to cash flow the building.   Lake Tahoe is in the midst of an affordable housing shortage and is offering incentives to building multi-unit and mixed use buildings in its urban core.   We hope our proposed infill building will be a win, win for the area and our slowly evolving redevelopment company.   We will keep you posted!   Then we will most likely be pulling some equity out of our 3 plex and looking to build something from the ground up again in the north park or golden hill areas of San Diego.