All Forum Posts by: Paul Shannon

Indeed, it can be a slog.  Banks are going to get a lot of requests i'm sure, so there could be a long que.   3 month should be doable though.

I'm not the authority on this subject....I'm a long-term rental investor, exploring the short-term model. A friend of mine works with a guy who built a house outside Myrtle Beach and have a friend looking at doing something similar near Hilton Head, both for STR focus. I think there's some opportunity in SC for sure.

The thing that turns me off about SC is the seasonal occupancy is lower b/c it doesn't get warm there until later in the year.  

For beachfront STRs, Florida has a longer season, so more opportunity to rent. Destin has average occupancy of 25-35 weeks and we've stayed in an STR that does 40 weeks. South Florida may have even more of a year round opportunity in the right spots.

Would be curious as to what others think. 

FHFA about two weeks ago proposed an "adverse market" refinance fee of .5% of the loan amount to begin on 9/1 for all refi mortgages back by Frannie or Freddie.  The WSJ's Andrew Ackerman minutes ago reported that the FHFA is standing down, delaying this surcharge until 12/1.  

Get your refis in soon!  Good news there's still time to avoid this clear money grab.   

Timing the market is not typically sound investment advice because nobody has a crystal ball.  If you find a deal that meets your investment criteria, go for it.  

Tax strategy. Hire an accountant, a good one who's understands the ins and outs of REI, and tell him where you want to be in 5-10 years. The right one can help you get there faster.

I think it depends.  Obviously if you don't qualify to take a distribution penalty free, I think its a bad idea to cough up 10% of you money.  If you can access it without penalty and you needed it for an emergency or have a lock on huge returns with an investment you can't access via your plan, I think it's a great idea.  

However, diversification is critical to overall investment success.  Not enough real estate investors are savvy in the stock market, or have pre-conceived negative opinions about investing in it.  The same goes vice versa.  

Both asset classes have their advantages.  Many times, when one does well, the other doesn't and vice versa, so you've got some balance being invested in both.  401Ks are a fantastic way to build wealth because it automates your savings before you even get the money and it's tax-free on the front end.  If you have an employer match, even better. 

I'd personally max the 401K out to the limit and save after tax money for RE.  If that's not possible, at least contribute up to the employer match.  Let it grow until retirement. 

Yes, ultimately you have the discretion to cancel the contract based on anything uncovered in the inspection.  Even if you seem to be unreasonable in what you are canceling over, its your discretion if you contract is subject to the inspection.  

Vacation rentals in destination markets are poised to do well, assuming local legislation is friendly towards them.  Covid has only accelerated the trend towards vacationers staying in private homes versus crowded hotels.  

I've been looking in the Destin market for the last few months.  Found that its very difficult to find a deal where numbers pencil out.  The effort versus the return seems to be out of line in my opinion.  Perhaps after peak season there will be more inventory, but I'm not holding my breath.  

Covid has no doubt had a major impact on Airbnb properties in major metros that relied on sports, conferences, etc. to drive occupancy.  Beach vacation homes are different.  If you like the asset class and can find a deal (that's the big what if), I wouldn't let Covid stop you. 

The bottom line is appraisals should be based on the market comps in the surrounding neighborhood, ie sales comparison appraisal method.  If its a commercial loan, the lender will likely look at using the income appraisal method as well, and sometimes loan to cost.  How much you bought the property for should be completely irrelevant, as should your rehab costs.  I'd keep looking for another lender. 

I have rentals that have appraised for way more than I know I could sell them for.  I've also been disappointed with a few that have appraised for less than they are worth by a quite a bit. 

Lenders need to protect themselves, I get that.  My experience with appraisals is that its ultimately a crap shoot.  

Absolutely agree that private placement syndications are a great way to diversify into investments that you wouldn't otherwise have access to - from both an asset class and geographic standpoint.  Much better option than REITs.  This is passive investing.

However, active investing offers another level of diversification and advantages....namely tax planning.  As a "real estate professional", you can write off passive losses in your business, not only against the income rentals produce, but your spouse's income as well.