All Forum Posts by: Zach Stroud

I just used Caliber Home loans. They have the Smart Vest program that allows you to borrow on over 10 properties. Their parent company, New Rez, keeps the loan on the books. They required 80% LTV and the property must cash flow at least one dollar above the monthly payment for them to approve it. My rate was about 4.5%.

@Dana Tenebruso Hi Dana. I live on the OBX and have 3 rental properties in the area. I use Southern Shores Realty for my rentals. They charge 10% gross on my long term rental and 15% on my short term weekly. I airBNB my third. This is about average expenses from what I have heard. 

Southern Shores, Duck and Corolla has some areas that are X flood zone. If you decide to get flood insurance in an X flood zone on a rental, it will cost you $750 per year. These rates are set by FEMA.

Sunny Berle has been my realtor. She is great and her husband, David Maso, is who we use for contractor repairs. RA HOY is hands down the best for HVAC repairs. Lowire Tech are the best electricians in the area. For appliance repair, Pops repair or Smith Appliance are the best. We use Action Plumbing and have been satisfied with them. 

I can't think of anyone else who I have to use for real estate on a regular basis. But if you have questions give me a should. 

@Brad Johnson I have 3 rentals in Southern Shores, Outer Banks. Southern Shores, Duck and Corolla are cash flowing STR that have less beach erosion and hurricane susceptibility based on their geography.

 2 of my properties are managed by Southern Shores Realty. They charge 10% gross for my yearly rental and 15% for the weekly rental. My experience with them so far has been very good. Very hands off. 

My realtor for these properties, including my primary residence in the area, was with Sunny Berle. She is very good and has an investor mindset. Another bonus is that her husband, David Maso, is a general contractor on the outer banks. So if we saw work that needed to be done he could give us estimates on what he thought repairs would be. We ended up using him for structural repairs because he was fair with pricing. 

There are essentially 3 seasons in the outer banks where your property can potentially take a beating. Noreasters in the winter, hurricanes in the fall, and then tourists in the summer. So far, we have managed them well but HVAC units last about half their average life on the OBX.

@Heather Carrow Hi Heather, Many people successfully do short term rentals in this area. In general, these properties are going to rent 100% of the time memorial day through labor day. There are some hurricane risks to consider. Those areas seem to get a major hit by a hurricane about every 3 years. If you look at a map, you can see why. They stick out in the middle of the Atlantic Ocean.  Ocracoke (just south of Hatteras) was devastated in Sept 2019 from Hurricane Dorian. 

Frisco and Hatteras tend to have more sound side flooding than beach side. Most houses are elevated. Buxton actually doesn't flood as much as it has some more elevation in the land. The problem is that there is limited beachfront real estate available in Buxton. It is mostly off of Old lighthouse road. Another consideration is that the beach erosion is significant in Buxton. They had to move the Buxton lighthouse inland in 1999 due to beach erosion. They will likely have to move it again due to encroaching sea levels. 

The actual island (Rodanthe, Salvo, Avon, Buxton, Frisco and Hatteras) has a tumultuous history. The main road on it, highway 12, seems to flood all the time. This pushed people away from investing in the area. However, they built a new bridge over the Oregon Inlet last year and they are building what locals call the "jug handle" bridge in Rodanthe to bypass the main part of highway 12 where it floods. This is to be completed in the next year. This has created more investor confidence in investing in the area and house prices have gone up. My honest opinion though is that by the year 2100, i think most of the island will be underwater. 

You can get a reasonable house, 3/2 "beach box" for under 300k in the areas you mentioned, within walking distance to the beach, and rent it out and it should cash flow. But be prepared for some capex. Take an average life span of roof, HVAC, etc... and cut it in half. The salt air and high winds destroy a lot. 

My personal preference, however, is to invest "in town." I think Southern Shores, Duck and Corolla (still part of the outer banks) are safer in regards to storms and flooding. Most of these areas are X flood zone. And they tend to attract wealthier vacationers. I also think we are seeing more long term residents in the area as telecommuting becomes more permissible. I think this should increase values long term. In addition, long term residents with children clamor to get in the Kitty Hawk Elementary School zone district. It is a very good public school. 

Hi Samantha, I am an active outer banks investor. I also live there year round. You can expect to rent out short term rentals for about 150-200 days per year. This generally covers the cost of the mortgage based on cap rates in the area. However ,there is a shortage of winter rentals in general. I received a request from my property manager this week asking for people to offer there summer rental homes as winter rentals with at least 3 months duration because there is such high demand for these time periods. So if you really wanted to maximize cash flow, do short term rentals memorial day through labor day and then try to do a winter rental. 

I have 2 STR and 1LTR on the Outer Banks. Overall, I think it is a good market with positive cash flows on the short term rental side, not long term rentals-at least for me. The market does appear to be heating up since Covid has caused more people than usual to vacation here this summer. I am hearing that there are multiple bids on properties Kitty Hawk-North of Kitty Hawk primarily in the 300k-500k range.

If you have any questions about investing in the area, let me know. There are certainly nuances to the area and spots you want to avoid, mostly for flooding/beach erosion issues.