All Forum Posts by: Braden Smith

I have been looking at the rental data in New Orleans lately and it seems like there may be a surplus of rentals available, most likely due to the STR rules causing people to switch to regular long-term rentals. I also know a few people who have been having a hard time finding tenants lately.

Universal Citation: LA Civ Code Art. 688 (2022)

Art. 688. Branches or roots of trees, bushes, or plants on neighboring property.

A landowner has the right to demand that the branches or roots of a neighbor's trees, bushes, or plants, that extend over or into his property be trimmed at the expense of the neighbor.

A landowner does not have this right if the roots or branches do not interfere with the enjoyment of his property.

Acts 1977, No. 514, §1.

https://law.justia.com/codes/louisiana/2022/civil-code/artic...

Also see here:  Dealing With Neighbors And Trees

A construction loan would be the route to go to get the lowest interest rate. I typically use bank money for my deals. They are short-term, interest-only commercial loans. The rate will be lower than hard money or private money, but the catch with these loans is they will require 20% down and the interest rate is a floating rate that typically runs around 1-1.25 over prime. Currently, the prime rate is 8.5% so these commercial loans are around 9.5%. The interest costs will be hefty and eat up a lot of profit. 

A few things to keep in mind:

Getting a property rezoned in New Orleans is rather difficult these days, and city hall is a disaster. You can't even get anyone to answer the phone at city hall. And getting anything done with the city is a painfully slow process lately. 

Ever since Hurricane Ida, the last major storm to hit us in AUG 2021, construction costs (material and labor) in our area are up about 25-30%. Hiring a contractor to build is going to start around $165/sqft and will be more for a multifamily. A full gut rehab is going to run about $85/sqft at cost. I just spoke to a contractor I know last week who just wrapped up a full gut on a double and that was his cost with no contractor markup. Add 20% to that to hire a contractor. 

Insurance is an absolute nightmare in our area. Premiums have doubled, tripled, and even quadrupled in some cases. Folks are seeing their monthly payments jump up hundreds of dollars and in some cases $1000 or more per month. We have very few insurance carriers to choose from. This is part of the aftermath of Hurricane Ida as well.

Short-term rentals in New Orleans have become next to impossible to do legally. The city just won a court case and the last round of rules and regulations that were in question are now in full effect. See here:  Federal judge gives New Orleans City Council green light on short-term rental limits

It has been rather difficult to get deals to pencil in our area, to say the least...

When you purchase a property, you own the air rights above it. If a tree branch is over the property line the person who owns the air rights has the right to cut the limb, unless it is a tree in a protected area. 

I recommend @Joe Latson with Backflip. Scan the QR code to get the app or use this link: https://backflip.mobi/BradenSmith

As of March 2023, short-term rentals are banned in all residential areas of Jefferson Parish and only allowed in commercial and mixed-use zoning districts and six municipalities. Even in those commercial areas, short-term rentals are forbidden within 300 feet of residential zones. Owners are subject to a 750-dollar licensing fee and a long list of requirements and rules.

The Breakdown: What are the short term rental rules surrounding New Orleans?

It is typically 10%. @Stephen Leonard manages a lot of rentals for local investors. He can verify the going rate...

Hi @Douglas Bennett. Welcome 

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As far as building a fourplex goes, it is expensive and probably more than you think it is. Building in general is considerably more expensive than it was just a couple of years ago. Construction costs are up around 25% across the board. For example, I used to be able to build a single family at about $100/sqft at cost. It is now at about $145/sqft at cost for a typical house. That cost will go up for nicer homes. And it will be a good bit higher for a multifamily as you have multiple high-ticket items, i.e. kitchens, bathrooms, HVAC systems, water heaters, etc. I have not priced building a multifamily in recent years but I would imagine that the cost would run about $165/sqft or more at cost, especially with a fourplex as you have 4 of all those high-ticket items and I believe a fire suppression system is required on new fourplexes which can easily be 60k or more. 

Keep in mind that those numbers are at cost. Add a minimum of 20% on top of those numbers to hire a contractor. So if you can build a fourplex at $165/sqft at cost it would be more like $198/sqft. Let's say you build a fourplex with 4000 sqft, 1000sqft per unit, you are looking at about $660,000 to build and that doesn't include the cost of the land. Those numbers just don't work. You would be better off buying an existing fourplex and updating it to maximize the rent.

Hi @Rick Chang. I am an investor and a broker in New Orleans, licensed in both Louisiana and Mississippi. I co-own GNO Realty and I own REvitalize Property Solutions. I will shoot you a message. 

Hi @Bryan Bahil. I am both a real estate investor and a licensed broker in Louisiana and Mississippi. The Fat City area has improved over recent years but it is a very densely populated area with lots of apartments and condos. Purchasing a condo as a rental has its pros and cons, as follows:

Pros of owning a condo as a rental property investment:

1. Lower Maintenance Responsibility: In many cases, the condominium association is responsible for the maintenance of common areas and exterior structures, reducing the landlord's maintenance burden.

2. Amenities: Condos often come with amenities such as swimming pools, gyms, and security services, which can attract tenants and potentially command higher rental prices.

3. Community Living: Condos are often located in communities with shared spaces, fostering a sense of community that can be appealing to certain tenants.

4. Lower Entry Cost: Condos may have a lower entry cost compared to single-family homes, making them more accessible for some investors.

Cons of owning a condo as a rental property investment:

1. Homeowners Association (HOA) Fees: Condo owners typically pay HOA fees, which can affect the overall return on investment. These fees cover common area maintenance and amenities.

2. Limited Control: Condo owners may have limited control over property decisions, as many decisions are made by the homeowners' association. This can include rules on renting out units, exterior modifications, etc.

3. Market Dependency: Condo values can be more sensitive to market fluctuations compared to single-family homes, and economic downturns may impact resale values.

4. Rental Restrictions: Some condo associations have strict rules regarding renting out units, limiting the owner's ability to use the property as an investment.

5. Special Assessments: Condo owners may be subject to special assessments if there are major repairs or improvements needed for the entire building or complex. This can result in unexpected financial burdens.

It's important to carefully consider these factors and determine whether a condo aligns with your investment goals and risk tolerance.