All Forum Posts by: Levi Bennett

Quote from @Marc S.:

@Garrett Crosby I've been looking at Charlotte MFs. Are you finding that you are still getting good purchase prices? I've yet to get my 1st property. I have made contact with an agent there and haven't gotten many good deals. The asking prices don't even come close to the 1% rule.

MF is not normal here, it's nothing like up north. I think a lot of investors from more dense cities assume Charlotte has a higher density but it really doesn't. Typically, MFs here trade between 3.5% - 6% cap. To compound frustrations, already very low inventory is exacerbated by people all over the country that see Charlotte on the internet as a good place to invest and think they can apply what they know about MF to Charlotte.. it doesn't work, yet (literally) 10s of thousands of new investors look here every year for the same couple of hundred MF properties. To give you more perspective, most of these owners get 1-5 offers PER DAY since 2017. You will not find a "good deal" in MF in Charlotte without enormous luck. If you want 1% rule in the Carolinas, invest in short term rentals. 

A quick update to this thread since it's relevant, I wrote a blog about STR restrictions in NC, and you can read it here!

Hey Claudia, 

I'm a seasoned broker that exclusively specializes in Short Term Rental properties. There are several ways to obtain financing, most people who are doing it for the first time do a second home mortgage to capture the lower down payment, no pre-payment penalties, and lower interest rate (compared to DSCR etc). The nice thing about DSCR loans is that they are approved irregardless of personal income. The lending option only looks at the potential for income as a ratio to the debt service. In many cases, the underwriter will approve airdna projections.

However, I will warn you that the airdna projections, especially in the mountains are notoriously inaccurate for various reasons. I have a full state-wide subscription to AirDNA and look at the full set of data to get a clear picture of where and why the algorithm is being generated and I help clients decide if it's accurate, high or low. Blue Ridge is nice, and maybe I'm bias, but North Carolina offers better acquisition prices, more inventory, higher elevation and more amenities (Biltmore Estate, skiing, Blue Ridge Parkway attractions, etc..). 

Most new investors make the mistake of thinking the location is the most important aspect to a successful STR, but in fact, it's amenities (view, hot tub, etc..), interior design, availability in a given market, and acquisition price. I suggest working with someone experienced in successfully analyzing these traits in an investment property for STR and find something that really pops. There's always a recipe for success in STR.

Quote from @Anthony Fulchi:

Quote from @Angie Castro:

There are deals here in NC. Either off-market, some new construction, or a  property that allows you to create value by doing some renovations. I really like the Seven Devils & blowing rock area. 

Same, Seven Devils and Blowing Rock are good if you can find a property at a reasonable price. We just closed on a property in Seven Devils and are starting renovations. The most wish-listed property in the US for Summer 2022 was the "Glass Treehouse" located Banner Elk (right next to Seven Devils), so definitely an area people have an eye on. 

The "glass treehouse" is in Eagles Nest, which is very much it's own eco-system and has a plethora of amenities not available to people outside of the neighborhood. There are very unique opportunities in there, as I've helped close two in this neighborhood, the numbers are pretty outrageous. However, it's not for a newbie investor. Starting price point is about $1M, but have returns deep into 6-figures very consistently depending on what you buy or build. Again, location doesn't matter as much as acquisition and return, which, when working with someone who knows what and where to look, there is almost always a recipe for success. 

@Roy Gottesdiener The surge in pricing there is due to a new casino "Two Kings Casino" that is opening fully in 2024. It is, by far, the largest casino near Charlotte or in the region, and has been drawing thousands of workers from out of town pushing rent prices, and investment opportunity very high. From, a short term rental perspective, it's also very interesting as contractors have basically rented up everything in town for the forseeable future. It's not a migration to the town from Charlotte as suggested, although statewide growth has been consistent, Kings Mountain is a bit far from the economic gravitational pull of the Charlotte metro area, and the out-pacing in pricing is due to the casino, not so much a shelter from higher prices in Charlotte. 

@Wilson Hunter I'm writing a blog about it here. I'll keep you posted when it's ready :D

I'm an actual STR real estate agent (I only do STRs), and to my knowledge, nobody provides the value we bring to the table.

It's not just about knowing how to qualify an STR candidate property (even an entry level agent can do that), it's knowing what will bring in revenue. With 8 years of experience in STRs, wholesaling, rehabbing and multi-family investing, we speak the language. I help underwrite, interpret data, regulations, and have a pulse on what makes an STR the first click in a sea of other listings. So we also connect with interior designers, contractors (in a tight labor market), and bring local knowledge and we DO NOT LIMIT TO CERTAIN LOCATIONS. This is is the biggest mistake realtors and investors make: Thinking that location is the primary driver for ROI, and it's not even close to being accurate.

The most important factors, ranked, are: 1) acquisition price 2) amenities 3) interior design 4) uniqueness 5) availability 6) number of bedrooms and lastly 7) location. 

People who put "location" at the top of the list are already making their lives significantly more difficult, and agents who still apply the antiquated "location, location, location" mentality to STR cannot possibly get the returns our clients get. So education is a huge part of what I do. I would barely even classify us as brokers or Realtors (alltho technically we are), we're financial advisors that specialize in STR investment. 

We take our information seriously, and pay for a state-wide user license with Airdna to get as much useful data as possible that we pass along to our clients (I still haven't met another agent that does this). 

In addition to providing all of these services, we leverage a huge network of wholesalers to provide exclusive and off-market opportunities as well being well-versed (and many times successful) in negotiating seller financing and know the ins and outs with leveraging limitations on DSCR, 1031, investment and second home mortgages.

