All Forum Posts by: AJ Wong

We've been anticipating that government-sponsored entities (GSEs) like Fannie Mae, Freddie Mac, and HUD programs could face privatization or otherwise - ushering in a new era of residential mortgage financing with profound effects on the housing market.

We have personally been so convinced - that we are literally closing on a new primary residence this month - with get this: $2950 TOTAL out of pocket expenses. HOW? It took a little creativity - but even after 20+ years as a mortgage broker, even I was surprised at just how friendly mortgage underwriting guidelines have become. With all of the discussion of barriers to home ownership - there is no country on Earth where financing a home is ‘easier,’ (for qualified buyers)  3% down programs (plus additional grant or homeowner assistance!) exist. 

It is well known that FHA loans default at many multiples higher than conventional loans with tighter DTI and larger down payment requirements - what is not often discussed (nor will be here) is how this loose monetary policy artificially inflates housing prices. In short - if buyers were required to have 20%+ down and 35-40% DTI's (recently raised to as high as 55% - not including real life expenses) - like when the program began, it is unlikely that valuations would have climbed as rapidly.*

With that said - here is a snap shot of just how creative and leveraged US mortgages can be (and what is likely going away) from my most recent personal transaction. (Keep in mind these results will be a bit skewed as I am a licensed Real Estate Broker and a 'first time' homebuyer as my previous US primary was sold in early 2022).

$380K Purchase Price (Appraised at $405K) 

3% Down ($11,400) with $2400 Deposit

2.5% seller concession ($9500) + 2.5% RE Commission ($9500 self-representation)

Inspections - Well, Septic, Property, Appraisal ($2100 - $600 Appraisal Credit)

Sub 6.99% 30 year rate

$450 credit at closing

TOTAL Out of Pocket: $2950

Mortgage Payment: Sub $2850

There are some caveats - I am effectively financing the closing costs and down payment however - lenders even allow seller concessions of up to 6-7% on primary residences (but not above and beyond closing costs) - concessions cannot be applied towards down payments.

The RE commission is earned income - and essentially ‘applied’ to the down payment at closing.

With that said - even without the RE commission, it is still a borderline ridiculous and unfathomable loan (which without Government Endorsement) not one that I would make - but that that I am ecstatic to qualify for! Auto note rates are higher...

My point in all of this is: 

1. Anyone that invests in a personal RE license should see a positive ROI

2. If GSE’s are privatized - these type of underwriting standards, and likely the rates supported by the guarantees, are going away…or changing considerably. 

Here’s what that could mean for borrowers—especially first-time homebuyers:

When these programs began (FHA in 1934, Fannie in 1938, Freddie in 1970), qualification was far stricter:

• Large down payments—often 20% to 50%
• Short loan terms—5 to 10 years, often with balloon payments
• Limited access—mostly to well-established, higher-income borrowers

Over the decades, GSEs transformed the market with:

• 3–5% down payment options
• 30-year fixed-rate mortgages
• Higher allowable debt-to-income ratios (up to ~55%)
• Lower credit score minimums and minimal reserve requirements

Potential Effects of Privatization

• Tighter Qualification Standards – Higher credit score minimums, lower max DTIs, and larger reserves could push many first-time buyers out of the market.
• Bigger Down Payments – Low-down-payment programs may vanish, forcing buyers toward 10–20% down.
• Higher Interest Rate Volatility – Without federal guarantees, investor risk premiums could push rates up and make them more volatile.
• Reduced Access in Marginal Cases – Self-employed borrowers, those with moderate credit, and non-traditional income profiles may have fewer options.

Privatization could roll back decades of progress in mortgage accessibility—bringing lending terms closer to what existed when the programs were enacted nearly a century ago. 

What are your thoughts? Would you purchase a primary property with little or no money down - or in retrospect any investment opportunities that would have made sense to do so?

