Active duty navy wondering the best route to get into STR

Shayne Meeker · 2021-08-26T07:53:20-07:00

Hello everyone! First time posting here so go easy on me. I’m seeking advise from others on what they feel would be best moving forward. He’s my story.My wife and I are both currently 25 with 120k saved and no debt. We are selling our current home in Jacksonville Fl because we want to capitalize on the booming market. We are set to leave Jax in May of 2023 (getting out of military). So the plan is to rent while trying to find our first STR somewhere in the Smokey mountains. I have considered keeping and renting out our home but the ROI just isn't as aggressive as the possibility's with STRs. We want to sell our home so we have the cash (about 60k) to invest into an income generating property.What would your recommendations be? Wait and see if the market slows or drops a smidge? Consider other locations for a STR? Shift focus to multi family homes? (Very slow ROI compared to STR imo) I am brand new to real estate but always been an entrepreneur and found ways to make side incomes. Open to hearing any and all ideas!

Matthew CrivelliBusiness Member

Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes

5y

Short term rentals are much more risky than long-term rentals because vacationing is tied in with the overall health on the U.S. economy. Also most, if not all private lenders will turn you down if you're trying to buy a property that is considered rural. With 120k saved up in liquid assets I would start finding discounted properties that need work. Use a bridge loan with a lender funded rehab budget. Build in equity, get renters in place, refi and pull out your original investment. if done correctly you should be able to rinse and repeat the process and you will have nice passive income flowing. Multi family income may be slow, but its steady.

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1 Reply

Anthoney Hanks

Real Estate Broker · Forney, TX · Member since 2019 · 1k+ posts · 399 votes

5y

@Shayne Meeker, welcome to BP!

0 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

5y

@Matthew Crivelli

@Matthew Crivelli I respectfully disagree. STRs tend to attract people with more $$ and a need to travel. During the near complete shutdown of our country due to Covid, our BnBs were as busy as we could have hoped.... Now a complete financial crash would be different if thats what you're talking about...

0 Reply

Julio GonzalezPro Member

Specialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votes

5y

Hi Shayne, welcome to the community! Glad to have you on the forums.

561-253-6640

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Justin WindhamPro Member

Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes

5y

@Shayne Meeker

It’s nice to have you on Bigger Pockets!

Make sure you check out all that this site has to offer. You will be able to get answers to so many of your questions regarding real estate investing, wholesaling, flipping, rentals, lending, self-directed IRA and Solo 401k investing, or tax and legal guidance from many of the knowledgeable members. Take advantage of the networking opportunities and best wishes to you.

If you haven’t checked it out already, the Bigger Pockets blog features links to their awesome podcast and many great articles: https://www.biggerpockets.com/renewsblog/

The site has quite a few tools that can be helpful for new members. For example, if you are looking to connect with other members near you, want to learn from people in a specific area you’d like to invest in, or have a desire to find people interested in certain topics, you could start your search here: https://www.biggerpockets.com/search/users

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Aaron T.Pro Member

Developer · Aguada, PR · Member since 2014 · 927 posts · 279 votes

5y

sell the home in Jax, cash out. then go use your VA loan to buy a 2-4 unit property and STR all the units but the one you live in.

2 Reply

Mike D'ArrigoPro Member

Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes

5y

@Shayne Meeker do plenty of research on the laws and attitudes of the local government towards STR. Quite a few cities are putting restrictions on using your property as a STR. Don't look only at the current laws and restrictions but also find out if there are any proposals or hearings pending in the city council or county supervisors.

0 Reply

Jeff Shumway

Lender · Tampa, FL · Member since 2020 · 182 posts · 90 votes

5y

Would you consider keeping your current home as a STR when you get out and use your VA loan to buy your next property 0 down? I know it's not the Smokey Mountains but it's at least a start.

0 Reply

Ben Scarborough

Realtor · Gulf Shores, AL · Member since 2020 · 153 posts · 76 votes

5y

In the short-term, I would 100% use the money to invest in a thriving STR market in the Southeast (Smokies, Gulf Coast, Blue Ridge). With current inflation rates, you are theoretically losing money the more liquid you are.

In the long-term, I highly recommend utilizing your VA loan to snag a 2-4 unit MFH in a metro market.

In this long-term scenario for you, I would recommend finding an LTR/STR in a Metro market for a few reasons:

1. If I was planning to utilize a VA loan, I would not want to live in a big tourist or vacation destination for my primary residence

2. You give yourself the option of having LTR demand if STR gets outlawed (this may get some backlash, but this is with the assumption that I don't want to live in a tourist destination for my primary residence, otherwise I am always buying an STR in a market that thrives on STRs

3. Reliable long-term appreciation

Good Metro Options to look into if moving from Jax and want to stay in Southeast: Atlanta, Nashville, New Orleans, Orlando

Important item to note: I know Atlanta just created a few restrictions for STR, but still worth looking into

Best,
Ben Scarborough

0 Reply

Chris Levarek

Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes

5y

@Shayne Meeker Welcome! As you are leaving the military, getting a new loan on a STR could be difficult. With that dependable income gone, a lender for an investment property will not have the same perspective. Qualifying on loans without the W-2 history can be a pain. Almost better to qualify now on a purchase, then exit the military. IF you do use the VA loan and demonstrate intent to move in, that might work but in most cases, lender is going to classify as a investment property and want income to verify.

Florida is a great place for STR and I've heard good things about the Smokey mountains. Remember STR income rarely counts towards boosting your income balance sheet with lenders. So again that income comes into play on the next one round. You can find lenders who use STR income to justify a purchase, but these are not the majority. So question is, do you want to have more management and ROI with higher risk on a STR OR do you want less management, medium/high ROI with lower risk on a LTR? Both have their advantages.

