Waterfront Cottage Short Term Rental

[Andrew Severino]

Investment Info:

Single-family residence buy & hold investment in Fairhope.

Purchase price: $586,100

1300 square foot single family waterfront cottage on Mobile Bay purchased to be used as a vacation rental.

What made you interested in investing in this type of deal?

Fairhope is a wonderful, unique community with much to offer for residents and visitors alike. I wanted to diversify my portfolio and consolidate some multifamily assets into high demand vacation rentals.

How did you find this deal and how did you negotiate it?

It was listed with a broker, I didn't negotiate price much due to location and market demand, I did however get much of the furniture from and a bunch of houseplants from the seller to lower startup costs for the STR business.

How did you finance this deal?

I borrowed 50% 1st mortgage 20 year am and borrowed the additional 50% on against equity from another property I purchased with 1031 exchange funds.

How did you add value to the deal?

Set up as an STR with amenities, bought a kayak and two paddle boards, got great photos and built a fire pit.

What was the outcome?

100% financed, renters are paying all the debt, property is appreciating, I love owning and using the property.

Lessons learned? Challenges?

I was out of state when as I navigated the purchase, I never viewed the property until the morning of closing. My agents and inspectors did miss something I wouldn't have, and I spent $15,000 resolving something I could have negotiated on. The lesson is be careful not to rely on others for too much, I tend to not make mistakes.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes I worked an agent as I was out of town at the time.