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[00:00] hey guys I'm Dylan the investor agent and realtor right here in Tampa Bay today I want to talk about pads split what it is and how it works and you may have heard about it from other investors maybe on Bigger Pockets or maybe you stumbled on to it from Google and like all things new you're probably skeptical
[00:14] of it and maybe even skeptical in the same way you were of Airbnb in the beginning see there's a new way to rent out your property these days and I think it's risen out of a crisis of unaffordability often referred to as room sharing patch spit allows owners to rent out individual rooms I mean similar
[00:31] to the Airbnb model in the beginning but Airbnb opened the doors to short-term and vacation renting but pad split takes like a a leap sideways right they're this interesting model is breaking down the affordability barrier for a significant class of renters but it's also unlocking previously unobtainable
[00:49] cash flow for landlords I mean like often doubling or tripling conventional long-term rental how does it work padsplit is very similar to Airbnb in the sense that they're both just a website and a market um you can put your property on there and they will find you tenants now they'll market your property
[01:07] screen and approve your guests and price ranges for them they'll collect rent and even arbitrate issues between the members the key though to really making this passive is through hiring a host or property manager to handle the maintenance like day-to-day stuff like the repairs otherwise it's a it's a
[01:25] pretty active business like Airbnb the typical rents are of Pat split according to the data provided is between 25 to 40 years old they're single um Pat split does not allow overnight stays with like boyfriends girlfriends or or their pets the average stay is about 8 to 10 months so they are considered long-term renting
[01:43] and the average occupancy rate right now is about 93% for the Tampa Market eviction rates are pretty low and they're also very quick because like members they pay weekly and I think if they miss like two weeks they're at risk of being evicted and with that on their record um they're going to be unable to
[02:01] find another PAAD split room and I mean unfortunately if you can't afford a PAAD split room I don't know how you can afford a studio or a one bedroom right now anyway let's dive into the numbers a bit the rental rates in padit properties average 600 to 900 per month per room the pricing is contingent on the room
[02:21] size the bathroom count the level of updates in the house and of course the location The Sweet Spot for most rooms I think seems to hover up see to hover about $200 per week and that that average averages you about 800 per month and I'm rounding down because some months have five weeks but here's where
[02:38] it gets practical and exciting because like picture a typical house in Tampa an updated four bedroom three bath maybe the average is actually a 32 but it's a 43 upgraded into an 83 this property as a 43 would only run out for like 25 or maybe 2900 maybe but we can get you closer to 6,400 a month through pads now
[03:01] you're not just netting all that as extra profit because there are other fees and expense expenses associated with renting it this way we'll talk about that next but you will notice a huge difference especially if you were previously underwater or like negative with your long-term rents especially if
[03:18] you bought in 2023 as far as the extra costs associated with being a pad split owner um pad split charges 14 and 3/4 um% currently and then it'll cost you about another 6% a month to hire a property manager or or host to make it fully passive they're also going to be covering all the utilities which can
[03:37] average 600 to 700 a month depends on the size of the house like there's there's we'll go over that too but I tend to keep vacancy capex and maintenance reserves the same as you would a long-term rental there are some upfront costs associated like there's Furnishing it
[03:53] only costs about7 to $8,000 actually for like a seven or eight bedroom house far less than Airbnb I mean it's like 20K if you do it right if you're in the Tampa Bay area I am connected with people who can not only help you furnish your property but they can also help you manage as well so let me know now here's
[04:10] the catch though because obviously not just any property can work for pad split there are several factors we have to consider with each property there's location there's parking there's bedroom Tob count ratio there's bedroom minimum square footage is it in an HOA is the layout conducive to that many uh
[04:27] bedrooms how much will it cost to renovate the house this is where you should really work with an agent who knows padsplit and they can advise you on what works and what doesn't I mean one of the great things I think about padsplit is that literally someone can move into a property with on very very
[04:44] very short notice they don't need to put in a security deposit they don't need to set up utilities um if they can pay through pad split online with a credit card like you would with Airbnb and then they can jump right into a room that's already half furnished they just have to bring their sheet their toothpaste their
[05:01] their clothes whatever uh and move outs for you move outs are super quick because remember they're they're easy you're turning one bedroom not the whole house just one bedroom and statistically I've heard from from a lot of owners they actually tend to leave the rooms in pretty good shape because they want
[05:20] their deposit back so why go with a room share or pad split I mean I think it gives investors the opportunity to buy properties they normally wouldn't be able to cash flow with and appreciate quicker because they're in potentially nicer areas and and the cash flow is there or at worse Break
[05:35] Even we're thinking about this from a cash from a appreciation first perspective with cash flow as a sidekick but like think about all those properties you would love to own but the problem is that they're in that A or B area and your cash flow was probably negative 500 a month with some of those
[05:49] properties and in this crazy market right now with the interest rates so high you can actually cash flow on some of them or again at worst break even and not only that when you're Buy buying these properties we're in such a weird Market you might even be able to get a price reduction on them because
[06:05] they've been sitting on the market for a while so just think about that because we do have an unaffordability crisis these types of rental properties are serving a class of renter that just cannot afford anything we have a lot of U I think their essential workers getting paid less than $2 to $3,000 a
[06:23] month and how can you afford A1 or $1,100,000 Studio when you're paying taxes you're paying rent you're paying food and clothes you're paying a car you're paying car insurance and gas student loans and a ton of other stuff but while it may not be as cool to own this type of property versus an
[06:46] Airbnb I mean with an Airbnb you can go travel and visit during the Dead season you can tell your friends you can show off I think there's less risk involved with pad split I think we're seeing the market shift and it seems like for the foreseeable future there's always going to be a a fairly
[07:03] large amount of people who need very very affordable housing people who don't want to live in their parents' basement anymore or who need to save up to buy their first house whatever it is don't forget to share this with an investor who doesn't know about pad split or doesn't believe you and please like if
[07:19] you learned something and let me know what you think about this I've worked with several buyers in the Tampa Bay Market to locate and close on future padsplit properties you're in Tampa St Pete Lake or Sarasota or anywhere in between hit me up and let's talk thanks for watching
