New Orleans Live-in-Flip Airbnb Cash flow Property

[James Antin]

Investment Info:

Small multi-family (2-4 units) fix & flip investment in New Orleans.

Purchase price: $161,000

Cash invested: $10,000

First investment was an owner/occupant duplex in New Orleans. Rented out the owner's unit via a month-to-month lease immediately, while I lived and renovated the renter's unit. Took me 2 1/2 months to complete renovations on renters side. I moved into owner's side, and opened up Short Term Rental on the renter's side. Cash flow has been positive since first month of purchase averaging ~ $1,100 per month after mortgage and STR expenses.

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

Living for free, making an extra $1,000 on top of normal income, and learning from mistakes to do better on next investment.

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

Made an offer before the property was listed on MLS via my agent's contacts.

How did you finance this deal?

First time home buyer loan through conventional loan product via Iberia Bank. 5% down. 4% rate @ 30 yr fixed.

How did you add value to the deal?

Found, evaluated, financed, rehabbed, designed, and managed property.

What was the outcome?

I am currently listing the home for sale, and if I get a good offer I will sell for nice gain (avoiding capital gains tax, as the property was my primary residence for > 2 years.) If I don't get what I'm asking for, then I am going to rent the owner's unit out long term, and keep the renter's unit as a short term rental.

Lessons learned? Challenges?

Do more due diligence for what your neighbors are like prior to ask, and make sure the risk is factored into offer decision. I factored neighboorhood into offer evaluation, but I did not do specific due diligence int neighbors. The neighborhood is a mix of families, new constructions, section 8, etc. (lower/middle income neighborhood). However, my direct neighbors ended up being section 8, which may create issues for reselling home for what it should be worth otherwise.

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

John Hendrix in New Orleans is a great agent/investor/property manager/developer. I use him for all my real estate needs currently.

[Braden Smith]

Quote from @Jon Lester:

Quote from @Braden Smith:

Hey @James Antin. Congrats! Sounds like a pretty good deal. One word of caution on the STRs though... it is looking like the city will move to only allow STRs where there is a homestead exemption in place after they finish their 9 month moratorium and study. Just in case, I would run my numbers with both sides having long term tenants and make sure it still works that way.

 4 years later and we are still battling this battle.  Lucky for us, the LTR rents are higher than in previous years and can make up the deficit from the paused STRs.

The new STR rules that were just implemented are even more restrictive than the previous rules.

There is currently an ordinance pending before the Council which would sunset all existing RSTR permits on August 31, 2023. Operators and/or owners should not book stays after that without the understanding that applicants unable to secure an NSTR permit by that date will not be permitted to operate without an NSTR permit and any booked stays would have to be canceled if a permit cannot be secured.

See here:  Changes to Short Term Rental Laws Enacted on March 23, 2023