All Forum Posts by: Shaun Kelly

@William Volt rent is due on the 1st but it's "BS" for a landlord to try to get them to pay on time...? interesting take. 

Most homeowners know that mortgage interest rates are skyrocketing (currently over 7%) and if you were one of the smart or lucky ones to lock in your 2-3% interest rate in the past couple of years, is it a good idea to lose such a low rate by selling your home?

Have you thought about holding your low-interest rates and just renting out your home? It could be a wonderful investment opportunity.

As an experienced investor, real estate agent, and property manager at Wishlist Property Management, I’ll quickly break down your monthly profits and how to go about keeping your home and historically low mortgage rates.

The Simple Math

If you purchased a home for $500,000 in 2020, your mortgage is around $1,700 a month if your credit was great, you shopped for low rates, and landed something in the 2% area. A $500,000 home in NC will rent for over $2,500 a month in most cases (obviously a lot of variables here to consider). That’s an $800 profit a month if you decided to rent it out.

If you purchase today, in 2022, your same $500,000 home has a mortgage of around $2,700 with the current 7% interest rate. You’d actually lose money if you tried to rent it out.

Therefore YOU have a wonderful investment opportunity if you were to hold that 2020 home and turned it into a rental. Don’t get rid of it unless you have to.

Upcoming Market Shift

There is a ton of fear entering the market and an expectation that real estate prices will continue to drop until 2024. But here’s the deal, this is much different than the crash of 2008. That was a crash caused by real estate - the largest in the housing industry since the dawn of the United States. No one is expecting even close to a similar outcome in this cycle but rather other industries will further feel the effects.

We still have a housing shortage (unlike 2008) and demand for housing is strong. So let’s use the harshest estimate of a 20% decline in your market. Your house drops to $400,000 in value and your net worth loses $100,000 now. If you’re renting it out, WHO CARES? You are still getting an $800 a month cash flow since rents hardly take a hit during recessions. You only lose that $100,000 if you sell at the bottom, not if you hold for the market to recover as it always has.

The market is already slowing so if you’re looking to get out, it may be smart to do it immediately, but ultimately who knows what’s going to happen. We only have history to show us the future.

Property Management

How does it all work?

It’s simple and there are resources to help you. First off, you can go to Zillow and list your home yourself. Screen tenants and their credit by using rentprep.com. Call their last 2 landlords. And make sure they meet any other requirements you may have (pets, job history, income, etc).

Or call up a property manager in your area and ask some questions. They’ll typically come to take a look at your property to make sure it meets certain standards and ask or answer any questions you may have.

Who to look for?

Company reviews are a good start, but just like with tenants, you need to dive deeper into just the “credit score” of the company. Get referrals for them by asking around on local Facebook groups or through others that have their properties managed.

A company like Wishlist Property Management out of the Lake Norman NC area is a good example. Of course, I am biased because I AM a part of Wishlist, but there are standards that you should be looking for that align with what we offer.

1. -A+ communication. Since we manage AirBnbs and traditional long-term rentals, we are experts in communicating with our guests and homeowners. We provide our phone number on a pamphlet attached within a kitchen cabinet, as well as a direct emergency plumbers number for immediate emergencies.
2. -Accounting that makes sense. Reading spreadsheets isn’t everyone’s expertise. Therefore we make all financial documents (as well as contracts) easy and appealing to read.
3. -Cleaning/Handymen. Again - AirBnb pros. We clean and fix up properties every day so we exceed the standards on long-term rentals. We’ll have the place fixed up in a jiffy. Make sure your
4. management team has a network of contractors.
5. -Offerings. Check fees, start-up costs, transfer costs, etc. Do they offer professional photos? Do they charge for additional showings? Ask these questions.

That pretty much sums up the why and the how of getting your house set up as a rental instead of getting away from that crazy low-interest rate.

*https://images.kw.com/docs/1/0/4/104917/1284599574128_7_Reason_Why_it_s_a_Good_Time_to_Buy.pdf

If you have to sell, you have to sell, but just know that despite the narrative you see, the last 3 years have actually been the most AFFORDABLE years in recent history to buy a home. Compared to monthly income, the monthly mortgage is lower than in recent years. You have a diamond in the rough so don’t mess this up!

