All Forum Posts by: Mark H. Porter

As to Myrtle beach, there are a couple of must-haves that float you to the top of the want list. Oceanfront, pool, elevator if over one floor.

When calculating BTCF, make sure it includes the HOA fees and any assessments that have been levied against the unit.

As for financing, these residential investments can be a hit or miss. Many banks are reeling from the past few years of heavy lending and have pulled back on higher LTV's. Smooth sailing occurs when the LTV is 70% or less. Even then, rates are tipping 7%.

Dig in deeply on the CAM reimbursement conditions.  Big national or regional players know their impact as an anchor and will have limits on how much property taxes (they immediately go up as you laids more that the seller), hvac R&M, parking lot care, roof, etc…

I wouldn't. if you already have a great relationship with your bank you'll be paying at least 7% interest, 25 year amortized, 75% LTV. They'll also be pushing HARD for the 1.25 DSCR which will be impossible with your numbers without a very low LTV.

 Hi Amber - there are some key determinants to increased revenue here on the Grand Strand.  1) an elevator if greater than two stories, 2) proximity to the beach, 3) a pool, and 4) a jacuzzi or spa.  The desire for a single-family home is still greater than condos as there are still folks not wanting to be around crowds.

Now, of the four features above, proximity to the beach probably places #1 followed by having a pool.  So many people come to the beach but won’t set their foot in it.

I’ve used @Dave Foster with Exhange Resource Group for about a half-dozen 1031’s and his knowledge is unsurpassed.  We’re in the middle of one right now and have another coming up.

He lives in Colorado.

@Dave Foster wicked smot, Dave, wicked smot!

It’s info like this that keeps me going back to you!

Andy, I don’t know of a CPA that doesn’t know how to complete a schedule E or multi-state returns.  It’s really a very common skill.

I own properties in South Carolina and Virginia and last year had some in Georgia and Vermont.  Don’t sweat it, just interview a few.  They don’t even need to be near you - mine is 800 miles away.

Right now cash is king. Any debt will be in the 6.5-7.0% range so the cap rate you will need is 7 plus to make any decent cash flow. Add to this the banks wanting a 1.25 DSCR, especially for new commercial investors, and you're going down a very tough road. A year ago you would have been fine. Banks are now very picky.

And, the STNL pharmacies are not cherished as they were. The longer the remaining lease the lower the cap rate, so if you want 10-years remaining you'll be facing cap rates in the 5's which is very hard to make the banks' DSCR demands. One major pharmacy, that I owned, even has an "incentive" program in which you need to pay them more than a years lease in order for them to exercise a 5-year option.

Do your research on investing in these and it will help you narrow things down.

I’ve done quite a few 1031’s and this is the first year where it’s not advantageous, to my BTCF, to use leverage as a driving force.  With interest rates the way they are, and assuming you don’t need a debt coverage provision of the downleg property, nothing gives you greater cash flow than paying cash.

Now, that’s not to say that a value add property, whether it’s under rented or under managed, won’t pay off in the long run.

We’re in a time where sellers are still trying to get 5-caps (overvalued) which leads to less sales and then obviously less buyers resulting from those sales.  Any sellers needing to cover a debt provision will be borrowing in the high 6’s which also pulls back sales.

Good luck. I'm Identifying my three choices this Sunday (45-day) and a DST is in there to cover all options and lessen the risk.

1 - Your family comes first.  Keep rents at market.

2 - only do the updates necessary to maximize rents.  Anything else, except for necessary maintenance, is a waste.

3 - it doesn’t matter whether or not YOU would live there.  Tenants have far different tastes.