All Forum Posts by: Jason Hathcock

We have lost access to our venue at the moment.  I will post details on the next meeting as soon as our meeting building is finished undergoing renovations and is available. 

Meg and I would like to invite all of you to join us for an evening of fun, networking, and learning about REI. This will be an opportunity for all of us to learn from each other through success and failure, meet new people, talk about real estate investing, share ideas, hear about what other members are working on, learn from our failures and grow together. If you are just getting started or a seasoned investor, this will be an opportunity for learning, expanding your network, laughing and having some fun. BYOB, we will bring some finger foods and snacks.

Hi Galen. Nice job on the presentation. Something that you may want to take into consideration is the State and Local occupancy taxes (12.6%). That could make a big difference in your NOI for the year. Another thing to keep in mind... the Dare County commissioners are still trying to figure out how to handle Airbnb. This new niche has taken the OBX by storm and it has received a lot of attention in the local media and legislature. I think that it could be an excellent opportunity for the right investors, however I would recommend that you nail down your figures, get a really good sense of the market, network with some local REI's (Herman Hall is an excellent resource and has a lot of experience with Airbnb on the OBX), and put together a proposal that is very likely to hit the numbers so that you and your investors expectations are in line with the market. I wish you luck and keep us posted on your plans. We have local REI meetings in the off season, come check us out sometime. OBX REI networking group on Facebook.

@Shelby Osborne

Southern Bank has been wonderful to work with. They helped us get started and took a chance on us on a somewhat complex real estate deal. They were able to see what we were planning to do, they liked the numbers, and thanks to BP, we were able to show them our cash flow analysis and get the financing to get the deal done through our LLC.

I only know one person who had their note called.  That was during the 08' collapse and the investor was heavily leveraged and the banks were calling in the more risky notes they had on their books.  I would imagine that if you are responsible with your finances and leveraging your business prudently, the banks won't feel the need to call your note(s).  Good luck to you!

We have been purchasing properties with our business, Moongate, LLC on the Outer Banks, NC. We have been using Southern Bank and for those properties that we purchase with our LLC, we are using commercial loans. We have not found any banks/lenders that will lend to LLC's with conventional financing because most banks want to sell the loans to Fannie Mae. Fannie will not purchase loans that are in the name of LLC's. If you want to continue purchasing and refinancing with your LLC, you may want to consider using commercial loans with a local bank. Once you build credibility and have proven that your business plan works, the banks will want to lend to your LLC over and over. One thing you will need to take into account, is that most commercial loans are 5/1 ARMS, fixed for 5 years, then you readjust in month 61. If the idea of 5/1 ARMS scare you, then take this into consideration. If you want to ensure that your payment does not go up in month 61, then figure out now what you think the worst case scenario is for interest rates 5 years from now. Then figure out how much you would need to pay your principal down over the 5 year period in order for the worst case scenario interest rate payments to remain the same as they are in month 1. If rates do not go up to your worst case scenario in 5 years, then you are ahead.

Another option for you is to title your properties in your individual names, refinance, and then transfer into your LLC. You run the risk of the due on sale clause when transferring title in and out of LLC.

Good luck! 

Hello Levi. I think it really depends on the seller and how good of a deal you may have. We do not offer a Due Diligence Fee, and we wouldn't unless we are 100% certain when we present the contract, that we will be closing on the property. Unless your seller is savvy or there are multiple offers on the property, you should have no problems with placing an Earnest Money Deposit in escrow. That way, if something comes up prior to your due diligence period expiring, you are able to terminate the contract by notifying the sellers in writing, or try to renegotiate the terms without losing your EMD. Due diligence fees are great for the seller, but I would not recommend offering them as a buyer unless you absolutely feel the need to.