For more articles on property management for both Long Term and Short Term properties, check us out here: www.wishlistnc.com/blog

I'm looking at a SFH (for LTR) with detached ADU (for STR) off of a main highway in my town in a major developing part of the area.

That highway will be widening and adding two more lanes within the next few years and I'm not worried about traffic noise but...

Do property values typically go down in these types of scenarios or does having a potentially future commercially zoned property increase in value?

Let's have a discussion on this!

The highway will help the AirBnb side of the house because guests can stay for a quick 1 nighter while traveling.

I also would love to own a Brewery/Coffee Shop someday so this could be that future type of property in 10 years if zoning permits. 

But in the meantime, if I were to do my normal plan of doing SFH (for LTR) with detached ADU (for STR) for 5-10 years and sell, will that property be unsellable in 5-10 years?

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $265,000
Cash invested: $65,000
Sale price: $560,000

I turned an old 1970s cabin into a cash flowing machine on Beech Mountain, NC. It was nestled in between 2 rushing creeks but you would hardly know it with the way I bought it (overgrown bushes). After a few month of remodeling it myself, I launched it on AirBnb and VRBO and managed it myself from 2hrs away. 15 months later I sold it for over twice what I paid for it.

After it was all said and done, I more than doubled my investment AFTER taxes in a single year.

What made you interested in investing in this type of deal?

Remodeling an old cabin would make great content for my YouTube channel, combined with some AirBnb cashflow, combined with a cool vacation spot for me to stay at from time to time.

How did you find this deal and how did you negotiate it?

Found it on the MLS. It was there for a couple of months during peak covid and I guess no one saw the potential of having a cabin along rushing creeks like that.

How did you finance this deal?

10% down second home loan with a 1.9% interest rate (I know I know, why did I sell?)

How did you add value to the deal?

DIY remodeled the entire 4 bed, 3 bath cabin.
Cleared out a ton of brush outdoors to clear up the view of the creeks.

What was the outcome?

Rented a 90% occupied Bnb for a year before selling over double what I paid for it.

Lessons learned? Challenges?

I learned how to run an AirBnb from 2hrs away and when to fire cleaners vs provide bonuses to cleaners. Some need a boost while others need a boot.

Hey @Mark DiPietro, everyone thought it was a seller's market before - well now it REALLY is around the Lake Norman/Mooresville area. There isn't much inventory to pick from and when there is, it's flying off the shelf. I have seen some AirBnB potential properties that are obviously more work/risk but would be pretty lucrative.

@Jared Wild if you are looking for the suburbs, Mooresville might be a good town to live in as well. Great school districts and much lower taxes in Iredell County. 30 min commute during rush hr to Charlotte and you get to enjoy the lake life. Atwater Landing is a new development getting a lot of attention here for housing.

@Heather U. Hi Heather! Statesville is a great town for rentals. With the hospitals, large manufacturing presence, and proximity to Mooresville, people will always be needing a place to stay there. I'm not too sure about Hickory, I know a major manufacturer just moved away from there and into Charlotte (Corning) but I just don't know enough about there. Gastonia may be a little rocky now for rentals, but if I were to be investing for the best returns - this would be it. Charlotte is expanding west with major development near the airport, plans for a light rail into Gastonia, the FUSE, multiple new bridges across the Catawba... etc. But yea, may need more upfront work and hassle. Anyways, always happy to help!

Shaun Kelly - Keller Williams Agent

Realtykelly.com

Thank you everyone for all of the input here. I Love how this community can pull in people from places I've never heard of like this. AirBnB aside, knowing about these options will really help. 

This is a long shot, but there's a small community outside of Asheville NC called Spruce Pine or Linville that I would love some expertise on. I have a client that is looking for a vacation home here for both themselves and for an AirBnb. If ANYONE has info on this area, their expertise would be greatly appreciated.

What is there to do?

Where are people looking to vacation?

Do you have a deal available?

Should be within 30 minutes of a grocery store.

@Nate Huber

Hey Nate!

As an agent myself in this area, situations like this can become the most frustrating. How long was the house on the market before an offer was given? Just curious to see who has the leverage here.

This is still a sellers market, and with interest rates so low, I would accept if you really liked the house.

Shaun Kelly

Keller Williams Realty