All Forum Posts by: Jake Durell

Hello - 

I am wondering if there are steps that an HOA can take to eliminate a condotel designation without eliminating the right to short term renters?

At the moment there are too many units on the rental market and not enough people living on premises who could be helping serve the community and making it a better place to live or visit.

Restrictions on number of rental units or rental days won't fly. 

I had one thought of seeking grants for low income resident owners that live on premises for more than a majority of the year. 

- Jake

Thanks @Jason Bott! Unfortunately, I am still finding it difficult. I've spoken with several today. They either won't cover a small HOA, or require some unspecified level of management. If you know anyone serving VT, please let me know.

My wife and I own one unit of a 2 unit building which we are living in. For whatever reason, we have an HOA for the building. The other owner own rents the upstairs.

When I started inquiring about coverage for STR in my unit for part of each year (~3-6 mos), the commercial agent claimed that the HOA master policy we had didn't cover the upstairs owner's rental. I'm looking at the insurance binder now for the "Business Owner's Policy" for the HOA, and I see the words "landlord" and "tenant" all over (e.g. "Covered Property, as used in this policy, means [...] Your personal property in apartments or rooms furnished by you as landlord"). It's possible that before my time running the HOA, the original policy was purchased when there was no tenant, but neither I nor the prior HOA head was ever asked about rentals over the past 7 or so renewals. 

Now the agent is telling me that we have a gap in coverage now, and no insurer will insure us unless we have a property manager. They have yet to give me a hard and fast requirement of what qualifies as property manager. E.g. can I or the other owner be property manager? They said something to the effect of "it would be good if it were a professional company that is insured" but did not go so far to say that insurance was a requirement. 

This seems excessive for a 2 unit building where the owners are around and care about the property. Are there insurers that will let me focus money and effort caring for the property rather than retaining some token property manager that has little to no function other than what is needed to help us check a box? 

Thank you everyone!

@Luke Carl hit the nail on the head about "where the wife prefers." We both love the area and I'm sure I've heard here to invest where first where you're comfortable.

But the money makes us uncomfortable. The plan was to use part of the HELOC to make the house we live in more STR worthy. This forced us to think how we do that for less and we will do that. But this will still leave us with $2,500 PITIA at the Beach, and maybe reserves to cover that with 8 months. Not sure if that is too thin @Marylin OShea, @Joe Norman, but I can't imagine getting comfortable with it by the Sunday offer deadline.

I think we do need to accrue a little more cash, and starting STR on our home soon will help. We could also do a little more research. We have a good prospective cleaning/consulting service who is providing solid advice, but talking to superhosts is a great idea @Corbin Loveless. Starting with a Condo may be the way to go as you say @John Underwood, @Karl McGarvey@Jon Martin I have trouble seeing how they generate enough to get us to our next property for at least five years. I agree higher end makes more sense when you can swing it @Derick Bonsu, and I never considered the hassle would be easier but that makes sense.

HOAs are somewhat unavoidable in this area at our range @Bruce Woodruff, but there are certainly ones that control fewer aspects of life. I have the honor of being "president" of a 2 unit HOA at home which is obviously pretty uneventful. Part of me gets excited about the idea of getting immersed in the politics of a larger HOA facing intense issues, and option 1 may be just the place for the @Jon Martin.

I am having trouble choosing between two beach properties for a first investment. 

One set of options are condos in a complex which basically has no beach during high tide and the HOA spends more and more each year remediating that. Fees were $5,500 but may go over $8,500 soon for beach work, but also other worthwhile projects. The HOA seems well organized. These units are anywhere from $160-$200k.

The other options that come up are villas on stilts usually in groups of 3-5 homes. These can be closer to $300k. When these rent, they rent for more money. There's not as many airDNA comps to see how often this might really rent. HOA Fees are basically nothing. Insurance might be as high $4k in CBRA zone though this property seems safer than the condos just outside the CBRA zone. But my wife and I would basically need to take a 90% mortgage to make this work. We'd need to average about 6k in rev after property management costs and any taxes and fees.

This is our first investment property which will be entirely debt financed. We will have a HELOC on our home and a new mortgage on the new property. We could do a villa and maybe have six months of reserves if we are lucky. We could have more with the condo. We likely have no where to go after that other than bankruptcy. I suppose we could try to increase the HELOC but that might be tight.

-Jake

Investment Info:

Condo buy & hold investment.

Just looking in this area so far

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

Spent a month there, and want to spend more time there.

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

Still haven't found a place.

How did you finance this deal?

Looking to do HELOC on home for down payment.

Thanks for posting this Del! I have been looking at property in Topsail and I am losing some sleep over the concern about global warming and hurricanes.

I am concerned that even if you get decent flood insurance within budget, the insurer might not renew if the property presents too much risk. We are new investors so we have to personally guarantee. NC allows deficiency judgments in any financing situation we would likely be in. So I am just picturing a disaster scenario where we are left holding the bag for a unit that can't be occupied.

These parts of NC are so beautiful and I would love to find a reason why these issues should not hold me up.

My wife and I have basically no cash except we own 75% of our home in New England. We can take out probably at least a 100k HELOC on our home. We want to start with making our current home a short term rental, and then get another condo unit on Topsail Island on North Carolina coast--which we use part time and as a short term rental. Good idea?

I am concerned we'll take out the credit line in our home state and then have too much debt personally to get financing on whatever entity we form in NC. We have great credit, but I do also have over 200k in school debt which I am handling properly on a payment plan through a public service loan forgiveness program.

I am also concerned that after taking out the credit line, we won't be able to compete with cash buyers in the area we want to buy in.