Very difficult to cash flow (at current rates with minimal down) in that area due to taxes and operational costs such as higher utility bills...example in-season pool heating bill. With that said - with the right amenities there is some impressive overall production (sometimes as high as 20% of valuation in gross annual income.) Cash flow is critical - however should align with your overall investment goals and strategy..is it a property you intend to utilize personally or an area that you visit frequently? Is the area on your retirement radar? In general throughout Palm Springs, Desert Hot Springs and Joshua Tree the prospect list and negotiations need to be very tight for optimal ROI. Coachella Valley Getaways is a GREAT PM for support and projections. Good luck!

Quote from @Brooke Roundy:

Great offerings. I would add, air purifiers as well. I think lighted vanities are not expensive and really a lovely touch. Good point about sensory. IMO quality cookware and utensils are required. I’ve seen so many of the same junky Amazon basics cookware, I went that route when I first started not knowing better but have pivoted. I’ll be focused on sustainability as well and I want to reduce plastic wherever I can. We are drowning in it. I don’t think that’s only for luxury rentals, I want all my rentals even economy offerings to be environments I’d want to live in. 

 You are ON IT! It's easy to loose perspective that a lot of our 'LTRs, MTRs and STRs' are on Maslow's hierarchy of needs and are our guests goals and 'dream' or ideal homes/experiences - even if only temporary lodging. I do not think any extra effort, thought or consideration goes unnoticed or is an 'over-investment.' There is an art and science of welcoming guests and inviting then into your...HOME (even if you don't live there full time.) Put two identical hotels next to each other, and hospitality will decide which one thrives.

Quote from @Mike Grudzien:

Awesome as always AJ!!!  Great analysis.  If you ever write a book; I'll buy it!

...oops, p.s. paragraph 5 "depreciation" is misspelled...
(not to be a karen, but I am a spelling and grammar cop)

I have a book! (It's titled 'The Gift of Love' a guide for Living Kidney Donors) No apology necessary thanks Mike!

Quote from @Brooke Roundy:

@AJ Wong this is personally the direction I'm thinking to take my business. These offerings play well in STRs, but I'm curious how wellness offerings would or would not play well in mid-term rentals catering to that niche market. Digital nomads care about these things, but it's the healthcare professionals ironically who probably need it the most, facing burnout, etc. a new generation of HCPs may want to flip that script.

Indoor infrared..Quality water pressure/fixtures and if any remodels are involved..small touches. Radiant heat floor in the bathroom only..vanity mirror lights that dim or illuminate on entry automatically. Bidet. Anything sensory oriented..quality sound system. Quality cookware and kitchen utensils. Sounds machine..high quality linens and mattresses. I always try to create a home for myself that I share with others - for a fee.

Luxury STRs are sometimes easier said than closed..having just represented a buyer on one of the most prolific Luxury STRs on the Coast (and one of the most challenging and lengthy to close!) I thought it would be helpful to share some of the challenges investors can face and things to look for and prepare heading into a luxury STR purchase or sale.

First and Foremost: If you are buying or selling an existing STR - CALL PLANNING AND CONFIRM the transferability, eligibility or license-ability for the next owner. You would not believe that just yesterday - I called on a listing (owned by a OR RE BROKER) that is an active vacation rental but cannot continue to operate as such - even though the owner/broker thinks it can! Particularly if you are searching a vast geographical area - it is vital to understand zoning and compliant - ideally with the support of specialized real estate professional in this space.

Secondly: Have your (Oregon) Ducks in a row! Similar to commercial transactions - the majority of STR investors are seeking verified income and expenses. Be as transparent as possible and as organized as possible. All utility statements: electricity, water, sewer & garbage, INSURANCE, road snow plowing, septic maintenance agreements, lawn care, hot tub maintenance, internet, and supplies. On the buyer side - obtain all pertinent verifiable information as completely as possible and ensure that with written agreements you utilize an ‘investment addendum' or equivalent outlining specifically what the seller's are required to provide - and when!

