All Forum Posts by: Mitch Davidson
Mitch Davidson has started 12 posts and replied 448 times.
Post: Asheville Area Meetup

- Lender
- Asheville, NC
- Posts 461
- Votes 505
Hi @Steven P Daugherty. Sure thing. I'll message you now for you email address.
Post: What do we think Asheville's Market looks like through 2021?

- Lender
- Asheville, NC
- Posts 461
- Votes 505
@Nathan Whitson, @Matt Payne: I'm speculating, and perhaps with too much optimism, but I believe we're going through a temporary adjustment rather than a long downturn. I believe this because although mortgage rates took off like a runaway train early 2022, and although they're still rising and falling by the day right now, from afar the trend of the last 3 or so months looks like a plateau with a slight angle upward. Meaning, not stable, but not so scary either. Last Spring, many of us thought we might be at 7% or more by now, and buyers understandably feared that by the time they got under contract their rate might cause the monthly bill to be significantly higher. Thus many of them voluntarily quit the pursuit, including many first-time investors, while many others learned from us that they now could only qualify for a purchase price that is far too small for our market. The fear of runaway rates seems to have calmed down some lately though, causing a few of the former buyer pool to reignite their pursuit, and also giving confidence to a new pool of buyers and prospects. The fact that we suddenly lost what felt like 2/3 of the former buyer pool, and the fact that we had to wait for the crop of new people to come online, seems to me to be one major reason we're in a time of adjustment, where many sellers are having to lower their expectations due to decreased demand (note that this doesn't seem to be across the board...some homes are still receiving many offers within days of listing). Perhaps some markets will take a harder hit from these and other factors, but I don't see demand cooling much for our market. It's not a place where people live only because they have to. People really want to be here, due to the incredible outdoors opportunities, the climate, etc.
Post: Interest rate on duplex

- Lender
- Asheville, NC
- Posts 461
- Votes 505
Thanks, @Marcelle Abel. Hi @Nathan Kawalerski, sadly NY is one of the only states I can't help in. That rate indeed seems high, but perhaps WF is the investor (i.e., portfolio loan, rather than Conventional where Fannie or Freddie will buy the loan). For a conventional loan, I think most lenders right now will be around 6.5% give or take. Also, people often say they had a terrible experience when getting a mortgage from a large depository bank. Mortgages aren't their sole focus, and their staff are paid a rather low salary rather than commission. Especially for an investment purchase, as an investor myself, I feel that it's critical that you not work with a call center type lender, nor a large depository bank, but rather that you work with a mortgage lender where the loan officer is your single or primary point of contact, where they're paid commission only, where you can reach them in the evening, and where they really know the various rules and complexities of investment purchases and investors.
Post: Small Investor-Friendly Banks in Asheville

- Lender
- Asheville, NC
- Posts 461
- Votes 505
Hi @Paul Lim. I'm local in Asheville, an investor, and am a loan officer for a larger mortgage lender. I'm happy to talk if you want to setup a call.
Post: Asheville Area Meetup

- Lender
- Asheville, NC
- Posts 461
- Votes 505
Hi @Patty Toohey. We meet the third and fourth Wednesday of each month, in Asheville. If you message me your email address I'll add you to the invite list. Would also like to connect about Bryson City. I have a new cabin there myself.
Post: First Smoky Mountains STR - Advice

- Lender
- Asheville, NC
- Posts 461
- Votes 505
Hi @Orlando Ortiz: Someone in our Asheville BP meetup recently had a painful loss where Guesty only updated Airbnb when the owner blocked off some further-away prime holiday dates. Thus, someone booked a prime slot for next to nothing on VRBO. Unsure of the details, but I'd beware of potential issues. Many of us here only do Airbnb. If anything, I'd start with only Airbnb to build review counts. Regarding hot tubs, I don't think the benefit here is so much nightly rate as it is occupancy in colder times. And regarding furnishings, to @Ken Boone's point about durability being the priority, I would plan for the rowdiest kids and heaviest adults.
Post: Tax write-offs and their impact on DTI

- Lender
- Asheville, NC
- Posts 461
- Votes 505
@Scott E. When I say we add these back I mean to say that we add them back to your net profit and thereby increase the income for the property in our calculations. We use industry-standard calculators, meaning the same calculators that underwriters use for any conventional loan. And those calculators allow us to increase the net profit by adding back the categories I've listed. Some non-QM loan programs allow us to add back one-time rehab expenses, but conventional does not.
@Sergey A. Petrov The PITIA for the property is included in the calculations as well. Nothing is counted in duplicate.
Post: Tax write-offs and their impact on DTI

- Lender
- Asheville, NC
- Posts 461
- Votes 505
Hi friend,
As you may or may not have heard, today's real estate expenses and write-offs may have a severe negative impact on your ability to qualify for Conventional financing tomorrow. And compared to other financing options, with the exception of commercial, Conventional is usually going to present the lowest note rate, so it's quite worth prioritizing.
While most write-offs will effectively lower your qualifying income for a Conventional loan, not all of them will.
When analyzing your 1040's Schedule E (where rental income is usually reported), we add back these write-offs to your net income: (a) depreciation (don't miss the opportunity here...this alone can pay the CPA bill!), (b) taxes, (c) insurance, (d) mortgage interest, (e) HOA dues, (f) casualty loss (uncommon), and (g) amortization (also uncommon).
For example, if your rent receipts totaled $80K, your net profit was $10K, and the total of the items listed above was $28K, we would see your income for the property to be $38K not $10K. We would not add back money you spent on repairs, maintenance, capex, advertising, legal, etc. Meaning, those type of write-offs would lower your income and increase your DTI. Also, note that there is no limit to the depreciation we can add back, in case you conducted a cost segregation study and thereafter wrote off an abnormally large sum of depreciation.
Hope this is helpful to you!
Post: Car loans. One of the biggest barriers to investing in RE.

- Lender
- Asheville, NC
- Posts 461
- Votes 505
Hi @David Cruz. If the loan itself was to the business rather than you as a person, it wouldn't show on your credit report and thereby wouldn't impact your DTI in the way mentioned above. However, I've seen several instances where clients have been assured by the auto dealer that the loan is to the business only to find that it's to their person instead. Also, the loan will still impact your DTI eventually, unless of course you don't write it off on your next tax filing. Because you would use self-employment income to qualify for a mortgage, the lender would look at your net profit and only add back a few of the write-offs. For schedule C, those are depletion, depreciation (including vehicles), business use of home, business mileage (perhaps a better option than writing off fuel costs), amortization (rarely applies), and casualty loss (also uncommon).
Post: Car loans. One of the biggest barriers to investing in RE.

- Lender
- Asheville, NC
- Posts 461
- Votes 505
@Jaron Walling. Great to hear!