All Forum Posts by: Mitch Davidson

@Levi Bennett The area you've mentioned in WNC (ie, Bryson City, Cherokee, Waynesville, Maggie Valley, etc.) appeals more to people who want a quieter mountain vacation, and perhaps a less expensive one as well, which has implications for revenue. And having invested in markets like Bryson City, I would say you have to be very careful. Like most places, STR demand has been slow for nearly 3 years, but it seems to be especially slow for markets that aren't as well advertised at their neighbors (ie, WNC compared to east TN). And hurricane Helene only added insult to injury, meaning many people still think we're partially closed or that what was once wonderful has now been ruined (both of which aren't the case). Thus tourism remains incredibly slow even here in Asheville. So for those reasons I recommend investors focus on areas where the appreciation opportunity is strongest, meaning near Asheville, and that they focus on properties that are going to stand out amidst the noise and saturation. @JD Martin, I hear you, but the restrictions over here are really limited to Asheville, and really only to about 2/3 of Asheville, and then Woodfin on the northern border of Asheville, which is quite small. Our county, Buncombe, considered enacting some STR regulations a few years back but backed down once the threat of lawsuits became real. 

Hi @Jordan Matchin. I'm not sure if you're nearby enough, but we have a monthly meetup here in Asheville that's great for connections and learning as well. We also have a Facebook group that can be similarly helpful. I'll send you the details in a direct message.

Hi @Mitchell McGuinnis. There's already a ton of great feedback here, so I'll try not to duplicate.

1. Regarding the MTR approach:
   a. Be sure there’s enough demand in the specific market.
   b. Add upfront furnishings to your expenses. And to be safe, multiply whatever you come up with by 1.25.
c. Add a monthly expense for replacing furnishings. These items won't last forever. They're not assets or improvements. And unlike STR, you won't have frequent opportunities to clean and maintain the furnishings.
   d. Add a monthly expense for whatever utilities you’ll provide. Many or most of us in MTR cover all the utilities and provide Wi-Fi as well.
   e. Be prepared for turns more frequently with MTR verses LTR, meaning gaps more often. On the other hand, with MTR you have less damage to deal with, because you’re providing all the stuff, because the tenant isn’t moving their stuff in and out, etc. And, my gaps seem to be shorter with MTR compared to LTR, meaning an average of just a week or two most of the time.
   f. Be sure there’ll be enough additional income to go MTR instead of LTR, and to pay back the initial investment in furnishings quickly.
   g. Consider that most MTR applicants only need 1-2 bedrooms and thus tend to not want to pay much more for 3 or 4 bedrooms. And some of them won’t even consider looking at homes that large.
   h. Consider that more often than not MTR applicants have a dog. By allowing dogs you’ll stand out from most of your competition, many of which are struggling STR owners, but you’ll need to take some precautions (ie, language in your lease, pet deposits, declining certain types of dogs, providing pet covers for furniture and requiring them to remain in place, perhaps fencing in a small area of the yard, etc.)
2. While closing costs themselves might be $4,500, you should also account for the following:
   a. Prepaying a year of insurance ($2,000 in your estimates)
   b. Prefunding your escrow account for sake of the next tax bill (likely a few months or $440 if you close soon and the county is the type that says it’s due by early January)
   c. Prefunding your escrow account for sake of your next insurance renewal (ie, likely 3 months or $500)
3. DSCR programs often disallow the borrower to waive escrows, meaning to pay tax and insurance bills on their own. Thus you should probably account for 1/12 of each annual amount in your monthly expenses.
4. If your rehab relates only to improving the home, you should be fine for DSCR. If the home isn’t fully habitable or functional, or there are other glaring concerns, DSCR won’t work. You’ll instead need to buy it with cash or private money, rehab, and then use DSCR as a cash-out.
5. Judging by the purchase price, it sounds like you might be buying in a rather rural area, at least by the appraiser’s judgement. They have to label the home urban, suburban, or rural. And while some of us offer DSCR for rural properties, many DSCR lenders don’t. Thus I would check into that before you get too far.
6. If you’ll pay interest on any of the cash investment, that needs to be accounted for as well.
7. Another critical question for me, if I were you, would be this. How much appreciation will there likely be for the particular market and property in the next few years? If it’ll likely be minimal, I wouldn’t bother with it unless the cashflow was going to be very healthy.

