All Forum Posts by: Cameron Calvert

@Account Closed FHA will lend on 2 structures. The tricky part will be getting the property appraised as there are basically no good comps on it.

@Jon A. I agree that buying at asking price will not cash flow with long term leases. I have factored mortgage insurance into my numbers. I26 is not close enough to affect this property, but there are other roads that could be expanding into it in the next 10-15 years. I hadn't considered partnering with the seller. I feel like they're looking to unload it. 

@Jeff Ronningen Could you further explain why it costs 8-10% at closing to sell with a realtor? How does using an FHA play into that?

Are you unable to refinance until you get to 80% LTV?

@Lauren B. yes, it's 98K gross revenue. The deal has fallen through for the following reasons 1)two business partners weren't totally in agreement and decided to go with cabins as their investments 2) a couple backed out after learning of the expansion of I26 and they decided to move somewhere else after finding out about Asheville's growth. 3) a couple couldn't get financing. 

I have a realtor and he agrees with you in that getting an accurate appraisal will be the biggest hiccup since there are not good comps. If I lost the ability to airbnb, I don't think I would be able to pay the mortgage with long term rentals. That's interesting that you bring up that it is being sold as a business because the property is not worth that without the rental income. 

@Jeff Ronningen Why would I pay down principle with my cash reserves if I'm preparing for an economic downturn? That's good advice to calculate the numbers based off long term rentals as a Plan B. 

@Bryce Cutler Yes, it's been used as an Airbnb/VRBO since 2016 at least. There are restrictions on short term rentals within Asheville city limits. This property is under county jurisdiction south of Asheville and there doesn't seem to be any restrictions coming, although that would be something I would have to make sure of during Due Diligence period.

@Morgan Klein Thanks for the honest feedback. You've voiced some of the same questions that I have.  1) You're right. This location is in South Asheville and is an area that is on the come up as the area between Asheville and Hendersonville populate. 2) This is a valid concern of mine too. This property has been under contract 3 times and has fallen through for various reasons. 3) The seller now lives 6 hours away and is burnt out on running this property from afar. 

4/5) The only response I have for this is that this property has historically earned $98k/year on short terms. There are also restrictions on running an airbnb within the city (which this property is not). Although there are talks that this may be lifted. A study just showed that Asheville is the 6th biggest airbnb market in the US too. 6) Another good point...That aspect does seem like a lofty goal. This place has gotten excellent reviews on Airbnb/VRBO and has been charging near that rate. Although the different units rent for slightly different rates. 

Thank you for taking the time to bring these up to me. It's been super helpful.

@Damian Bialonczyk

Yes I’ve taken all expenses into account, which the seller provided to me. I don’t know the rental breakdown or occupancy rates between the units. The numbers check out for me but I guess I’m just more concerned with jumping into this big of an investment as my first go around.

And yes getting the FHA loan will be possible. The tricky part will be getting an appraisal that matches my offer due to the uniqueness of the property.

I'm currently renting for around $1000/month and am looking to get into investment properties. I'm currently in talks with a seller who has a 4 unit (2 duplexes) for sale that is being used as a vacation rental banking $98k/year in revenue between the 4 units. The asking price is $610k. My plan initially would be to live in one of the units while managing the other 3 vacation rental units. I would be using an FHA loan so I would only put down 3.5% plus closing costs.

I would manage the property and take care of landscaping that first year while living there and should cashflow at least $5-10k while living for free. After I moved out, I would be getting revenue from 4 rentals instead of 3 and would continue managing the property and doing landscaping. In that scenario I would be cashflowing $27k-$32k per year. The place is well taken care of, has been remodeled, and comes with high quality furnishing. It's considered a "turnkey" property aka would be ready to earn me money without having to do anything to it. I live in a booming market where tourism is big and retirees are moving to in droves.

The cap rate renting all 4 units is around 11% and is 7% when I'm living in one of the units. I would have my cash back within 2 years. I've calculated all my expenses and have even been conservative with my numbers. I'm pre-qualified to buy and I wouldn't pay the full asking price.

My question to you is this. Is this too big of a leap for my first purchase? Are the numbers too good to be true? Will I struggle to run successful vacation rental cottages out of the gate?