All Forum Posts by: Mitch Davidson

Hi @Peter Castrianni. Regarding the southeast, I think you'll do better over here near Asheville and the NC mountains than on the coast, in part because winter time is pretty dead over on the coast, unlike over here where well-managed places are booked solid year round. As much as I'd like to make my next purchase a beach house, to use for family, the numbers can't compete. Happy to discuss further if you like.

@Derek Worrell. You'll have a hard time finding a conventional investment loan for under 20% down. Most of us don't mention such as a possibility because the points cost is high. Meaning, we can only go so high on rates, and thus have to charge points. The points cost is often not worth the lessened down payment.

Would you consider buying a duplex, or 3 or 4 unit, and occupying one of the units as your primary residence? If so, you could and count the home as a primary. If you use an FHA loan for this approach, the down payment will be just 3.5%. Conventional will require 15% for a 2-unit primary residence, and 20% for a 3 or 4 unit, but will be better regarding mortgage insurance.

Also, with this approach, if the place is a bit beyond your DTI limits, the lender can count 75% of the projected rent (per appraisal) to help you qualify. The same applies to a Conventional purchase classified as investment. Classifying as investment adds 1% or so the rate though.

Hope this helps.

Hi @Mike Carroll

Is the in-law suite an ADU (i.e., second dwelling on the same parcel), or is it a separate parcel and address now?

Assuming it's an ADU, if you do a cashout, I would recommend doing it while you're still living in the property. Otherwise, the lender will have to classify the home as investment instead of primary residence, and that will make (a) the interest rate be higher (perhaps 1%), and (b) the cashout LTV limit reduce from 80 to 75.

Regardless of lender, you won't be able to title in an LLC with a conventional loan. I've heard of some investors changing the vesting after closing, despite the due on sale clause, and the servicer not noticing, but I wouldn't recommend attempting such.

I'm not a CPA, but in my experience vesting in an LLC will not afford you additional tax benefits, unless perhaps you file as an S Corp. Meaning, once you move out of the property, and it becomes 100% investment, you'll be able to write off 100% of the expenses rather than just a portion. For now, because you live in a portion of the property, you can only write off a portion of the expenses. Whether you vest in the LLC or your person, the profit and loss will be reported the same on your tax returns (Schedule E, or Schedule C if your CPA advises to go that route instead; there is some debate on this among CPA's). Thus, vesting in an LLC is only going to add additional legal protection. Also, you'll want to be sure that you have an operating agreement, multiple members, etc., as the LLC won't add much protection without such.

Hope this helps.

Hi @Devante Malloy. If you use Asheville's GIS site, there's a city limits layer. It's quite hard to see the borders though, unless you click the ... shown below and reduce the transparency. Also, if you're unsure about a specific address, this site is very helpful. 

Personally not a fan of Canton. Unlike some other Asheville border communities, I think your equity will grow slower due to comparatively higher crime rates, higher poverty rates, the paper plant, etc.

Hi @Courtney Haynes. Both markets you mentioned in NC are pretty hot for housing demand. People continue to flock to these areas to escape harsh winters, to have more outdoor opportunities, etc. Thus, supply is thin and costly. But rent rates are high as well. Having lived in both markets, I find them to be quite dissimilar. Charlotte is enormous compared to Asheville. And in Charlotte you compete with institutional investors like AH4R and Invitation Homes, both of which own several thousand rentals in Charlotte. That would be a concern to me. They can operate on thinner margins than people like us.

Hi @Beau Watson. Lake Lure is a great place to be! Sadly, we don't offer new build loans or construction to perm. We offer renovation loans (i.e., Homestyle and 203K) but not what you're needing. HomeTrust might be a good place to check. They'll put you into an ARM loan, but you can refi out of it later. Happy to help in any other way, such as local resources and such.

@Angeline Rebottaro: Even our DSCR cashouts (i.e., no income or DTI considerations) are 75% LTV. If you need to go higher on LTV, your only options may be a HELOC or hard money.

@Brian Williams, If you manage it well, and if the property is pretty appealing and special, you'll exceed 80% in a market like Black Mountain. Of course, much of that is driven by your pricing. Many of us locals are drooling for an opportunity in Black Mountain though. The available inventory is quite low there, and pricey. It's highly desirable. It's just 25 minutes from downtown Asheville, yet has it's own really great downtown scene. The trails nearby are excellent as well, as are the views. For this reason, there's quite a bit of local investor focus on Old Fort and even Marion right now (east of Black Mountain). The east side of Swannanoa (western border of Black Mountain) is also gaining in appeal. Also, I wouldn't be discouraged by something being even 45 minutes from downtown Asheville. I have friends that are killing it on STR rent in markets that are that far from downtown Asheville (ex: Mars Hill, Waynesville, etc.).

@Chan Park HELOC's might be a great alternative approach, as you can often go higher on LTV, as you can keep your existing loans at their low rates (assuming they're low), and as you can reduce your overall monthly nut when you pay off the HELOC. The process of getting the HELOC's will likely take longer than getting conventional cashout refi's though, perhaps 60-75 days.