All Forum Posts by: Zachary Harr

Wife and I are looking to get started in long term rentals to hold long term. This would be our first rental. We have about 400k HYSA. Ideally looking for something around 200k.

We have previous experience with Live In Flip (didnt know there was a name for it until after we had done this). Currently with a high income for Ohio of combined 450k. Trying to put our extra dollars at work.

We live in Southern Ohio which is fairly poor. I work in a small college town. I graduated from UK. We are about 2 hours from Columbus, Ohio.

Our 3 options are: A- buy cheap housing in small college town. Benefits is that we know the area and know contractors in the area. Downside is that being in a poor town area, not much appreciation in the future. However, we could buy cash and it would technically be easiest to BRRR. B- invest in Columbus, OH. Would still be in state. Lots of new businesses moving in to Columbus. Downside is that being 2 hours away might as well be 12 hours away with the hours that I work. C- invest in Lexington, KY. More familiar with Lexington as I went to college there. Downside is that again it is about 2 hours away.

Ideally, we would find a coach of some sort that could help us find a deal that works, knows the ropes of the building an LLC.

Does this type of service exist?

Thanks!

3 Votes

Columbus, Ohio

Quote from @Scott Trench:

Fantastic job! This is a fun one.

Aside from “invest in Cleveland, Columbus, Toledo, or Akron”, here are some ideas:

First map out annual savings potential and multiply by the next 13 years. Bet with your income and LCOL you generate $2M+ on that alone.

From there think about how you want your wealth to look at that time. With $1M today, and $2M accumulated and invested over 13 more years, I think you are looking at an end state NW of ~$5M.

Personally, I’d love an end state $5M portfolio that looked something like this:

$750K paid off home

$250K cash

$2M stock portfolio (as much as possible in tax advantaged accounts likely 401(k), HSA, and less in the Roth in this situation). Mostly in index funds.

$2M in, at this future time, lightly levered RE.

Supposing this is close to what you’d love, one could spit out a financial plan that looked something like the following:

- Max HSA

- Max 401(k)

Use leftovers to go on a shopping spree buying RE at relatively low leverage, potentially on 15 year mortgages, in local LCOL area (which probably also means a relatively reasonable cash flow market)

Obviously I’m making a ton of assumptions here and will be wrong in ten places. But this is how I approach planning at the highest level.

This is what I am looking for! Totally appreciate this! If we could get to 5MM by 50 that would incredible. Going to take time to wrap my head around it being me. I would probably continue to work part-time hours for a few years after that... but would be happy to stop if I want to.

1 Vote

Quote from @Christian Styles:

Hey Zachary, Welcome to BP! Always glad to see another Ohioan on here!

Saving is the hardest part, and it looks like you've done that exceptionally. I'm obviously bias but Cleveland has some great opportunity for cash flow and even some appreciation in some neighborhoods. What geographical areas are you looking at investing, and are you still interested in primarily Long Term Rentals?

Also interested in your woodworking projects as I've been trying my hand for some time now.

Will likely buy in the Wheelersburg, OH area as it is nearby... and almost always appreciates. Great school district that everybody is always trying to get into. We had previously looked into STRs (Gatlinburg), but it is a difficult segment to get into due to being so far away (5 hours driving) AND current interest rates. We are approaching the capital to buy a cheap cabin in cash if we wanted to, but feel like that isn't the best use of our nest egg.

In regards to woodworking projects, nothing special. Just benches and the like. Just trying to pass on skills to my kids that they can use later in life.

I appreciate your interest!

0 Votes

Hello,

37yoM living in LCOL area Midwest. I'm a PA and wife is an OTA. Current income is around 450k on W2s. I max out 403B. Going to begin maxing Backdoor Roth this year. Hold some VTSAX. Homeowner. Looking to begin doing more with our money. Goal is FI by around age 50. 2 boys (5yo and 7yo).

Current Assets:

250k in 403B (max contribution)

25k in 401k (wife 401k)

400k in HYSA at 4.25% (need to move a lot of this, previously was saving for local Long-term Rentals... but haven't put enough effort into this."

