All Forum Posts by: Brad Johnson

Put a large beach house on the NC coast under contract recently and wondering if there are any stories/tips on assessing a potential BRRRR opportunity in a beach/vacation area? I think we got it under priced a decent amount and it's a bit outdated. I know floors everywhere, countertops in kitchen, and all bathrooms are outdated and could be updated for sure. There's also no pool or backyard setup. So, these are the opportunities. 
I'm familiar with this process in normal LTR areas, but I'm curious how it may differ in an area like this? For example, I'm sure a pool is more valuable at the beach vs in the middle of a city where it may be a negative for some buyers.

I am honest with myself - I want to use real estate relatively passively/hands off. My day job requires too much out of me to be an active RE investor. I know OF turnkey companies (rent to retirement, roofstock, etc) and have read as many reviews from users as possible, but I rarely hear from people who have primarily built a portfolio of turnkey properties from these sites? Anybody around with 5-10-20 or more turnkey purchases?

Thanks for the response, @Jerry W. ! So, I'm picturing "cleaning fees" as a built in fee added to the nightly rate when booking. If I find a cleaner to turn the unit for, say $300, they I will add on that $300 to the booking. So, yes this would NOT include cleaning supplies and other refreshing needed. I'm ballparking $200/mo on supplies for this and including backup linens/sheets in the upfront $15k in "furnishing costs".

On utility costs, I will check with a realtor on what to expect in that area as I don't know the answer besides estimating. I'm ballparking $1k/mo for utilities. No other HOA or odd fees that I can think of and that you have mentioned.

That leaves $800/mo in maintenance on a ~$500k house, which is ~2% of purchase price, which gets me to the $2k/mo number. 

On revenue, a 15% rule would yield $86k/yr, slightly higher than my conservative guess of $80k/year. So using $86k/year in revenue and $2,000 in expenses, we're still talking 18% cash on cash.

I'm looking at possibly purchasing a beach house and Airbnb'ing it. The general rule of thumb I've heard is to expect 1% of the purchase price in gross revenue, but Airdna suggests this property is almost 2%:

501 s shore, surf city, nc 28445

So, obviously $100k on a $575k property would be a deal, so I also paid the $40 for airdna's market specific data and there is a ton for that area, including a great comp a few houses down (same views/distance to beach). This comp does $43k on 99 days a year, 90% occupancy, $475 daily rate (I assume for the 3+ summer months). So, how does $43k for 99 days of peak season extrapolate for the whole year? 

Even if I use $80k/year and assume $2k/mo in all expenses/maintenance/utilities (is this way low?), it is still a 15% Cash on Cash deal.

Assumptions - 25% down, $15k for furniture, $2k/mo for ALL expenses including maintenance/utilities/tax/insurance, cleaning fees baked into airbnb revenue

Does anybody know of any lenders who do this? Looking to get 90+% LTV.

In trying to get creative in this market, I've been looking for mountainy locations with many nearby wedding venues with the idea to Airbnb a nice home nearby. Then, we'd work with the wedding venues to be an offering for weddings. I found a location with $300-400k log cabins in an area with 4-5 pretty nice wedding venues nearby. These venues claim to do 50-100 weddings annually, so I'm optimistic we could see solid occupancy if we are a listed partner. I also made sure they don't currently offer their own lodging onsite, and the nearest lodging offerings are hotels further away than the prospective Airbnb I found, so these venues are actually eager to have an option like one we'd provide. Ideally, the wedding party or other VIP's would use our Airbnb house as it would be more convenient/nicer than hotels further away.

The location doesn't have many Airbnbs, VRBO's and isn't a vacation spot by any means. But it does have a possibly untapped wedding venue market.

Anybody do something like this? Anything to watch out for? It's tough becuase you can only do so much market research on this.

Thanks @Nicholas L. and @Nate Bell. 

The plan would be to do a cash out refi after renovating the basement and then renting as an airbnb. I was hoping that adding over 2k square feet would add enough value to get most of my cash out and have a nice vacation rental. Also, I know the bank bought it at auction, where the price started at $210k. Though I don’t know how to figure out what number they won the auction at. So I think it can be acquired closer to $400k or maybe even $350k. 

Jumping onto this thread as there is basically ZERO Davie County forum posts or real estate agents on here - does anybody have a good real estate agent referral for the area? I'm looking at a possible BRRRR deal and need someone with REI experience.

@Richard Mercado

Found a 3BD/3BA 3200sqft cabin on 2+ acres in great condition, but in foreclosure and owned by Fannie Mae. It went to aution of course, and I have no idea what the bank is in the property for. It is listed for around $500k and the tax records show it being valued around $450k. 

It has an unfinished basement with around 2200 extra sqft to be added, which can/should include a few bedrooms and maybe a bathroom. The unfinished basement has electrical, studs up, insulation in walls/ceiling, etc. so it seems like it just needs drywall and flooring. Not sure if its plumbed. This is obviously the potential value add.

I researched the tax record codes and found the basement is counted at 20% of its sq footage in the tax value. If I change that percentage to 90% (which is what the finished second floor is counted at - the main floor is 100% so this may be conservative), the value add is about $150k. I have no experience finishing basements but I expect it to cost much less than this potential value add.

Am I thinking how to value this potential deal right? There are basically no comps to judge $/sqft in the area, but I will be looking to pay an appraiser in the area for help Monday, if I can find one.

Path of progress in DTR is absolutely in the south park/downtown south area - 

the zoning for this massive project was just voted on and approved last week. They are hoping to break ground in late 2021.