0 Reply

Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

5y

@Shayne Meeker

Smokey mountains right.

Do an RV park, tiny cabin rental, overnight camping,

SBA loan. You have enough for collateral

Your young and energetic. Rent a skidsteer, mini excavator. Buy a chainsaw.

First go online and look at different RV campground setups. Look at ones that are for sale.

Look for nearby features that make them successful. Lakes, mountains, ocean, big cities, etc

This is easily scalable on the same site. Live there in an RV. Set aside some ground for your future house and shop. Do some tiny house cabin rentals. Overnight camping spots. Go on line and look at the Seward Alaska military park as your end game.

Do both a plan for this and several STRs and MFH investments. Compare which ones you would like to own in 10 years, management, scalability, upside/downside from today’s market.

0 Reply

Account Closed

Member since 2020 · 983 posts · 1k+ votes

5y

Originally posted by @Matthew Crivelli:

Short term rentals are much more risky than long-term rentals because vacationing is tied in with the overall health on the U.S. economy. Also most, if not all private lenders will turn you down if you're trying to buy a property that is considered rural. With 120k saved up in liquid assets I would start finding discounted properties that need work. Use a bridge loan with a lender funded rehab budget. Build in equity, get renters in place, refi and pull out your original investment. if done correctly you should be able to rinse and repeat the process and you will have nice passive income flowing. Multi family income may be slow, but its steady.

Great Advice!

Before investing in STR's read the pros and cons all over the internet. While many people brag about the high returns they make the business comes with many inherent risks and it requires 27/7 work, worries, management and extra high management costs that long-term rentals and multi-unit properties don't have.

With $125k to invest I would definitely invest in no less than a 4-plex where your profits are almost exponential when you increase rents and the rent increases result in both higher profits and an instantly higher re-sale value for the property. You cannot forcefully increase the value for a single family home when you increase the rent.

BP has a great calculator that does something similar to the image below.

1 Reply

Shayne Meeker

OP

Member since 2021 · 12 posts · 4 votes

5y

Originally posted by @Jeff Shumway:

Would you consider keeping your current home as a STR when you get out and use your VA loan to buy your next property 0 down? I know it's not the Smokey Mountains but it's at least a start.

Unfortunately our HOA does not allow STR and also the market just isn't there for a 4 bedroom home. (In our area)

0 Reply

Shayne Meeker

OP

Member since 2021 · 12 posts · 4 votes

5y

Originally posted by @Ben Scarborough:

In the short-term, I would 100% use the money to invest in a thriving STR market in the Southeast (Smokies, Gulf Coast, Blue Ridge). With current inflation rates, you are theoretically losing money the more liquid you are.

In the long-term, I highly recommend utilizing your VA loan to snag a 2-4 unit MFH in a metro market.

In this long-term scenario for you, I would recommend finding an LTR/STR in a Metro market for a few reasons:

1. If I was planning to utilize a VA loan, I would not want to live in a big tourist or vacation destination for my primary residence

2. You give yourself the option of having LTR demand if STR gets outlawed (this may get some backlash, but this is with the assumption that I don't want to live in a tourist destination for my primary residence, otherwise I am always buying an STR in a market that thrives on STRs

3. Reliable long-term appreciation

Good Metro Options to look into if moving from Jax and want to stay in Southeast: Atlanta, Nashville, New Orleans, Orlando

Important item to note: I know Atlanta just created a few restrictions for STR, but still worth looking into

Best,
Ben Scarborough

Fantastic advise thank you!

0 Reply

Shayne Meeker

OP

Member since 2021 · 12 posts · 4 votes

5y

Originally posted by @Chris Levarek:

@Shayne Meeker Welcome! As you are leaving the military, getting a new loan on a STR could be difficult. With that dependable income gone, a lender for an investment property will not have the same perspective. Qualifying on loans without the W-2 history can be a pain. Almost better to qualify now on a purchase, then exit the military. IF you do use the VA loan and demonstrate intent to move in, that might work but in most cases, lender is going to classify as a investment property and want income to verify.

Florida is a great place for STR and I've heard good things about the Smokey mountains. Remember STR income rarely counts towards boosting your income balance sheet with lenders. So again that income comes into play on the next one round. You can find lenders who use STR income to justify a purchase, but these are not the majority. So question is, do you want to have more management and ROI with higher risk on a STR OR do you want less management, medium/high ROI with lower risk on a LTR? Both have their advantages.

Thank you so much for the reply. Once out of the military I’ll have a W-2 job making almost double of what I make now, so I shouldn’t have issues with lenders. I have always been a high risk/high reward person. Knowing the hard work it takes to get the results you desire. I don't feel a LTR would be a medium/high ROI especially when comparing to STR. I feel as they would be more of a low/medium ROI. Although I am young and don't have experience in any of these fields so who knows! Maybe our first multi family will surprise me. Again thank you for the insight!

0 Reply

Shayne Meeker

OP

Member since 2021 · 12 posts · 4 votes

5y

Originally posted by @Mike D'Arrigo:

@Shayne Meeker do plenty of research on the laws and attitudes of the local government towards STR. Quite a few cities are putting restrictions on using your property as a STR. Don't look only at the current laws and restrictions but also find out if there are any proposals or hearings pending in the city council or county supervisors.

Great advice! Thank you

0 Reply

Active duty navy wondering the best route to get into STR

Active duty navy wondering the best route to get into STR

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