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All Forum Posts by: Cody Smith

Cody Smith has started 21 posts and replied 114 times.

Post: Our First STR!

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $180,000
Cash invested: $55,000

This is our first Short-Term Rental out of the 3 total we need to be financially free! This property was already beautifully renovated when we bought it and we furnished the property. We now self-manage and host this property and things have gone very well. Learning to Host a STR has really opened our eyes to how much different it is than managing a Long-Term Rental. We very much enjoy the process and look forward to adding more STR's to our portfolio!

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

As we near the end of my military career, we would like to separate from the Army with a financial foundation that allows us to transition with limited risk. With that goal in mind, we are investing primarily in STRs in my local area of Columbus, GA to maximize our cashflow to supplement my current income. Three of these deals will give us what we need to leave the Army and move to our dream location.

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

This was an on-market deal. I am a local Real Estate Agent and had MLS access to catch this listing as it hit the market and place our offer quickly.

How did you finance this deal?

We used our first conventional investment loan with 20% down.

How did you add value to the deal?

By furnishing this property as best we could for a little cost as possible, we believe we have created the image and drive this property needs to bring the demand of the constant Columbus, GA travelers. This demand for quality, well-hosted properties adds value to our cashflow.

What was the outcome?

Things are rolling along smoothly. We have great reviews and great guests, the demand has been impressive as well. January was our first full month as a live listing and our cashflow was just over $800.

Lessons learned? Challenges?

This deal we completed the traditional way by leaving our money in the deal. I sell real estate part-time to fund our investments. Now that we've spent all our money pn this property, we have to save back up for the next one; not very efficient. We would like to conduct a BRRRR to ensure we are making the most of our capital in the future.

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

Myself! lol In all seriousness, please reach out to me if you are interested in learning more about investing in affordable, fast-growing markets like Columbus, GA. There is a constant flow of people here and the city is growing more and more everyday. I have helped multiple other investors put their cash to use in a market that is much more affordable than where they currently are.

Post: How do you tackle mold?

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

Hey everyone, I'm looking at potentially starting my first renovation on what would be a STR in my town. Most of the rehab needed is cosmetic to bring more life to this older property (1940's).

One of my largest concerns with the property is the potential mold in one hallway (pictures below). It appears the shower in the bathroom being right next to the door is releasing steam into the taller ceiling in the hallway with no ventilation. This area is staying moist and has created some mold on the ceiling and in the two adjacent closets. This is the only area of mold I noticed in the house. The seller has a dehumidifier in the property which may suggest a ventilation issue overall, or maybe just in that area. 

How do you factor for mold in your rehab estimates? How do you know if it is a serious case or not? I’ve read online the potential costs of mold remediation and how it can really put a damper on a rehab budget. Any insight at all is helpful. Thank you! 

(Sorry the pics are blurry, had to take them from a video)

Post: Do you think it is a good market to buy?

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

Hey @Rani Shukla! Great question. This is the same thing people are asking themselves all around the country! I think the decision to buy shouldn't necessarily be based solely upon the market conditions, but rather your personal ability to buy what works best for you. 

Obviously this is not the same market we saw 6 or 12 months ago. Things have changed rapidly and housing has become less affordable than it was before. Buyers need to keep in mind, however, that things will continue to change and always have. According to many real estate professionals, now is the best time to buy this year. The Fed has plans to continue to increase interest rates for the foreseeable future, so things may get even less affordable as time goes on.

That being said, just as rates are going up, they may eventually come back down! We may never see the 2-3% interest we have before, but they will continue to change throughout the course of time. This becomes a problem when people decide to "wait and see" or "hold off until rates come back down". What if they never do? What if today's rates are the new normal? I would rather purchase a home now that I can afford than wait and potentially afford less in the future. 

What if rates do go back down and you're stuck with a "high" interest rate from purchasing today? You can refinance! Even if they go down significantly, you have the option to remedy that higher interest rate by refinancing. 

In addition to rates, we are projected to see upwards of 20% appreciation over the next 3 years in the housing market. 6-9% over the rest of 2022, 4-6% in 2023 and 3-4% in 2024. As we continue to have shortages in supply, we should continue to see the demand that supports that appreciation.

Moving out and renting the previous home is exactly how I got my first rental property. It is a great strategy to get started as long as your current home will perform well as a rental.

Considerations before making your decision: Can you afford the home you want as your new primary residence? Will you have enough cash in reserves after the purchase to support your new rental property? Does your current house make sense as a rental? Do you have a back up plan for the property if the rental doesn't work out? How much potential profit will you lose out on between appreciation and cash flow if you decided to wait? 

There's never a perfect time to buy. If all my answers to these questions made sense, then I would do it! With the right research and plans, the market doesn't necessarily matter. Waiting for the right time could be the thing that hurts you the most!

Post: Finding Data for Market Trends in smaller cities

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63
Quote from @Paul C.:

@Cody Smith thank you for the insight! Where did you get the census numbers that you quoted?

 @Paul C. That came from a quick Google search!

Post: Finding Data for Market Trends in smaller cities

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

Hey Paul! My name is Cody Smith, I'm an agent and investor. I am from the Carrollton area, but have been in Columbus, GA for the last 10 years with the Army and this is where I have done most of my real estate sales and investing. I think there are a lot of variables for each of these options to determine why and where you would invest, here are my thoughts based on a "broad view" of each market.

