All Forum Posts by: Jonathan Schwartz

@Dave Foster, thank you very much for this info.  That is an interesting and creative way to potentially make this work.  I'm not 100% sure my partner wants to sell, but knowing there is a path is great.  Like you said, I will definitely speak with my accountant before doing anything.

@Andrew Postell and @Robin Simon were correct and a DSCR loan was not right for our project. As an update though, we did move ahead and were able to secure a 1X close construction loan that automatically converts to a 30-year fixed rate. We locked in at 6% about 16 months ago, which was fortunate. The build has run longer than expected (shocking...) but the house should be finished in the next 2 weeks.

We were unable to use projected income to qualify for the loan, so I needed to bring on a partner for the project.  50% of something great is much better than 0% of a project I wouldn't have been able to do myself.

Hoping someone with 1031 expertise can help me here. I'm considering selling a single-family house we've own and rented for almost 5 years. Separately, I have 50% ownership of an LLC that holds real estate on which we are building a new investment property. Do 1031 rules allow me to use the proceeds from the sale of the first property to purchase the remaining 50% of the LLC that I don't already own...assuming the numbers line up?

I suspect this is not allowed since I already have partial ownership, but figured I would check.  Thanks in advance.

Del,

I am heading to the 4x4 area with my family for the first time later today. As a renter, the appeal is that it is completely remote, unique, gorgeous and will force us to relax and unplug from life for a week. I believe there will always be people looking for that type of vacation , even though some people will not be interested.

As mentioned above, flood insurance would not be required in an X flood zone, so you could choose to purchase as extra protection if you wanted.

I've done extensive research on the market and believe it can be a great investment area if you build or buy the right house. It seems the best ROI are in 9+ bedroom houses, semi-oceanfront with all the top amenities. Pool, media room, hot tub, huge decks, updated kitchen, possibly an elevator. Most are $1M+, so it's a tough starter market but I do think the potential exists for a strong investment. 4x4 land is significantly cheaper than in the paved towns and while you can't charge quite as much, the rates still get very high during peak months!

Hi Kelly,

We live in MA and have several friends who have built new homes over the past few years to use as STRs. They use a management company to handle everything and they produce nice cash flow each year. From my research, it seems the large houses, close to the ocean, with pool, media room, hot tub, etc. offer the best ROI but they are also the most expensive to purchase.

Any recommendations for lenders who have a loan product for a DSCR construction loan? We are purchasing land in OBX and have a great builder lined up to build us what should be a tremendous rental property. The total cost of project is more than we can qualify for based on personal income, although our W2 income and credit score all work in our favor. Hoping to find a way to purchase myself rather than bring on an equity partner.

@Victor So try Pentagon Federal Credit Union. I was able to secure HELOC's on our 2 rental properties in 2021. Terms will vary based on your specifics and they are variable, but my rates are in low 4's.

I secured HELOC's on my 2 rental properties earlier this year using Penfed and they were easy to work with. If you are going to secure a 10% down vacation loan, I have heard that is is necessary to have the money in your primary account for a few months. Do others have experience with this? I have the same plan.

I have used MTR on our property on Cape Cod for the past 4 years. We manage STR Memorial Day thru Labor Day, with huge weekly rates and use May & Sept to do repairs and upkeep. I've successfully found mostly young families looking to buy or build in the area, who need a 6-7mo. lease. All 4 years have been great tenants, providing bonus income, paying utilities for 6 months and easing my worries about an unattended house in the winter. Proper screening and choosing the right tenant is key but I am a big proponent of the strategy in seasonal markets.

@Pat Chamara, I have not studied the Newport market in depth, but it seems to be a higher price point to enter. There is the added benefit of more year-round interest or a rental to Salve Regina students or staff.

I've kept my focus on the Cape and specifically Falmouth because I found I was stuck in analysis paralysis mode looking at a variety of markets. 2021 will be easily the best year for our Falmouth STR, and Cape rentals continue to be in high demand. So for me, it continues to be a great market!