Here’s the Rundown for today:

📕 Read: Can you Afford a Lake-House A

🎧 Listen: Episode 005 - 3 Things To Know About your Insurance Policy.

Can You Afford To Buy a Lake-House Airbnb Property?

Have you ever thought about getting that 2nd residence? A nice little get-away where you can retreat & relax?

More and more millennials are considering this idea….and, even pulling the trigger.

The Detroit Lakes Area

As Fargo/Moorhead residents, we have quite the playground in our backyard. We call it “Lakes Area”. And it’s enough of a destination that people not only want to own there, but it’s a great rental market.

So…… 🤔🤔

“What if I could buy a Lake-House to use myself and rent it when I’m not there?”

Well…we’re curious too. Here’s an example of how it could work.

Here’s an active listing:

List Price: $599,000

• 2 Bed/1 Bath

• 840 SF

• Detroit Lake

Where’s the Money Come From?

The “2nd home” loan product lenders offer generally only requires 10% down payment.

Out of Pocket costs:

• Down Payment: $60K

• Closing Costs: $10K (could be negotiated by the seller.

• Monthly Payment: (see image)

🛑 STOP🛑

So, unfortunately, if your monthly income cannot handle this extra payment burden…the stop is over. WHY? Because the lenders usually need approx. 50-60 DTI (Debt-to-income ratio) for any borrower.

So let’s say your mortgage/Car payment/and CC debt was costing you about: $4500/mo.

Add the above payment burden to that: +$4175/mo

You’d need household income of ABOUT $18,000 to $20,000 per month in order for this to be possible.

If that’s not the case….then this specific example doesn’t quite work for you. BUT don’t be afraid to TWEAK THOSE NUMBERS!

****REMEMBER. The Bank can’t use rental income on property until after 2 years of history 😥

But, you got a RAISE! 🤑

So let’s assume you tweaked things a bit and made it work…Yay!

Now comes the fun part…

You can furnish this place and rent it out to cover the costs for you.

Based on a quick Airdna Search, here are some quick stats from airbnbs in the DL area:

• $372 average daily rate

• 49% occupancy

So Let’s Run Some Numbers

Using these stats, your new purchase has the potential to do $5500/mo in airbnb revenue. 30 days x $372 × 49% = $5468/mo.

Now there are other expenses like:

• Cleaning costs

• Internet

• Lawn & Snow removal

• Maintenance & Materials

CONCLUSION

If you…

• Have the monthly income to qualify for that payment ✅

• Are willing rent out your place by the night ✅

• Can coordinate cleanings & guest stays as a manager ✅

I think there's a recipe for success here....plus you can use it the other 50% of the time 😊

The Midwest Invest Report LIVE 🎙

LATEST VIDS 👇

Episode 006 - 3 Must-Knows about Insurance in 2024

Multiple Offers in Real Estate & how to use an Escalation Clause

Real Estate Investing with only $10K

🗞 Stuff we like….

If you want Airbnb Data…

Airdna.co is a spot we go for airbnb data. It’s not perfect, use it as an approximate resource, prop managers are the best source!

Looking For Your Next Book…

Currently reading Dan Sullivan’s new book, 10X is Easy than 2x, and it will change your mindset about business.

If You’re an Optimizer…

STOP what you’re doing and subscribe to All The Hacks podcast, it’s a gem!

YOUTUBE

Multiple Offers In Real Estate & How to Use Escalation Clauses

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