All Forum Posts by: Sean Hudgins

Quote from @Rich Lambert:

Sean,

Thanks for the helpful information.  I do like the Sandbridge area, but as you say, it is quite pricey.  I'm not sure yet how much we can qualify for, given the current interest rates and addition of unknown rental income.  

What is the average price right now for properties in the oceanfront resort overlay?  And what types of dwellings are typical of that location?  Detached?  Multi-unit condos?  

To be honest, I hadn't really thought of Lake Anna, until I saw the ranking that you cited.  The proximity is certainly very attractive.  Do you have experience in that market or can you recommend someone that is familiar with the Lake Anna?

Thanks,

Rich

There are mostly condos and attached units under $800k, but there are some interesting small single-family new builds that are going in. The condo fees range between 300-900+ per month. Once again, these are the ones within the overlay zone, which is definitely an important factor. At the moment, there are ten properties for sale, with three being under contract. The remaining properties range from 297k condo with a $962 per month condo fee to a 2000 Sqft condo at $1.6m and a $2097 per month condo fee. There is one for $395k and a $420 per month condo fee. I would be happy to send you the properties; I have a search made up with the overlay layout specifically for these types of searches. There are some similar-priced properties in Sandbridge as well, so I wouldn't count it out, depending on what you are pre-approved for.

I know this topic has been significant in this forum, But I want to cover something that many people are not discussing—the opportunity cost of not doing one of these deals now. 

The reality is that the rates everyone wished for were mostly available between 2020 and 2022, which was also the time that saw the most significant appreciation in home values. This only increased the loan amount gap and current market value. I know that most people out shopping these kinds of deals are already looking at the gap as the biggest barrier to entry into an assumption. The second largest objection I get when discussing VA Assumptions is the time frame and hassle you have to go through as the buyer and seller. But as things have slowed due to the affordability and seasonality of the market, sellers are now looking at this as a more viable option than ever to get top dollar for their home. This gap will only increase as time goes by, and we all can likely agree that the rates will not be heading down below 5% any time soon, and if they do, we will have more significant issues.

I believe that with the current state of the market and mortgage rates coming down slightly (we will see if that is here to stay) over the past couple of weeks, the timeframe for even the best financially poised buyers to make these assumption deals happen is only going to last maybe 12-24 months. In my market, the average gap I have seen in the past six months has been between 70k and 150k; if the market continues to appreciate slowly or even remains flat, that gap will continue to spread as mortgages are paid down. That's not even considering the possibility of another round of buying frenzy if rates drop into the 5s again. In 24 months, there will likely be only a few properties that can be had without bringing at least 100k to the table to cover the gap, and much past that, no one will even be talking about VA assumptions anymore.

I would suggest that if you have some excess cash available or have found a lender willing to go into a second position, NOW is the time to grab these deals. I mean NOW because once the summer selling season is upon us again, I'm afraid even fewer sellers will be willing to participate in the assumption process. If I were even remotely considering a new primary residence purchase or had the opportunity, I would be shopping for a new home ASAP because this opportunity to get an assumption with rates in the 2s and 3s is quickly going to become a thing of the past. We would all love to have more properties at those low rates!

Do you agree that this is a quickly passing window, or do you see the opportunity staying around longer?

Quote from @Rich Lambert:

Hi All,

My wife and I are considering investing in a short-term rental in the Virginia Beach area. We'd like to own property (house or condo) that we can use for vacation several weeks of the year and rent out the remainder of the time. The goal would be to find a decent 2 to 4 bedroom place close to the beach (or other outdoor attraction) that would allow us to realize a modestly positive cash flow. We might also be open to other markets, as long as they are within 4 hours of our home in Northern Virginia. As someone who has never invested in rental property before, I'm in the process of trying to educate myself, so I welcome any useful recommendations or suggestions related STR investing/analysis, financing, property management, etc., as well as any information specific to the Virginia Beach market. I'm excited to learn and look forward to engaging further with the community!

-Rich

 @Rich Lambert, Welcome to the community! Virginia Beach is a great area, and we have some awesome spots for STR! One thing to be aware of here in VB is the STR zoning; not everywhere in VB can be short-term rented (<30 days). There are currently two specific zones in VB that allow STR, and they are very concentrated by the coast. Here is the Cities website that can help you better understand the regulations 

The first and most widely known would be Sandbridge; this market even made Vacasa's top 5 list (Article Here) of STR locations! The best part about Sandbridge, in my opinion, is that there are no Hotels to speak of, so they are extremely reliant on the STR market in that area, and Sandbridge has always been a vacation rental market even before it was "cool" so there has not been any push to regulate that area away from STR. the only real downside to Sandbridge is the price point is higher than other areas, the median price in Sandbridge is $928,000, but if you can swing it, I think it's pretty unbeatable for the area as far as STR demand goes.

The second STR-zoned area, which is relatively new, is called the oceanfront resort overlay. There are not as many residential options here, but it is worth keeping an eye on as this is the tourist hub when the warm season comes. The other advantage depending on your own style, is the proximity to attractions, whereas Sandbridge is pretty far from most attractions and is better known for the peace and quiet this area is close to all the happenings of the VB oceanfront.

Outside of these two areas, you would need to find a property that has been grandfathered in order to STR legally. Another option would be to look at the Ocean View area of Norfolk; though not quite as popular, it has a lower barrier to entry, and you can find some great homes very close to the water if not on it. Norfolk has less stringent STR regulations at the moment, but that could change in the future.

With you being in Northern VA, have you considered Lake Anna? I have spent some time there myself, and I think it is a great opportunity in the STR space. Oh, and it was #1 on the Vacasa list for the past two years!