30k in checking

50k in VTSAX

15k in Disney

est 20k (bought side lot adjacent to property in 2020 1/2 acre for 15k... paid off)

est 60k (bought back lot adjacent to property in 2020 3 acres for 45k... paid off)

est 280k equity (Home valued est at 600k bought for 380, 320 remaining on note at 2.7% in 2020. Recently finished a pole barn to make a family room for large family gatherings. Put 70k into this, will likely only recoup half of this in the future.)

So, current NW just breached 1MM for the first time! Although my wife and I are excited, I know that we could be doing more to grow our money (I also know that many people don't tie in equity to NW, and these numbers are skewed if we keep our home forever). Looking for inspiration and ideas of what to do mostly with the HYSA money. I know that we are in a good position. Wife and I grew up poor. Have been savers all of our lives. No expensive hobbies other than the kids (I play disc golf and I like to do wood working). Both vehicles are paid off.

Thank you all!

3 Votes

Quote from @Mike H.:

Quote from @Raj Sat:

Quote from @Matt Mertz:

You may want to consider a custom build on a vacant lot if you can't find an existing home with a good view. This gives you more flexibility but comes with its own set of headaches.

does anyone have good contacts here for builders?

I'm actually a licensed GC in tennessee where me and my brother in law have partnered to do new construction builds. I also have builds going where I'm acting as the developer and using other builders. And as a land flipper, I also own a ton of land out there even though I've sold quite a bit too.

In terms of location, Gatlinburg addresses tend to drive the best rent. Specifically chalet village is one of the better larger subdivisions out there. In terms of view, be careful. You can pay 50k for a decent lot with a simple view or you can pay 200k for a lot with an amazing view. Based on the numbers I've been given by several property management companies, those 200k views don't get you much more income.

In terms of amenities, if you really want the best return, you want to have a pool. But I've looked into that ad nauseum and not sure I like that added risk of the pool - not necessarily for guests drowning although that is a factor. But most pools are in basements and now you've got chlorine and moisture issues you have to deal with or it could affect the rest of your cabin.

Hot tubs are an absolute must. If you're building or buying an existing, try for a large deck. Decks are super cheap to build but make the cabin feels like it has way more space. Pool tables are another big one but they take up a ton of space because you need 5 feet on all four sides plus the pool table (14x18 is what you need for a pool table). But still a key amenity depending on the size of your cabin. At 1400 sq ft, you likely aren't able to find many cabins with pool tables. At 2,000 you're expecting it.

In terms of buy versus build. I'd definitely recommend looking for an existing cabin right now. Make some low ball offers and you'll likely find someone to accept a deal. In your price point, you're likely looking at a 1,500 to 1,800 sq ft cabin at 350/sq ft fully furnished. Thats a good deal and it won't be easy to find. Typically even the existing stuff is at that 400/sq ft. For new construction, you're looking at 400 to 450/sq ft depending on the size and location. Gatlinburg is more expensive but it also drives more rent too.

If you can get something at 350 to 375/sq ft furnished thats not too far from everything, take it. Again, you probably won't see too much listed in that price point so be prepared to make low offers and have local realtors you'll never get it. But you will eventually.

Just to get an idea, here is the typical rental quotes from property managers:
2 bed, 1500 sq ft - estimated gross rent is between 70k to 90k a year. With a pool add 25k more a year.
3 bed, 2,000 sq ft - estimated gross rent is between 95k to 115k a year. With a pool, add 30k to 40k more a year.

My understanding right now is that the one and three bedroom cabins are doing pretty close to their same revenue numbers. But the bigger ones (4 bedrooms and above) are struggling a bit because a bunch of new 4 and 5 bedroom mega cabins have come online over the last 6 to 9 months.

Here is the one thing I would leave you with. I looked at every area possible before I really jumped in here. And I didn't find a single area out there that came close to the returns being produced in this area. Not only that but a lot of other areas are at risk of the cities changing the laws or the zoning and really affecting the value. These cabins and these towns in sevier county have specifically zoned subdivisions for short term rentals. So you'll never have to worry abou them rescinding your zoning and now you're stuck with a cabin you bought based on short term rental returns and you have to make long term rental rates work for it. That can never happen here and it is a peace of mind that I don't think you can find anywhere else.

Thank you for the very informative, insider reply! Very helpful!

0 Votes

Hello,

I'm a 36yo Physician Assistant in Ohio. Current income is around 350k between the two of us. We have 400k liquid currently. My wife and I have been collecting data and saving up our nest egg for the past several years. We are looking at buying in the Gatlinburg area. Home prices seem to be coming back down from the giant price hikes a few years ago.

