Our 1st STR - “The Retreat”

[Duane Napier]

Investment Info:

Single-family residence buy & hold investment in Wellington.

We purchased 20 acres at Cave Run lake in Kentucky, near Red River Gorge. We flipped an existing mobile home that was on the property, converting it into a log cabin which was our 1st STR. We have been developing the land to support multiple STR's.

What made you interested in investing in this type of deal?

We were interested in buying this 20+ acres property because it's in an area that attracts local and out of state visitors to the area to the Daniel Boone National Forest. We were certain that we could develop the land to accommodate multiple STR's.

How did you find this deal and how did you negotiate it?

A local real estate agent #adamratliff knew of this off-market property. We came in and offered $40K less than asking. The offer was accepted as long as we could close in 3 weeks.

How did you finance this deal?

We put down 20% and used a local private bank for the loan.

How did you add value to the deal?

1. Flipped a mobile home into a log cabin complete with poplar tongue & groove wood on the inside, D-log on the outside, converted a cement porch into a game room, added a mud room, metal roof and a very large river rock courtyard with firepit.
2. Rehabbed the property entry way from the main road
3. Added a large private parking area
4. Added a new front porch and extra-wide concrete sidewalk leading to the cabin
5. Added a nature trail to the 20 acre property for use of STR renters

What was the outcome?

The STR cabin performed 2x our projections and the local bank re-appraised our property enabling us to leverage a Heloc to build a 2nd cabin on the property.

Lessons learned? Challenges?

We nearly got burned by the 1st contractor that we hired for the rehab.
1. Do NOT pay contractors until the work is finished and do NOT agree to a draw schedule. Only pay on completion of work.
2. Pay contractors with credit cards so if things go wrong, this can be used as recourse.
3. Be willing to WAIT for the good contractors, if they are available tomorrow, that should be a serious red flag.
4. Put contracts in place for all work to be done that includes timelines and penalties.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Adam Ratliff out of Frenchburg Ky is an excellent agent! Highly recommended.