Feel free to reach out if you have any other specific questions on the area!

Happy to help!

@Scott Lovelady Welcome to the community! That sounds like a great trip, and your current house will make a fantastic rental! 

I will chime in on the Norfolk, VA Market. There is a lot to love about this market and some downsides, which I will also cover. One caveat is that Norfolk is just one piece of a larger puzzle here. Hampton Roads is made up of 7 cities, and for the most part, Norfolk, Virginia Beach, and Chesapeake are all cities that I would consider if I were in your shoes, depending on your goals and lifestyle preferences.

Norfolk - is great if you're looking for more of the city vibe, and from an investment standpoint, this is where you will find the majority of available small multi-family units if that is something you're looking for. From an investment standpoint, I would recommend considering your location in proximity to the different military bases in the area, as the military here provides an excellent renter pool and keeps vacancy time pretty low on most units. The schools in Norfolk are a negative factor, and considering you have children, I imagine that would be a factor for you. Still, there are good private school options, and the other areas of Hampton Roads offer some great schools in comparison. Coastal flooding is another thing to remember when looking for housing in Norfolk, as much of it is in low-lying areas and is prone to flooding more so than in other areas.

Virginia Beach - This market is a bit more expensive. The area is spread out and has different pockets that offer different experiences. If you want to be close to the beach or have more of that coastal vibe, VB is your best bet. The school districts here range based on where you are located in VB, but there are some great options for schools in VB. Something else that may be new to you would be the Jet Noise; with Naval Air Station Oceana in south VB, there are areas of VB that can be very noisy compared to what you might be used to. The good news is that these areas can be avoided if they bother you, and you also get used to them pretty quickly. This area has some short-term rental opportunities, but it gets costly as most of the STR-zoned regions are on the beach. Long-term rentals can be found, and I have found that many of the townhome communities tend to give you the best ROI in VB (very generalized statement); however, if you are looking for more of an appreciation play, VB is a great spot to be in!

Chesapeake - This is the quieter part of South Hampton roads. The schools in Chesapeake tend to be the best in the area and some of the best in VA. There is an opportunity to get more land in this area, but it is still relatively close to conveniences. One airstrip in Chesapeake can cause some jet noise, but it's easily avoided and is only used for practice, so it's less busy than the one in VB. Compared to Norfolk and VB, the area also has a lot of new construction; they are constantly adding new developments in Chesapeake. There is good appreciation to be had in Chesapeake, but not quite as good as what you might find in VB. There is less nightlife here in Chesapeake, but more family-friendly activities to be had here.

Below, I will link some of the market stats for each area.

Norfolk - Market stats

Virginia Beach - Market stats

Chesapeake - Market stats

Hampton Roads Economic Report

Feel free to connect with me if you want to know more about Norfolk or any of Hampton roads. I focused on South Hampton roads in this post, but there is a whole peninsula that has its own diverse area that may be worth looking at!

Quote from @Christina Husfeld:

Awesome, thanks again. We have been at our current house for 2 years. 

 That's great then you really don't have much to worry about. For the most part, lenders' occupancy requirement is between 6 months and a year. After that, you are pretty much good to start looking at the next house. 

A CPA is a must for your situation. As you start to expand to different states, the tax situation gets a little more complicated than you might want to deal with on Turbo Tax. 

I would seek out the advice of a lawyer on the LLC formation, but personally, I don't put too much weight on the LLCs until you have several properties. Until you get a couple of properties, often the LLC may just complicate things more than it helps protect you. Get some great insurance and leave the Missouri property as it is in the LLC. But a lawyer is going to better inform you on the LLC issues and how to make sure you don't end up doing something wrong in the operation of that LLC because, after all, the LLC does no good if it won't be upheld in court.

Quote from @Christina Husfeld:

Thank you so much for the info Sean!

I’m no longer active duty (no PCS) but plan to rent my current home to my brother and his wife until they can afford to buy a house. So the third house I’m looking to purchase would be in the same area and would just be my new primary home. 

Is it likely that a lender would allow me to use my remaining entitlement to purchase a third home? Financially I should have no issue being approved, I have just been told in the past that you can only use the VA loan for 2 houses at a time.

Thanks again for your help!

I would see no issue with getting a third home since you have the entitlement. That being said, every lender has their own requirements, so I wouldn't be surprised if some lenders have arbitrary rules like that, but to my knowledge, that is not a VA requirement.

how long have you lived at this property? 

@Reynaldo Ramirez I love rentals in this area, and using an upgrade in your primary to add a rental to your portfolio is a great strategy! Personally, if it has a big yard, I would require the tenants to take care of the lawn maintenance. Most renters who are looking for a big yard don't mind the maintenance. Also, consider allowing pets if you have a big yard, as that renter pool is eager for the yard, and there are a lot fewer options out there for them. I did all of the things I just described with my own property here in Chesapeake. It was my first home and turned into a fantastic rental as we upgraded.

I would also consider when you upgrade to find something that could use some work; we bought a fixer-upper and have added well over 100k in equity because of it. 

I would learn the skills to manage the property yourself while you are local, but @Shawn Griffon has a good point about keeping that cost in mind. I am less of a fan of self-management of long-term rentals when you are out of state.

I would contact your lender and ask about the process. 

But one way to do this may be to do the division, get everything in place, and be prepared to pay off the loan as soon as you sell the first parcel. This would probably avoid any heartache that the lender may have. (not legal advice). So, looking at your case, I would subdivide the 3 acres with the house and sell that and pay off the loan, then do the double wide.

I would be very interested in hearing about the process as you figure it out. 

I'm also interested in hearing about your thought process on building a park on the remaining 12 acres.