We are looking in the 600-700k range. We have spoken to the Short Term Shop previously. We now have an additional year of savings to use AND home prices have come down since last year (at least a little).

Any advice would be greatly appreciated! What do we avoid in this market? Anybody familiar with the local area, what areas around Gatlinburg to avoid. Which areas seem to rent out the best? Which areas are the slowest to rent out. Do cabins rent out the best at this price range? Or chalets with unique features?

For lending, we would qualify for this to be a "second home" mortgage, which would be 5% down payment and increase ROI. We do have enough saved to easily cover 20% if we can't find a bank to offer that option. Recommendations? Credit score is at 800 currently.

Thanks,

Zach

1 Vote

Greetings,

My name is Zach and I'm a 35yo Physician Assistant in Ohio. Married with 2 kids. I work at a 501c3 currently in my 8th year of practice. We are looking to use our savings to grow our wealth by investing in more real estate. Have previously owned a Live In Flip that we made 30k on.

Income: Me- Current annual income of just over 300k for the past 2 years, before that it was in the low 200s.

Wife- Occupational Therapy Assistant income of 50k a year.

Debt: -160k in student loans. 2 years remaining until this is completely forgiven through Public Service Loan Forgiveness. Wife's student loans are paid off.

- 15k remaining on my truck at 5%. Wife's vehicle paid off.

- 320k remaining on home mortgage at 2.7%. Original home price was 385k. Plan to live in this home another 20 years until my boys graduate.

- No Credit card debt.

Credit Score- mine is 785 average, Wife is 765 average.

Assets: -200k in 403b account current. Max out 20k per year into this account.

- 55k in 3.5 acres around our home that we could sell later, but no plans at the current moment as we like not having neighbors. Our total lot including this acreage is 6 acres.

- 50k in VTSAX

- 350k in our checking/savings account.

I have a friend that has 5 STRs in Smoky Mountains/PCB. My wife and I have been researching by listening to BP, Robuilt channel, reading Short term rental Long term wealth and other books. Did order the new RE By the Numbers book that was on the podcast last week. We are looking at getting in the Smoky Mountains market for a STR. We have already been talking to an agent with Short Term Shop.

I think we are in a good place to get into the market for a 2 bedroom 2 bath STR. Looking to spend around 550k, unless we find a 1B1B that we like that the numbers make more sense. Plan to get this as a second home/vacation home loan, but use as a STR. We would be running the STR ourselves, but will obviously need to assemble our super team.

Am I missing anything? Tips, tricks, or any other advice at beginning this journey? Having just a little trouble pulling the trigger due to current state of the economy, but we have plenty in savings to help with a couple of bad years.

Thanks,

Zach

0 Votes

All Forum Posts by: Zachary Harr

Zachary Harr has started 4 posts and replied 7 times.

Post: Access to coaching?

Post: Long Time Lurker, Introduction

Post: Long Time Lurker, Introduction

Post: Long Time Lurker, Introduction

Post: Newbie looking to invest in STR in Gatlinburg, TN

Post: Newbie looking to invest in STR in Gatlinburg, TN

Post: First STR in Smokies. Financials posted. Tips, Tricks, Advice?

Zachary Harr has started 4 posts and replied 7 times.

Biggerpockets Logo Post: Access to coaching?

Biggerpockets Logo Post: Long Time Lurker, Introduction

Biggerpockets Logo Post: Long Time Lurker, Introduction

Biggerpockets Logo Post: Long Time Lurker, Introduction

Biggerpockets Logo Post: Newbie looking to invest in STR in Gatlinburg, TN

Biggerpockets Logo Post: Newbie looking to invest in STR in Gatlinburg, TN

Biggerpockets Logo Post: First STR in Smokies. Financials posted. Tips, Tricks, Advice?

Post: Access to coaching?

Post: Long Time Lurker, Introduction

Post: Long Time Lurker, Introduction

Post: Long Time Lurker, Introduction

Post: Newbie looking to invest in STR in Gatlinburg, TN

Post: Newbie looking to invest in STR in Gatlinburg, TN

Post: First STR in Smokies. Financials posted. Tips, Tricks, Advice?