All Forum Posts by: Daniel Alvarez

@Troy Hebert I just saw the house for sale when I was in the area, so perhaps you decided to flip it. Should yield a healthy profit, are you doing a 1031?

Fantastic! Best of luck in the coming weeks and for 2021/2022. Charlotte is another very interesting market, for long term rentals at least. Vibrant city with solid growth and employment hubs. Can you share what kind of gross rent multiple you are expecting once you get a tenant in (gross annual rent / purchase price)? Are you planning to rent it through an agent?

Great to hear, Asheville is a fantastic market I hope to be able to explore for STRs one day. Hardworking agents are hard to come by in my experience, although thus far I've only been on the buy side, and I always have lots of questions and high expectations. 

In the OBX David Weybright is the absolute best I could have hoped for. He's a local entrepreneur, humble, and knows the area and its history like the back of his hand -which is invaluable when researching about land subdivisions, flood history (high risk factor in OBX) and market trends. He works relentlessly for investors, whether it's to get the right answers or unlocking value. 

Glad to see some great activity! I think OBX is one of the few last great coastal opportunities left.

Hope to see more 2020 experiences in the post. I'd guess that if you sold you probably made a decent margin, and if you bought I think there is steady tourism and more appreciation to be had. Of all things, the pandemic has created strong pent up demand in the area, and this was one of our biggest concerns. The avg "sold" price is up nearly 30% from 2019 (e.g. $560k vs. $430k in Oct last year), and market veterans say 2020 will finish stronger than 2004, one of the best years on record.

My wife and I had been looking into investing on a beach house in OBX to take the family a few times a year. For us it's a 4-5 hour drive, it's not crowded with large hotel chains, can still find properties with 10%+ returns, and it's beautiful and authentic. So after dealing with a couple realtors we found "the one" (could not recommend David enough) and locked in a semi-ocean front home that sold at the pre-GFC peak for $1.1m. It's also in great condition and has a large lot and water views.

So we put in an offer in July and closed in October, for about $760k after concessions. Getting an inspector and an appraiser in Jul/Aug of 2020 was like finding water in the desert, despite the fact it's a small market and everyone knows everyone. I also financed it with a piggyback loan (10% down no PMI) and that took managing a few curveballs. The initial 45 days to close quickly turned into 3 months.

An interesting concept is that in OBX a) most if not all furniture conveys, and b) any income from guest stays after you buy are yours, regardless of when they were made. This last point makes sense but it's also fascinating, because buying in April will get you immediate cash flow, boosting returns, but buying in October will mean operating losses until the next season bookings start to come in -which I had to account for in the numbers. Meanwhile property prices don't necessarily fluctuate accordingly...

I don't know enough about the market to compare STRs with LTRs, though I'd agree STRs can be riskier but can also generate higher returns. 

I can recommend touching base with a vacation property manager in the region, they can tell you about STR demand for new townhomes and would happily generate a no-obligation income projection, which you can use as a data point to compare. In fact I'd talk to two or three different ones.

I can give you the contact details for the property manager I'm signing with (it's early days but I'm quite happy with them so far). I know they manage SFRs as well as THs / bungalows.

2020 is almost over and it's been a year for the record books. Even for my portfolio, I took the leap into short tern rentals this year and bought a house in Corolla. The purchase process was by far the most complex I've undertaken, aggravated by how hot the market is across the Outer Banks. 

I'd be glad to share the juicy details but I'd also love to hear about YOUR forays in the Outer Banks in 2020, or in fact anywhere in North Carolina's markets like Charlotte, Asheville, Greensboro, Raleigh.

What did you purchase? Did you achieve your goals for the year? Any details you can share about the deals? (type of investment and why, sale/purchase price, financing used, rent/profit). And finally, any shoutouts to any professionals that helped you and you would recommend to others?

I've had a solid experience with Jackie from Elite. Great agent and very competitive rates.

Send me a PM and I can send you her details.

I'd be curious to find out how it all went as well

Hello BP community. Some background on the question first. I've recently closed on a beautiful second home on the beach using 10% down with a piggyback structure to get low rates, avoid PMI and increase return out per dollar in. Funding looks like this:

• 10% down
• Conventional loan, up to limit ($510k) 
• HELOC for the balance (~200k)

Property is expected to cash flow from short term rentals. I understand the interest on both loans is tax deductible (business expense) -although I'm guessing just for the period of time it's rented out (this is not the main question although also an interesting topic). As next step I'm now looking for ways to reduce the cost of the HELOC, which is currently at 6%. Primary mortgage is at 2.75%.

With the recent hot market my primary home has appreciated to a point I might be able to take a HELOC at 3% or less. On the surface quick math would suggest I could halve my HELOC costs by taking out a new one to pay off the existing one, or effectively "swapping" the collateral property from second to primary...

Question is, would the costs on the new HELOC on my primary home be considered tax deductible, as it would be used in the business. Also, would you do it?

Thanks so much!

@John Underwood Well I thought 20% was the hard rule until I learned about piggybacks and portfolio loans, both of which have no PMI in this case.

With rates and fees that are comparable to pure conforming mortgages with 20% down, I'd take these in favor of no PMI all day. I suppose as long as the eligibility criteria is met for the other more "creative" structures (DTI, credit, reserves, etc.).

I just wouldn't want some unknown risk to sneak up on me so I'm hoping investors with experience in piggybacks or portfolio loans have some counsel they can share...