STR Lincoln NH (Loon Mountain)- How to finance? How to Analyze?

Question

I'm currently evaluating 3 bed condo's near Loon Mountain in Lincoln NH. While they seem to cash flow with traditional financing, most HOAs will not qualify and require a portfolio loan. Does anyone have any experience with portfolio lenders or creative financing methods to avoid 25% down?

As I analyze these properties I'm doing my best to evaluate the STR market and avg price/night but having a tough time w/ 3 bed comps. This market in particular seems to have significant opportunity 3/4 seasons (winter, summer, fall). There seems to be good cash flow opportunity or at the very least break even opportunity w/ some personal use.

1. Does anyone have experience in this market or offer any advice on avg price per night for 3 bed condo?

2. Any data on vacancy rates?

3. Any ideas for financing a property outside of 25% down?

Thank you!

Erik

Erik Kraemer · Answer

@Richard Lovering FYI, ended up w/ an approval for a portfolio loan (10/1 ARM) through Northway Bank who are familiar with all of the HOA's in Lincoln. Super quick, easy to work with and very helpful in understanding financing options on a 2nd home. All in far less expensive than I had projected which is nice given the uncertainty of rental figures!Best,Erik

Erik Kraemer · Answer

@Lien Vuong sure thing- I was quoted: 3.875% for 10/1, 3.75 for 7/1 @ 10% down.

Richard Lovering · Answer

Hey Erik, Going through the same process myself right now. I subscribed to AirDna for a month. I think the data is mostly correct based on what others have said about it. It at least should give you a general idea regarding vacancy rates, average daily rate, etc. I used NBT bank for one of my multi family apartment buildings in Nashua. They offered good terms on a condo for short term rental that I'm currently negotiating. We plan to use the condo as a second home periodically throughout the year, which may provide better finance rates than a pure investment property. NBT has been very responsive and easy to work with. Good luck on your search! Rick

Erik Kraemer · Answer

I think you’re going to find a lot more value in the 2+ bedroom market. I’ve found a mix of families and friend groups, so likely a larger market to appeal to with more space. You can certainly rent out a 1 bed and the numbers might work. Depending on your goal, you’ll find significant appreciation w a larger place.

Nicholas Demasi · Answer

Hey I know it’s kind of an old thread here but figured I’d give it a shot with a question what have you guys seen as far as rentals to rent easier when it comes to STR in Lincoln studios or at least like a 1 bed and bigger ?

Erik Kraemer · Answer

Once I had both listings set up and calendars synced it's a breeze. I have a lockbox, give the renters the code via message day of and that's about it. I have it set up so I approve before renting unless they're verified, but honestly no more than 45 mins a week max I'd say.I'm sure you could find a plow service up there- give Home Run a call and see if they have that as part of their plan. Being in a condo community they take care of everything so I don't have to worry about that. I think the nice part about their service is they handle both turnover and on-call repairs, so it's pretty easy.One thing to note about the rental market is that while it is a year round destination (aside from mud months- April and May) many folks inquiring about rentals over the summer are looking for a pool. A lot of complexes, including mine, have indoor and outdoor pools/ hot tubs and are independent of the association, so they offer outside membership. A nice-to-have amenity.

Daniel Jameson · Answer

@Erik Kraemer thank you for the quick reply and valuable info! How much time do you find yourself spending managing the bookings each week? My plan is to buy a value add single family opportunity up there, my strongest suit right now is in renovations so want to try and get a deal that way. This will be my first rental short or long term so figured utilizing a property manager might cut down on the risks of me having a tough go of it for my first one. The cleaning & maintenance was definitely the largest part of that concern though. Do you know if they do plowing? I feel like that has to be a challenge up there.

Erik Kraemer · Answer

Definitely start looking to get a feel for the different associations, related costs, amenities and pricing. It’s still relatively competitive up there. I also recommend a local bank. Local banks know the properties, % investment owned etc that will play into financing options. Would highly recommend, as mentioned above she was able to get us conventional when all signs pointed to portfolio. I worked with Ben Wilson of Remax in the mountains. Great guy, very helpful, a lot of connections. I’m using Airbnb and vrbo to rent, a lot of places charge a ton to use onsite rental services- so far so good I use Homerun Property Services for cleaning/turnover- http://www.homerunps.com Colette runs the cleaning side and her husband does property services (repairs, maintenance, construction). One stop shop- they go in, clean everything, change linens, provide soap and paper goods. Highly recommend. Due to Covid additional cleaning measures increase costs but well worth it. It’s been super easy thus far other than having an issue w copied keys. Let me know if you have any specific questions about loon or properties. I was looking for about 6 months prior to landing one!

Daniel Jameson · Answer

@Erik Kramer any STR property managers or realtors up there you'd recommend? Finishing off a HELOC this week then I need to figure out those 2 and start hunting for a property up there.

Erik Kraemer · Answer

Hey All,Quick update, after offering on several condo's in the Village of Loon we landed a nice end unit, 3 bed 2 bath for $305. Closed early June so I don't have actual numbers on expenses, but my estimate is ~ $2300 all in. Financing came in better than expected w/ traditional financing for $274,500 @ 3.375% ($305k purchase price, 10% down) Have it listed on AirBnb and despite Covid, have it rented through early August. Hopeful for a more normal Fall!Questions on STR (via AirBnB):1. Do you have requirements for renters?2. Do you rent to folks w/o reviews OR new profiles?I understand AirBnB provides insurance, but obviously looking to avoid any issues.Thanks!