New Bern Tiny Home rental netting $25,000 profit

5 Replies | Coastal NC, North Carolina

I've been proposed a deal on investing in a Tiny Home, to be placed in New Bern, NC (Fairfield Bay).  The person presenting me this deal is suggesting it could warrant up to $200 a night, through AirBnb.  On the conservative side, at least $75/night.  He's even suggested that with the recent hurricane damage in New Bern, there is no where to rent, and there.  He suggests insurance company workers need to be stationed down there for months, and will need a place to rent.  After the hurricane damage is addressed, he suggests it would market well for people looking for a week by the coast.  The Tiny Home would be acquired for ~$50,000, and he suggests it could generate gross profit of $4000 a month.  Accounting for 3 months vacancy, that's $36,000 a year.  

Is this too good to be true?? Those who are familiar with the market in New Bern - please help me with this. Initially, I think - why would people pay up to $200 a night for a Tiny Home on Airbnb? He suggests thats the market in the Fairfield area. I would be funding the deal, and splitting cash flow 50%, while the other end is acquiring the deal, and handling the management, maintenance, and keeping it occupied. Since I would be using a HELOC to fund this, the gross profit would first address the HELOC monthly payment, then split up net profits from there. Since I'm inheriting all the risk by funding 100% of the deal, I'm not sure I'm not sure I'm comfortable, but am unsure on what else to have in writing to make it right.

In addition to this proposal, I've already purchased 3 lots in New Bern, which was presented me to this same person.  I've purchased 3 vacant lots in zip code 28560.  The intention is to hold onto these for awhile and sell in a 12-24 month period for a return on investment.  Houses right by these lots are in the $250-$350k range.  Anyone with knowledge of this area, do you have an idea of what is a reasonable expectation for a builder to pay for vacant lots in these areas?

Updated over 2 years ago

Update: I've posted this in the North Carolina main forum to get more opinions.

@Ben Kirchner

Reach out to me anytime, I’ve lived in New Bern sine 1996 and very familiar with the area. I’m curious what ended up happening with your building lots in the area. I started to do a tiny house deal and I think there is some opportunity but those numbers seem a little aggressive to me.

@Tim Garrett  I haven't pulled the trigger on building out there.  I passed on the TinyHome proposal, as I didn't see it producing the return put out there.  One thought was to sell the lots, as my partner was in discussion from interested big builders. However, COVID19 has shut that down, for now at least.  I would still like to learn moreabout the process of hiring a builder, to better determine the cost of that, and learn the numbers on what I could rent/sell for out there.  Any information you have on this is appreciated. 

I believe you made the right decision on the tiny home.  Fairfield Harbor has plenty of nice folks and a lot of homes have been rehabbed out there since Florence but you can’t fix the fact that it’s low and prone to flooding.  Builders are still building even with everything going on.  I’m in the process of selling a lot for a spec home now and another for a double wide.  Everyone has kind of taken a breath but so far everything is moving along.  Happy to help you connect with some builders.  Are you wanting to parter on a spec build or just sell the lots outright?

I'm not dead set on one option.  The beauty of real estate.  I'd prefer to learn a little more of the building process to help get a better idea on the numbers.