@Dave Yandel: Regarding local REI groups here in western NC:
1. There's CREIA (Carolina REIA), which is fairly large considering our population. They meet once per month in Asheville, and have other sub-meetings. Membership, dues, rules, and much structure applies, in case you're like me and a little unattracted to such.
2. Until now, I would first mention AVL Meetup, which has been similarly larger but more free and easy to be part of, but the owners are shutting it down next month.
3. And last but not least, there's the BP-themed meetups that I orchestrate here in Asheville, which are roundtable, themed, and conversational...and therefore intentionally smaller (ie, 10-20 people). Until late we've met twice per month, but are now shifting to once per month for most months. And in our 4 years of history we've had about 400 different people participate in our meetups. I wil send you info our next gathering, which will be with an REI tax specialist. I'll also send you a link to our new Facebook group. We've used Slack until lately, but are now migrating to Facebook.

Regarding other groups that are great for networking but not REI focused, one of our most popular ones is called AVL Digital Nomads. Another, run by a friend of mine, is AVL International Connections. You can find both of these on Meetup.

Finally, if you want to connect with investor-agents who specialize in the Brevard and Transylvania area, I would reach out to Jeremy Purcell and Cole Ordiway. I'll send you their contact info as well.

Cheers

@Dave Yandel, I'll send you a direct message with the details for this month's meetup in Asheville.

Hey @Sean Poulos. As a local here, I think you're on the right track regarding location, meaning be as close to Asheville as possible, yet not in city limits. And about 1/3 of Asheville isn't in city limits. I would abandon the idea of manufactured though, meaning a single or double wide, for several reasons. First, there are almost no options for permanent financing on a manufactured home (MH) when it won't be a primary residence. It's disallowed for conventional and for nearly all DSCR options. The one DSCR option we have has a 65% LTV limit, higher rates and fees, etc. Second, MH will fail to appeal to many potential guests. Also, in some cities zoning restrictions will limit you to lots that are surrounded by homes that guests might not be thrilled about. And with STR being slow right now, especially for us (thanks to Helene), I wouldn't recommend launching an STR that's less attractive. Third, MH don't appreciate nearly as well as stick-built, due to the quality of materials but also due to the fact that your pool of future buyers will pay a slightly higher interest rate due to the build type (and of course won't include non-owner-occupants). For these reasons I wouldn't recommend MH whether you apply STR or LTR for strategy. And LTR isn't helped by the fact that our average LTR rent here is amazingly low relative to property value and cost.

Hi @Sean Poulos. Thanks for sharing some of your story. We have two great monthly REI meetups here in Asheville that you might really enjoy. We keep them conversational, and rather roundtable in format. They're great for comradery, connecting, and learning. And we have a private FB group for the group as well. I'll send you some details in a direct message. Also, I would checkout AVL Meetup as well, which hosts a great meeting the first Tuesday of every month.

@Mike Fernandez. Sorry for the delay. Sure thing. I'll message you now.

@Ed Troyano. I'll send you contact info for some great options. All smaller, more personal-touch type outfits. You won't have as good an experience with our larger options.

@Michael C berry jr. If it were me, I wouldn't put the money towards STR, especially here in the Asheville market, unless you're really going to create an STR that's standout for the market, meaning very desirable but also uncommon. STR is super volatile across the country right now, and is even more painful here due to the lingering impacts of Helene. I'm happy to help you think on other strategies, and likewise introduce you to any local investor friends that can speak more to a specific strategy, location, etc. And if you're local, we have a twice-monthly BP meetup that you might really enjoy. I'll message you the details.