I appreciate people with the mentality of "we don't need real estate agents" and, I almost agree, only because most agents can't possibly provide the value necessary to help every client crush their STR goals, but, for the few out there that know what they're doing and really understand the market, it's more than worth it. I can speak for myself that we work with a plethora of different clients, from extremely experienced to inexperienced. All[!] of them have been pleasantly surprised at the performance of their investment.

Hey Sean, I don't think you can do it exactly like that, but I do have a client who "games" the system (so to speak) and creates an LLC where the seller becomes an investor in the LLC, and they have a payout schedule just like a mortgage for the remaining balance, and the LLC is subject to the loan. SO it's not technically a second lien, but functions like seller financing. Very creative, and he's done a few that way. He's usually able to acquire with no money down if they can convince a seller to do it.

As someone who specializes exclusively in STRs in NC, I can tell you that your requirements are possible, but rare. Certainly from a "turn-key" perspective. Anything listed for sale, furnished, with a history, is going to be listed at a cap rate similar to what you'd expect across other real estate investments. @Sean Bramble made a great post explaining this, so I won't repeat what he said, but I will offer up a different opinion in that STRs are becoming perceived as far less "risker" than previous times in history. The STR market cap has grown tremendously since pre-Covid, and nowadays property managers for STRs are abundant and can make it truly passive income. Specifically for NC, I can tell you the demand for STR ownership has skyrocketed over the last year which has driven prices up, particularly in tourist towns, nearly 50% in some areas (in one year).

As Sean also mentioned, most people are finding that applying a BRRRR method in getting a distressed home for rehab yields significantly higher returns. It requires significant cash investment however since many are not able to be financed.

Finally, and a point that I make to all of my clients: Location has almost nothing to do with your return requirement. If your criteria is ROI, then don't pigeon-hole yourself to a location. Contrary to popular belief, locations rarely have to do with return potential on STRs. The main driver for good STR return is availability to a tenant. What markets/areas are underserved? Do you want to own your first hotel in a market with 1000 hotels? Or do you want to own one of the first hotels in an emerging market? Most likely, as a new investor, you cannot possibly have the experience or financing to compete with the top-performing properties in a popular tourist market. Meaning, your property won't even be on the first several pages of options and you will struggle with the most important metric: occupancy.

What you want to be successful, is find an emerging market, or a market under-served with STRs, and create a listing totally unique and be the first booking in that market every single time. Additionally, acquiring in these secondary markets is significantly less expensive and less competitive. I've helped my clients close nearly 20 STRs in the last year, all of them have been very successful for various reasons, but location is only one (and not the most important) thing we look at out of about 5 different points of analysis. Don't get hung up on location, because acquisition price and ability to have high occupancy is far more important than trying to be in a popular spot. In short: popular locations do not always equal occupancy. Uniqueness, High-quality interior design, and amenities typically have way more to do with success than location in STR investing. 

Now, speaking of amenities, obviously certain amenities are tied to the location.. like beach-access or mountain views, but.. the nice thing about mountains views, is that there is a huge area of the country with views (particularly in NC) that is within a reasonable driving distance to several metro areas in the South, and that makes occupancy very high, even in extremely rural areas (where acquisition is cheap). The seasonality is far less extreme in the mountains compared to the beach (that's another post for another day), and simply put, there is far more to choose from at a better price. In short, the mountains typically fair better for new investors than the beach investments. 

I hope this is helpful, good luck on your search. 

Hey man, I’m a licensed broker in the Charlotte area. I’ve been doing real estate in some fashion or another for the last 8 years, and first licensed in Florida in 2014.

First thing, just pass the exam in NC. We have one of the hardest in the country, so just study for it like you’re studying for the BAR exam and don’t take it for granted. I know a lot of smart people who underestimated it and now can’t pass. 

Second, as @Heather Hatcher mentioned.. go ahead and start building your sphere. I would start by trying to imagine the type of real estate you want to work in. There’s a lot of different things to do, but a lot of people get cornered into brokering primary homes and that’s a crowded space. I’m not knocking it at all, but it’s very competitive compared to many other niches where it’s easier to stand out. Brokering primary homes is good, especially if you have a lot of friends and family gearing up for buying and selling and will use you, but don’t think it’s the only thing you can do, especially when it seems like that’s all there is.

Finally, and most importantly.. the brokerage you choose is key. This can make or break a real estate agent just starting out. I’ve known a lot of people who would’ve been great in this industry, who went with a big “trusted” brand and they got used up and spit out. A well known large brand does not automatically mean you will do well. You need to find a brokerage that matches your personality, and fits your goals. Personally, I’m a fan of smaller boutique firms with a high level of broker (broker-in-charge in NC) cooperation and support. I also think, if you’re new, find a smaller firm that will give you a lot of leads and learn how to work leads. If you know how to do this from another industry, you’ll do well with the right organization. Some of the larger firms are good, but some require a long contract and make you sign a non-compete. Non-competes are extremely enforceable in NC, so be very careful with this. In both states where I got licensed, I didn’t “specialize” in short-term rentals until AFTER I got licensed and figured out I wanted to niche down in that space, and thank goodness I didn’t just sign up with the first brokerage that came knocking. Always remember, they’re interviewing you, and have a lot less to lose, so be very picky and think through it. I’m also a fan of linking up with a broker you respect and look up to, and try to learn from them. If I were doing it all over again, or I got displaced to a new location and market and were starting all over, I would find a broker that is killing it in the space I wanted to be in and literally reach out and ask to work with them.

That’s my .02, sorry for the long post.. but yeah, do that, be disciplined with your leads and hold yourself accountable and try to get into a space in the real estate world you really enjoy and you should do great. Good luck, and feel free to reach out with any other questions.