All Forum Posts by: Jason Hathcock

Good evening Cory.  I'm not an accountant so I can't comment on the depreciation question, but I would suggest that you reach out to the Commissioner of Revenue Office for the County in which you are purchasing land to see if they have a Land Use (tax abatement) program for land being actively farmed or growing timber.  You will need to qualify in order to participate in these programs (if offered) but that typically is done by providing a copy of the tenant farmer lease, or the owner attesting to growing/managing timber on the property.  Also, you may want to read up on the Growing Climate Solutions Act which recently passed in the House as a part of the omnibus package.  This legislation will allow landowners of farmland and forestland to participate in the carbon market as long as they are utilizing best practices when farming/foresting.  These carbon credits might provide some additional income for your farmland if your tenant farmer is willing to utilize (USDA) best practices for land management in an effort to reduce emissions/pollution and increase carbon sequestration.  Best of luck in your investing.   

Based on my local knowledge of the market on the OBX, I would definitely invest in the pool.  You will first want to check with the local town planner to verify what the maximum lot coverage allowance is for the subject property.  Each town has their own max lot coverage allowances.  You will then want to contact the health department to get a plat showing the septic tank location and drain field location if not on city/county sewer system.  Once you have those two pieces of information, you should know whether or not a pool will even be allowed on the property and if so, what size pool it can accommodate.  Then run your numbers.  You will likely find that with a pool you will get more bookings at a higher rate and more weeks rented each year and will pay for itself within a few years at most.  

I am located on the Outer Banks of NC where I invest in STRs.  To those of you that are losing bookings, I would suggest that you be patient.  Within the last 48 hours I have been flooded with booking requests from people with children who are not going to be in school for the next several weeks.  I have a feeling that as the virus threat continues to shut down places of business and schools, people will be looking to get away for a while.  

@Jason Riddick, Hey Jason, I just wanted to add that when some people are suggesting using AirBnb to help you determine competitive pricing to maximize your rental income, I don't believe that they are suggesting using the AirBnb automated pricing tool.  The best way to price your listing effectively is to look up other comparable Airbnb/VRBO listings in our OBX market (size, bedrooms/sleeping capacity, bathrooms, town/neighborhood, proximity to beach/sound, pool/spa, amenities, elevator, etc) and price your property with competitive/similar pricing.  Good luck this season!

Good morning Cal. The OBX REI networking group is not active at this time.

Hi Greg.  Meg and I are considering investing in a vacation rental between Kitty Hawk and Nags Head but aren't sure if we should start off small 3-4 bedrooms, or go ahead and get something larger 6-10 bedrooms that can accommodate larger families and hopefully provide more positive cash flow. 

Do you have any knowledge/experience with 3-4 bedroom vacation rental houses near the beach (between the highways)? If so, from a cash on cash ROI perspective, do the smaller houses cash flow as well as the oceanfront/oceanside houses? The smaller houses seem like a logical starting point (lower entry costs, maintenance, etc) for investing in vacation rentals, but if the larger houses provide better returns, maybe it is worth moving up to a larger house that is closer to the ocean. Your thoughts?

Hi Greg. In your experience, does ROI increase with the larger houses? I have noticed in many of the mls listings for the large vacation rentals, that the realtors will include the previous years' gross rents or this years' gross scheduled rents only. Getting actual expenses seems to be difficult to obtain and absolutely necessary to underwrite/analyze the deal. Other than using general rules of thumb for expenses, do you have any tricks to easily obtaining financials for previous years' expenses on these homes? Do you have any contacts on the OBX that would be willing to share actual data with me regarding ROI before debt service for some of these houses? It would be interesting to see how the numbers compare on these large oceanfront/Oceanside houses to a SFH portfolio on the westside.

If you do join us for a meet up, I usually bring about 20 different REI books to lend out to the participants so they can take them home and read them. You are welcome to borrow any that look interesting. Good luck!

Hi Beth. Check out our group on Facebook, we will be having local REI meetups starting back up in May in Kill Devil Hills. We have about 70 members and we meet up once a month in the Kill Devil Hills or Nags Head area at coffee shops or local businesses. You can find us be searching Outer Banks Real Estate Investors. It is a great place to learn and meet other local investors. Looking forward to meeting you.

My wife and I live and invest in the Nags Head area. If you have the means and the desire to purchase this home as an investment property, make sure you go in with eyes wide open. There are a few things to consider that are unique to this area. Maintenance costs are much higher due to the salt contamination in the air, strong winds, and occasional flooding. You will want to check the flood zone of the property. A good portion of the Nags Head Links neighborhood is in flood zone X which is good (no flood insurance required in X zone), however there are also houses in the AE zone which can tack on several thousand dollars a year in flood insurance premiums. I would ask the rental management company for the last two years of income and expenses for the property so you can plug in actual numbers. I would also find out if the rental management contract allows you to manage rentals yourself (AirBnB) in the shoulder season. Ask the family about the capital expenses, (roof, HVAC, siding, windows, etc.) for the past 5 years. I believe that the HOA requires cedar shake roofs for all houses in the neighborhood, which is costly to replace. Just something to consider. My wife and I live in Kill Devil Hills, just a few miles north of your family's property. Feel free to reach out anytime for advice.