All Forum Posts by: Chris Watson

I am a recently retired AF Chaplain in the area. Obviously you are looking at Gulf Breeze or Navarre. Several properties here for sale have VA assumable loans. Look for those at it could greatly reduce your carrying costs by abot $1k a month (2.75% loan vs 6.5% loan). With this you might have to put $10k to $20k down just because of the difference in the assumable loan and the selling price. It is that time of year and several people are getting orders soon and more properties will hit the market in the next 90 days. Just search for the word "assumable" in the key word search on zillow or realtor.com. If you need a realtor I can give you a recommendation. You need someone who understands assumable VA loans and how to get it done.

I am an investor and STR self managed in FL panhandle and Smokies. A couple things not mentioned by others. In the Panhandle/Emerald Coast, GulfShores and Smokies there was a major shift in the purpose of the real estate inventory in the past 4 years which for ease of identification I will call pre-COVID and post-COVID. Pre-COVID these markets had 20% to 40% of all prime inventory being held as personal residences or second homes with no desire to rent. Due to age of owner's (70+), money to be made selling ( rapid increase in equity), change in the market area (over crowded beaches/Pigeon Forge strip) and life changes (divorces/death) the owner occupied/2nd home owners sold. The new buyers turned them into STRs. Additionally most markets saw and the increase in new builds increasing inventory over 10% a year. Now post-COVID you have a larger inventory, increased prices, increased interest rates, increased property taxes, increased regulation (even Smokies are now requiring permits) and increased insurance and at the same time return of the reduced Pre-COVID occupancy numbers. All this said, due diligence is required. I still acquired and built STR properties in both markets and am getting over 20% cash on cash return. You need to know the market and buy right. Due to interest rates, it is now important more in the Post-COVID years to buy at a discount. Look for the opportunity to buy an outdated property for 15% to 20% less than market and update it. As someone mentioned there are a number of outdated properties in the Emerald Coast and especially Gulf Shores needing a refresh. Do not go for a complete gut or major reno as it will take too much time and money to do. Think paint, deck, countertops, flooring and removing the 1990s curtains. Here is a trend I am seeing in all markets....COVID and Post-COVID era STR owners are selling because of many reasons (headaches/lack of cashflow/increased condo assessments/not there cup of teas for business). This means we should see a portion of those convert back to owner occupied or 2nd homes, but also this will produce and opportunity to buy at a discount. Unfortunately the race to the bottom pricing is real and it will remain for atleast the next year till after elections (currently it is a fear driven leadership and it produces fear) and clearing out the fear driven pricing by the panicking STR owners selling. Be patient, do due diligence, buy right and be ready to work and it will be successful.

I hope this helps. 

We live in the area and self manage our STRs here and several of ours in Tennessee.  I suggest trying to self manage as booking properties are not hard in this market and very little maintenance in a condo.  You need to find cleaners, a maintenance person, there are several hvac and plumbing companies to choose from in the area. Most bookings in this area come from vrbo and Emerald Coast By Owner

Luther,

I have done several in the Smokies pulling cashout when closing on permanent financing. You will have alot more options if you have rentals already for a year or 2. There are several lenders who will go off of STR income instead of LTR. Expect to see DSCR rates of 9% to 12%.

A word of warning.  The payment at 75% cashout with these rates may not cashflow.  I personally will not pull cashout when my 2 current builds finish up.  It is too risky with these rates, in this economy and with the uncertainty of world affairs. I would rather have to sell one to free up cash.  

@John Watson So for well, if you have a filtration system budget $60 a month also capex $50 a month total for repair to septic and well. Septic will need pumping every couple years and well pumps break.

@Pam Smith. Forget the extra charges but you must leave an honest review. The key is to wait for them to leave a review.

@Collin H. Heloc one to get the 4% reserves required by fannie mae for four or more financed. Then cashout refi the others.

@David W Waldron Get a hot tub and in the meantime since you have the space forget the swim spa and build an enclosed inground pool.

@Luke J Nelsen 2 bed $300, 3 bed $350, 4 &5 bed $500

Also the first two weeks of March currently seem ridiculously slow.  I think the first week of March will be the least book week since last April when Covid first hit.  I do tend to be on the higher side of pricing so peoples cheap priced cabins are booking.  I expect once the $1.4k stimulus hits people's accounts along with tax refunds we will see a large uptick in Apr to Aug bookings.