Thirdly: Coordinating showings and tours around long-term tenants is annoying for everyone - coordinating them for a short term rental with a full calendar is extremely tedious and often frustrating for investors and buyers- particularly those visiting on their single trip of the year..my best advice is to try and block a few days for showings near the anticipated listings launch date and possibly even each or every other week it is on market. What can also be helpful is a link to the AirBNB or management calendar in the private remarks listing so that brokers can have an idea of the schedule - without unnecessary discussions. Another helpful resource can be personal photos, videos and as much content beyond the public listing that buyers would find helpful. Such as: walk throughs, floor plans, inventory and upgrade overviews, brochures and contacts like PM’s, cleaners, contractors and handyman. These resources can be helpful beyond the initial assessment - for during the inspection or contingency period when you need to determine feasibility of repairs, projects or management.

Lastly: Timing, strategy and decisiveness are CRITICAL. Particularly - post accelerated deprecation renewal - these assets are in incredibly high demand and likely to have investors of a similar profile considering the same property. In conjunction with the preparatory tips above, have a Pre-Qual letter and responsive lender relationship in place (the kind that responds promptly on Sunday night) and connect with a local insurance broker and of course - STR focused real estate professional to support an efficient search with the resources to visit and tour prime prospects as near to hitting the market as possible. On the sales side - the cleaner response you or your representative can deliver to a prospective buyer, the more efficient a sale is likely to occur.

Here are some other Luxury STR transaction considerations:

Pro Forma Drives Demand In commercial real estate, projected income often drives demand and even value..listings with strong reviews and turnkey management can command a premium above nearby residential comps. Luxury STR buyers aren't just comparing square footage or finishes—they're underwriting deals based on net operating income (NOI), occupancy rates, and cap rates. Like commercial buyers, they're asking: "What's the return on this asset?"

Due Diligence Goes Beyond the House Buyers want to see:

• STR permits & zoning compliance
• Booking history & revenue statements
• Guest reviews and property management records

That’s a very different due diligence process than your average residential buyer.

Luxury STRs are a business acquisition disguised as a residential home sale When you buy a high performing luxury STR, you're not just buying a home—you're acquiring an often branded, income-producing business. The structure, operations, and even the furnishings often come with the deal. Understanding the commercial mindset will give you an edge—whether you're running the numbers, negotiating price, or crafting your exit strategy.

Hope this is helpful :)

Quote from @James Derry:

Spinning off of this a bit. I have a close friend that provides and installs golfing simulators. Do you think that would be a viable amenity in an STR? I think the price of them could be too high to allow for a positive ROI, any thoughts?

Absolutely - at least two of my clients in the area feature them..but the tech has come a long way! They are a great way to convert a garage. People also like installing putting greens but personally - wellness is more appealing and functional and a better ROI. Sauna, hot tub and/or plunge, outdoor shower, massage table, pull up bar and some weights or TRX. This generation wants to move and restore and stay on routine. There has been a fundamental shift even in Vegas towards health - last time I checked in they offered 'gym clothes..and a $45 health & wellness gym fee..lol

Quote from @Dan Gandee:

Love the article and insights - In my opinion I would say a hard "no" to Bandon. I have clients and investors there and it's been so-so depending on their locations but the seasonality is brutal. On top of that, we have super tough STR regulations with waiting lists and high competition from years of established vacation rentals with long lists of repeat clients. Also, I was just there for a week and there is an unusual amount of new construction homes for sale as well as other homes that could be potential STR's sitting on the market - these would typically be always gobbled up in a hot STR market. Bandon Dunes Resorts is also building a hotel right off the frontage road with ocean views. As I've always said, you can be successful in any market with the right strategies and timeline, but I'd much rather take an STR in Brookings or Florence at this point.

I have successful STR clients in both Brookings and Florence and two in Bandon with a third closing next week on one of the top three revenue producing STRs on all of the Oregon Coast - so it is definitely selective. The regulations are difficult - but can be navigated and clearly provide a very high barrier to entry. The hotel is needed and will only create more demand and opportunity for the area - I do not see it as competition for luxury STRs. Thanks for your insight!