If you continued to invest in Atlanta, obviously there will continue to be growth and appreciation, depending on the location. I would assume you have a higher cost of entry in your Atlanta properties, and would have to continue to pay more to purchase, while benefitting from the likely higher appreciation and population growth you'll see in a larger metropolitan market like Atlanta. (again, mostly guessing here)

For a market like Carrollton, I'm sure you are aware that properties can be much less costly to get into than Atlanta, but Carrollton is still a decent-sized market. I would assume you will see much less competition than in Atlanta, but could still see some pretty good returns if you find the right deal. My guess is your capital could stretch much further with less competition, but you likely wouldn't see the same levels of appreciation or rent increases as you would in Atlanta. Carrollton has grown a lot over the years, however, and I would say it will continue to grow and improve as more people are interested in more affordable markets close to the Atlanta area.

I would say Columbus, GA is pretty similar to the Carrollton market, but a good bit larger in population. According to the 2022 census, Carrollton, GA has a population of just over 30,000, an increase of 3,000 from the 2020 estimation of 27,000. The Columbus, GA market currently boasts a population of just over 200,000, an increase of 3,000 from the 2020 census estimating a population of 197,500. So, the increase is more dramatic in the Carrollton market when compared to similar markets outside Atlanta, but that comes with less opportunity as well. The Columbus, GA market has every type of property you can think of, with a wide range of options to invest in. I have seen some pretty good returns (depending on the property of course) with other investors I work with buying in Columbus. It's also very convenient to Atlanta and Carrollton, with a 1.5 hour drive to Atlanta and a 1.5 hour drive to Carrollton as well. 

Hope this helps!

Post: Realtors - Lets Connect!

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

Hey, @Jacob Zimerman and all the other great realtors on here! I’m Cody Smith, an investor-focused agent in the Columbus, GA and Atlanta markets. I am also active duty Army and love to work with other members of the military on their PCS or transition out of the military, or to help them understand the power of real estate investing. I will definitely refer back to this post if I find people headed to any areas represented! Please keep me in mind if you know anyone heading to Atlanta or Fort Benning, Georgia!

Post: Selling my rental before the lease is up

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

@Layne T. Right, I totally understand where you all are coming from! I've said for a long time I would never sell this property because of its performance and the fact I financed it with a VA loan, so I essentially have no money in it except the occasional repair. Maybe I am getting a little too excited with shiny object syndrome. I can't thank you guys enough for providing a counter argument and additional things to consider, it really does make me think harder about the decision.

What are your thoughts on using a HELOC as funds for a down payment? I have two properties (LTR and primary residence) that both have equity, I have just been weary of using a HELOC that costs additional money to use as a down payment. I picture a HELOC for something like a BRRRR that I can use to pay the HELOC back asap versus paying for it longer term in addition to the cost of the loan.

Post: Selling my rental before the lease is up

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

@Nathan G. Thank you so much for the response! It is very important to me to see all aspects of a potential decision, especially any reason why it might be a mistake.

I definitely understand where you're coming from when saying it may be unwise to let go of a property that is performing well. My thought process is to increase the amount of income I have now to better prepare for when I leave the Army. Looking at a conservative, affordable type condo at the beach that I know people will always travel to seems like a safer purchase than other STR options, STRs being important to me because of the increased cash flow.

I understand your mention of the inflated market in that area as well, I am definitely seeing it during my search. I guess I am just thinking about long term stability because of the type of property. In my head, I would be trading something stable with small cash flow for something stable with greater cash flow.

Does that make sense? Are there pieces of this I’m not taking into consideration? Thank you again for your insight.

Post: Selling my rental before the lease is up

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

@Jared Baker Thank you for the response! I should have clarified a little more. The property is a nice single family in a desirable neighborhood. I only cashflow like I do because of when I bought and my current mortgage amount. This house would likely sell to someone as their primary residence. The house could slightly cashflow at market price, but I highly doubt any investor would put $50k down on it for the little cashflow. Plus, I think I would get significantly more interest if listed as a primary residence for someone.

Post: Selling my rental before the lease is up

Cody Smith
Pro Member
Posted
  • Realtor
  • Panama City Beach, FL
  • Posts 122
  • Votes 63

Hey BP, thanks for stopping by my post!

I have a bit of a moral dilemma. I have a current LTR that I have gained about $80,000 in equity since purchasing. I began exploring STR properties recently, and after much research, I am interested in purchasing a vacation rental, a condo on the Emerald Coast. I have decided that I am interested in selling my current rental ($700/mo dirty cash flow) and using the proceeds to purchase one of these STR at the beach. The proceeds would cover my down payment and other costs associated. The property should appreciate over time due to location and demand, and should bring much more monthly income than the LTR, something very important to me as I prepare to transition out of the Army in two years.

My dilemma: I placed a new tenant with a 12 month lease on my LTR on May 1st.

I would like to give them first opportunity to purchase the property if they would like, but I’m not confident they will since this is an interim home for them until they build a home in a couple years. If they don’t want to, I would be selling and forcing them out 2-3 months into their new home and new lease. My lease does state the landlord can break the lease with 30 days notice to the tenant.

I feel bad for having to possibly put them out after just settling in, but if I am going to make this move on a STR, I do not want to wait until their lease is up for fear of interest rates and prices rising even further.

What would you do?