All Forum Posts by: Nicholas Bolcon

Hello All, 

I'm wondering if there are any VT investors around specifically for short term rentals. 

This has me concerned and wondering. Specifically the very last section about no one being able to offer a short term rental unless they live at the property over 270 days a year. 

https://fastdemocracy.com/bill-search/vt/2021-2022/bills/VTB00007442/

I vacation to ski in VT all the time (not so much this year) and have been considering buying a vacation home there. I love the community feel and supporting the small shops and businesses where I go. Unfortunately part of being able to afford a vacation home would involve renting it out in the summer to offset the cost. If that's not a possibility I may have to rethink entirely. Thoughts?

A lot of people are waiting for the '08 crash again, or prices to revert back to the 90's because they can't get the same deals they used to.  Over time RE tends to go up, not down though so you could be waiting forever.  That being said the market is a bit hot so I think all we can do is find deals that make sense, this means not over-bidding and sometimes losing out on deals where the price gets driven too high. Stick to the numbers and make sure they are a bit conservative.

@Joe Splitrock I have to agree.  I think the key is cashflow.  If you are concerned about the top you have to make sure the deal will cashflow with some margin (not just $100 a month).  Because if you can hold it indefinitely then you stand to make money from the loan paydown, hopefully appreciation, and cashflow.  To me it seems better than just having cash which makes nothing.  But you have to make sure the deals pencil.  If you are trying to time the market with appreciation alone that's more risky.

And I'll be the first to say that I'm seeing a lot of stuff go right now where the numbers don't work.  I am cautious of that.

@William Jenkins  Yes I will add to my earlier response that most of the buying I am seeing does not pencil at all, and I don't understand how people justify it.  I did find a duplex on-market in October that made the mistake of not listing with pictures initially despite the place being in good shape compared to most other multi-family listings.  We jumped on it immediately, offered 20% below asking, were the only offer and refused to budge.  At that number the deal penciled with some room.  They exist on and off-market but you can't get caught up in the hype

Of course there will be a top at some point, and there will be a bottom at some point.  People have been trying to call it for years.  Eventually someone will be right, but over-time real-estate tends to increase in value if you can hold it long enough and weather any downturns.

I'm open for dissenting opinions, but during the housing crash rents barely moved.  If you buy a cash-flowing asset for under market value and aren't leveraged 100% you should be able to weather downturns.  So the key is to not buy into the hype and over-bid on properties.  This means it will be harder to find the right ones and you will loose out on a lot of others that you get out bid on.  But be patient and let the numbers do the talking.  If you do that you should come out at least even in the short-term and ahead in the long term, regardless of the ups and downs.

@Brandon Allenczy I am also interested in your location.  I have been thinking about the Wilmington - Jacksonville NC area since I have a buddy in the Marines down there.  If you don't mind I would like to talk to you about the market in that area.

@Jaron Walling @Brandon Allenczy I'm not so sure on the return of the refinance not being worth it.  It all depends on closing costs, yes you are paying for them with equity but if its only $2k-$2.5k then an extra $100 a month pays it back in 2 years.  That's a pretty good payback timeframe and could be worth it if you plan to hold the property for any significant period of time.

Typically in my state if there is no lease you can just give them a 30-day notice to vacate, or a 30-day notice of rent increase and if they don't agree then they can vacate.  The problem right now is that with Covid they may know that if they refuse to leave you could have a long time in the courts trying to get them out.  Not all tenants will do that because it can ruin their rent history and etc. but they definitely have the leverage right now, even though they will eventually get evicted.

My personal thought is that given the environment right now its best to try and be diplomatic and set expectations.  While also understanding it may be hard for them to find another place so they may want to dig their heels in.  If you can get the building delivered vacant that would probably be the best option.

Although I've never been the sole person doing it I have sold a flip without an agent and it went smoothly. My parents typically sell new builds/flips without agents in RI. It's certainly do-able, might be worth having an attorney who can draw you up a P&S.

I would be willing to bet if you put it on Zillow or other sites as sale by owner there are plenty of investors out there looking without agents.  I would certainly be typically be interested in for sale by owner although I just closed on a property.

@Tia Wilson sounds like you are on the right track and thinking.  I would not force the numbers to work based on the climate, a lot of markets are over-bought and people are putting too much stock in the lower interest rates and continued appreciation.  Make sure the numbers work and have patience.  I just closed on a property yesterday in RI after analyzing over 2-dozen houses, and glancing at numerous more that I just threw away without even analyzing.  The market is crazy but I managed to find something that I paid much less than appraised value for to weather any downturn.  But there will still be challenges in this climate.

As some have echoed you may be hamstringed by the VA loan. I'm not saying they are bad but the problem is that VA and FHA have stricter standards than conventional. I'm not familiar with your market but in my area (Rhode Island) it is almost impossible to find a duplex or triplex that needs improvements and will pass FHA standards. Needing improvements is essentially a criteria for forced appreciation.

But don't give up, have patience, and don't compromise on the numbers.