Quote from @Bradley Buxton:

@AJ Wong

This is an interesting strategy and niche. I'm in the Tahoe area and for summer, the golf experience for a STR would appeal to many people. Even families that stay there, there is always time for a round, right? Corporate retreats, C-suite people staying in town. You might be on to something there... Chase the greens

 Yes - interesting note about Bandon Dunes is that it's intended to be 'Traditional' (such as with a Caddy) and to mimic Scotland - therefore there is year round play despite the weather conditions. Definitely families, corporations are even some notable Sports teams and players have been spotted and stayed at a friend of a friend's property. The reason there have not been majors there presumedly is lack of infrastructure. There is a small municipal airport - seasonal flights into North Bend from (or connecting) from the Bay Area or a 2.5hr one-trip from Eugene. Also one new luxury hotel proposal but one of only a handful of its kind on the Southern Coast. 

Thanks for the positive feedback! 

Golfweek published their top 100 US Public Golf Courses last month and one-third of the top fifteen courses are in a single Southern Oregon town - with more on the way. This week Bandon Dunes is hosting The 126th U.S. Women's Amateur golf championship from August 4-10, 2025. Check it out for a glimpse of the views - the rankings below and full article here.  The Courses success is not by accident. The architects of Bandon Dunes had a vision for the pinnacle of golf and have created 'Disneyland' for golfers without disrupting the local environment and community. 

1. Pebble Beach Resorts (Pebble Beach Golf Links) 

2024 ranking: 1

Average rating: 8.74

Location: Pebble Beach, CA

2. Bandon Dunes Golf Resort (Pacific Dunes)

2024 ranking: 2

Average rating: 8.53

Location: Bandon, OR

3. Pinehurst (No. 2)

2024 ranking: 3

Average rating: 8.29

Location: Pinehurst, NC

4. Kohler Whistling Straits (Straits)

2024 ranking: T4

Average rating: 8.13

Location: Mosel, WI

5. Bandon Dunes Golf Resort (Bandon Trails)

2024 ranking: 6

Average rating: 8.08

Location: Bandon, OR

6. Bandon Dunes Golf Resort (Old Macdonald)

2024 ranking: T4

Average rating: 8.06

Location: Bandon, OR

7. Bandon Dunes Golf Resort (Bandon Dunes)

2024 ranking: 7

Average rating: 8.04

Location: Bandon, OR

8. Bethpage State Park (Black)

2024 ranking: 9

Average rating: 7.99

Location: Farmingdale, NY

9. Shadow Creek

2024 ranking: 8

Average rating: 7.98

Location: North Las Vegas, NV

10. Kiawah Island Golf Resort (Ocean)

2024 ranking: 10

Average rating: 7.96

Location: Kiawah Island, SC

11. Pasatiempo

2024 ranking: 11

Average rating: 7.81

Location: Santa Cruz, CA

12. Sand Valley (Lido)

2024 ranking: 15

Average rating: 7.76

Location: Nekoosa, WI

13. Pebble Beach Resorts (Spyglass Hill)

2024 ranking: T13

Average rating: 7.71

Location: Pebble Beach, CA

14. TPC Sawgrass (Players Stadium)

2024 ranking: 12

Average rating: 7.67

Location: Ponte Vedra Beach, FL

15. Bandon Dunes Golf Resort (Sheep Ranch)

2024 ranking: T13

Average rating: 7.66

Location: Bandon, OR

There is a meme-ish real estate investing strategy to 'follow the Starbucks..' but what about 'follow the greens?' As in - luxury golf developments and destinations? I've noticed that many of the very top performing STRs on the Oregon Coast and beyond cater to large golf-oriented guests and destinations and I often joke with clients that Bandon is the next Pebble Beach...

What do you think? Is following the 'green' a viable RE investment strategy?