BP!

I had purchase this town-home in April 2018, located in Havelock, NC. I previously posted about the purchase on the following forum link: https://www.biggerpockets.com/forums/522/topics/546300-first-investment-property-havelock-nc.

After a year of living in this property, and sporadically house hacking it, I started assessing the true cost of living and how it could possibly perform as a rental. The Craven County real estate market and the Eastern NC market in general appeared to be low in rental inventory after Hurricane Florence. My property manager was telling me how high rents had become, relative to a couple months prior. This became glaringly obvious to me when I created a test ad to rent the property. Before the storm, the highest rental comparable for the same exact town-home was $775. I put an ad on Facebook marketplace, listing the rental for $1000. In 48 hours I had over 30 interested renters wanting to see it. After that show of interest, I knew it made little sense financially to stay in the property when it could be used as a cash flowing rental. 

I quickly started looking for other living options, both temporary or permanent, in order to capitalize on the current rental rates. I found a park model home in a nearby RV park that would allow me to move quickly, offered great amenities, and was reasonably priced at $15,000. I've always aspired to live in a tiny home, so this was about half way there at 550 sqft!

This was my ticket to move out. I got the park model under contract for $13,125 and scheduled the transfer of title to take place a month out, giving me enough time to prep the property and find/screen a tenant. The owners were gracious enough to allow me to move my belongings into the park home and live there as I was getting the town-home ready for showings. The timing and coordination seemed to all come together pretty smoothly on this one. As I was moving out, showings started. By the time I was fully move-in to the park home, the town-home was rented.

I had my property manager find a qualified tenant two weeks into marketing the property. We had listed the property for $1100, and negotiated with them to sign a two year lease for $1075! Who knows how long these rental rates will last? 

The Numbers-

Mortgage                                $ 388 monthly

Property Taxes                      $ 885 yr

Insurance                               $ 670 yr

Property Mgmt (9%)             $ 1,080 yr

Maintenance & Repairs       $ 600 yr

HOA dues $ 400 yr

Capital Expendatures           $ 720 yr

Vacancy (7%)                          $ 903 yr

Rent                                        $ 1075 monthly

Total Cash Flow                    $ 249 monthly


Living Expenses/Savings-

The Park Model home was purchased with a HELOC @ 6% interest only on a 12yr AM from another investment property. The numbers:

Lot Rent (water/trash included):                                     $360

Electric:                                                                                $60

Loan paydown (50% principal, 50% interest):               $100

Total:                                                                                    $520

Noteworthy Intangibles: Closer to the beach, no lawn care, swimming pool, simple living!

The Town-home was costing me:

PITI: $520

Water/Electric/Trash:        $150

HOA: $40

Total:                                   $710

Overall, by moving out I was able to save $190 a month on living expenses, while adding a stream of income that is covering down on my previous expenses and netting ~$250 a month. That $440 I am seeing each month was absolutely worth the hassle of hustling to secure a new living space and moving. Utilizing the HELOC was also worth it. The arbitrary amortization schedule I have set will have the loan paid off in 5 years. However, I probably will sell it for cash or owner financing before the 5 years, due to the fact that:

  1. I move when it benefits my real estate endeavors, which seems to be frequent and sporadic.
  2. The RV park will not allow me to rent the park model. 

All in all, I'm happy how the whole process turned out. My RV park is awesome! Shout out to Whispering Pines, Newport, NC! Please comment if you have any questions or critiques. I love hearing from the community.

-Paddy

Subject Property-