All Forum Posts by: Mike L.

Great feedback everyone. Nationwide, it seems the trend is towards more and more regulations making STVR investments more difficult. Savannah passed very specific STVR regulations in 2014. The area must already be zoned for an inn or traditional B&B. This creates a very small area for legal STVR. Low competition but also low inventory to invest in. Owners must apply for a business license and pay hotel tax in addition to state use. I see the clear and specific regulations as an advantage in our market. Takes a bit of the guess work and risk out of it.

Hi, Tanner. Thanks for the great feedback. You're absolutely correct that good areas and bad areas can be found on either side of the same block. Really helps to know the town. Fortunately, Savannah has strict STVR zoning regs that eliminate some of the guess work when trying to find a property in a decent area. It's a small zone with limited inventory. Good for business, I guess! Do you feel that prices in Charleston are peaking?

Trying my question one more time. Apologies if I've posted in the wrong forum.

Hello,

I would like to move money from the stock market to real estate. I have $140,000 to invest in Savannah, Georgia. My initial plan was to build a portfolio of 4-5 single family rental properties; adding a new property once per quarter. These would be homes valued between $100,000-130,000.

Savannah's historic district is a phenomenal area for short term vacation rentals like Airbnb. Duplexes in this area are currently listed for sale at $400,000 and up. This area averages 80% annual occupancy on Airbnb with an average nightly rate between $150-200. Monthly gross on a duplex would be around $7200 using the lower nightly rate.

I decided to kick this can a little further down the road by getting pre-approved for a conventional loan through Quicken Loans. I'm pre-approved for a $540,000 loan with 25% down. I expect interest rates to be around 4% so I can avoid the ridiculous amount of points I'm seeing in the Fannie Loan Level Price Adjustment (LLPA) matrix.

A potential deal will probably look like a $500,000 loan on a 2 or 3 family unit with $125,000 of my money down and a 4% interest rate. Each unit gross around $3600/month. Plenty of cash flow after taxes, property manager, cleaning, utilities, and other fees. I would like add similar properties if this one goes well.

There is a bit of intangible benefit for us as well. My wife and I will use the property when we are in Savannah.

Is this a sound strategy? Is it wise to put that much cash into one property?

Best,

Mike