@Melissa M. Hi Melissa.  If you are considering investing in a Vacation Rental property on the Outer Banks of NC, you will certainly want to account for increased insurance costs, Wind & Hail insurance is extremely expensive here, Flood Insurance if in an AE Zone, and approximately 17% property management fees to handle your bookings/cleanings, etc.  For example, I have a 3/2 in the west side of Kill Devil Hills as my primary residence in an AE flood zone, and I pay roughly $4k per year for insurance.  This cost would likely be higher for larger properties that are closer to the ocean and not owner occupied.   Maintenance costs will also be higher here due to the salt contamination.  HVAC units typically last less than 10 years, anything made of metal will corrode, and the salt buildup will require regular cleaning of windows, exterior siding, etc.  I am not trying to scare you away, my wife and I invest here on the OBX, but I didn't want you to get swept away by the allure of high rental rates without considering the other side of the equation.  Picking up shoulder season bookings will definitely help your revenue but you will need to have a unique property or creative marketing to stand out from the crowds of empty houses during the off season.  The rental season here is about 16 weeks long, and if you are lucky you can pick up an extra couple of weeks on the front end and back end of the season at discounted rates.

I have noticed over the last several years here that AirBnB is gaining a lot of traction and the number of properties offered thru AirBnB is increasing at a staggering number on the OBX.  If you can link up with a good cleaning company, a reliable maintenance/handyman, and have some local contacts to keep an eye on the property, you may want to consider AirBnB to increase the amount of revenue that you get to keep.  Another consideration here on the OBX is the local occupancy taxes, so factor in at least 12.5% of your revenue being set aside for local and state occupancy taxes.  If you are seriously considering a vacation rental on the OBX, please feel free to reach out and I will give you some insight on which towns attract the types of tenants/vacationers that you would want to target.  Good luck in your search. 

The OBX REI Networking Group will be meeting at Waveriders Deli on the 2nd and 4th Wednesdays of every month in the lounge room. Our goal is to have some casual conversation about REI and provide you with opportunities to meet and really get to know other members. I would encourage everyone to come out, have a great lunch, and talk with other investors about what you are looking for, what is working, what isn't working, what type of investor you are and what areas you are looking to grow. This is a great way to meet other members, learn, and grow your investor network. As always, I welcome your suggestions and feedback. Hope to see you on the 2nd and 4th Wednesdays of the month at 11:30!

This location is within 20 minutes of Southern Shores, Kitty Hawk, lower Currituck, Kill Devil Hills, Nags Head, Wanchese and Manteo. 

The OBX Real Estate Investors Networking Group will be meeting at Waveriders Deli on the 2nd and 4th Wednesdays of every month in the lounge room. Our goal is to have some casual conversation about REI and provide you with opportunities to meet and really get to know other members. I would encourage everyone to come out, have a great lunch, and talk with other investors about what you are looking for, what is working, what isn't working, what type of investor you are and what areas you are looking to grow. This is a great way to meet other members, learn, and grow your investor network. As always, I welcome your suggestions and feedback. Hope to see you this Wednesday at 11:30!

Double closing vs. Single closing for a Sub-dividable property in the Outer Banks, NC ......

I am a beginner investor and I have an off market single family home under contract in a vacation resort area which has a long term tenant that would like to continue renting. The house is one block from the ocean and it sits on one half of a double lot. I have gained permission from the Town Planning Board and the sellers to subdivide the lot prior to closing. I have found a buyer that will purchase the vacant lot at my asking price which will allow me to purchase the SFH with a significant amount of equity in it. This is my first situation like this, and I am wondering what is the best way to take this deal down. Should I attempt to qualify for the entire purchase price and then double close on the property? Then use the proceeds of the sale of the vacant parcel to repay my down-payment and pay down the loan amount? Or, should I have my attorney write an addendum to the contract to allow the buyer of the vacant lot to close on the vacant lot during the same closing of the SFH? It seems that both situations have their challenges, risks, tax consequences, and costs associated with them. I have an assignment clause in the contract to allow an assignment, but the purchase contract is for both lots and the house. Would I need to amend the contract to describe the subdivided parcels in order to do a single closing? Does anyone have any experience in situations like this?

Not actual numbers but this will give you an idea of what I am looking at.  

Total purchase price:  $250k

Sales price of vacant lot $100k

Value of SFH one a single lot $225k

Due to the low long term rental income numbers in this area, the house will not cash flow at the full purchase price.  It will cash flow after the sale of the vacant lot.   Our goal is to purchase this house and rent long term for the next 20+ years. Credit scores are excellent and we have sufficient funds for down-payment for either scenario, however we would rather not tie up our cash in down-payments so we can continue to make more purchases. 

Any suggestions on how to structure this and take it down successfully?

Thanks.

-Jason Hathcock