All Forum Posts by: Mitch Davidson

Hey friend. Great point here. I skipped the septic inspection on a home in Asheville several years back, because the home was fairly new. Big mistake. Things weren't installed properly and the sellers didn't notice because they didn't use the system nearly as much as my family does. I'll text you about this, to see how I can help. Sounds like Carolina Septic Solutions didn't work out.

Hi @Christina P., are you talking about taking cash from stocks or your current home for sake of the down payment, or for sake of the entire purchase? 

Hi @Edward S. Sarnowski. That's a great question. As you may know, the lake is drained every December, and was drained early this past year. Thus, it's pretty ugly for a few months. And, properties with water access are generally much more costly to buy, not to mention HOA fees and such, compared to properties not on the water. So, I believe you'll find the numbers overall are better for a cabin in the woods, especially one with views, than lakefront. Meaning, you'll have better wintertime occupancy, and perhaps quite great occupancy, with a cabin in the woods. And your margins will likely look better too. Happy to discuss further by phone sometime if you like.

Hi @Brenden Corder. As an STR investor in the Asheville market, and a lending consultant for many STR buyers here, I've studied the markets you've mentioned quite a bit over the years. Lake Lure is superior to Maggie Valley in the opinion of many, including me. The average nightly rent is better. The activity options are better as well. And it's closer to south Asheville, the airport, etc. If you end up still wanting to be SW of Asheville instead, I'd pick Waynesville over Maggie Valley. Waynesville isn't as oversaturated as Maggie, has a nice downtown, unlike Maggie, and is closer to Asheville. Also, we have more and more people working in Asheville while living in Waynesville, which seems to make it a better equity play than Maggie as well (i.e., for resale, you can hope to have owner occupant buyers as well). Happy to talk further if you want to set up a call.

Hi @Dustin Pendel, I highly recommend connecting more with @Matt Payne regarding markets and neighborhoods here.

I live inside Asheville city limits, and have a furnished monthly rental inside city limits, as well as another STR elsewhere in the region. Asheville allows for a "homestay" inside city limits, meaning owner-occupants can rent out a portion of their home, but does not allow STR of a entire home.

Perhaps only 2/3 of Asheville is inside city limits. You can see a map of city limits here: https://www.ashevillenc.gov/de...

Most of what you'll find in that remaining 1/3 or so doesn't have a view, a cabin feel, a water feature, a trail, etc. Thus, I would recommend instead considering a border area, within 45 minutes or so of Asheville, such as Mars Hill, Waynesville, Alexander, Weaverville, Black Mountain, Lake Lure, Brevard, Pisgah Forest, etc. And I would be careful about spending much time analyzing properties that are in an HOA, as many HOA's here have recently banned STR.

Regarding seasonality, I had the same concerns in the past, but found that my friends were staying booked through the winter. Some of your competition will take down their listings during the winter. And you'll still have plenty of people that want to get away to a quiet place in the mountains. It helps if you make things more attractive in the winter, by way of a hot tub, allowing pets, having a great firepit, having other fund and uncommon things to do at the home, etc.

If you need help thinking through your financing strategy, or with preapproval, I'm happy to help. We can do conventional, DSCR, jumbo, etc.

Sage advice, @Jake Wiley, @Natalie Kolodij, and @John Underwood. I agree that ultimately, liability comes down to title not what entity shows on a permit or even tax returns. If titled in your person, I don't see the benefit in running through a corporation, and actually can't see how that won't just be more cost and labor. If titled in an S Corp though, there could be some tax savings, but the additional CPA expenses wouldn't likely be worth it until your gross income for the S Corp was substantial. 

Another thing to consider. If you title and operate the home through an entity, you'll likely have less DTI benefits for future loans. When calculating your DTI, we (lenders) add back a few more write-off categories for Schedule E than we do for 1065 or 1120S.

My thoughts exactly, @Matt Payne. 

@Ryan Moyer, I think you've asked a really great question here. For many of the STR listings in our general market, if you had to buy the home at today's price, and if it performed like some of the samples, it'd be less exciting.

It would likely still be a better cashflow play than LTR though. And, although a bit less passive, your asset would be preserved like a fire truck due to constant cleaning and maintenance. I think that benefit is often overlooked.

Also, when looking at sample listings, I think it's important to consider which homes are using dynamic pricing, and to look at which aren't allowing bookings for more than 90 days in advance. Meaning, some samples are leaving money on the table by way of non-changing pricing and allowing people to book as much as a year in advance. 

And other samples are just poorly managed, poorly decorated, and/or poorly photographed. You can see this even in large homes that rent for $800-$1K/night. Thrift store qualify furniture, dark photos, etc. 

If you're going to make your place great instead of good, I think you can assume you'll make at least 10-20% more than many of the samples.

Hi @Aaron Akins. I'm also local in AVL. My family and I have spent tons of time in the general region that Maggie is in, and are under contract for a new STR just a bit south of there. I feel 100% the same as @Collin Hays about a quieter mountain experience. 

Beyond the average nightly rate and occupancy, which PriceLabs seems better for compared to AirDNA, I would recommend looking through a strong sampling of AirBNB/VRBO listings. Some of our towns may be similar in saturation, but one may be easier to compete in than another. Meaning, some of them have a noticeably higher frequency of drab décor and lousy photos, which to me spells opportunity. 

If you're considering Maggie, perhaps also consider Waynesville, which is a hair closer to Asheville and is also hot regarding appreciation potential. 

Like others have said, I think you'll be surprised at how much winter business you'll have, albeit at a lower price, in part because some of your competition will go offline for the winter. 

Finally, beware that some HOA's in Maggie and the surrounding area don't allow STR, and you don't always get that from the listing.

Happy to connect more by phone if you like. And to help with financing strategy, mortgage, whatever. 

Hi @John Bouchard. Welcome to the area! We have a great local BP meetup here in Asheville, twice per month to accommodate schedule challenges. It's rather open forum and spontaneous. The group shares many great ideas, resources, and experiences. And the camaraderie is great as well. One meeting is at 6PM on the third Wednesday of each month, at Archetype Brewing on Broadway. The other is at 9AM on the fourth Wednesday, at a location that may change soon. If you message me with your email address, I'll send you a copy of the invite.