All Forum Posts by: Matt Jones

Welcome @Willie Eshe

Pensacola has a strong market for small multifamily(2-4 units) properties but typically not enough inventory.  The best numbers here are usually on value add deals but depending on your build costs new construction may be an attractive option.  I can give you a list of zoning designations that allow multifamily in both Escambia county and in Pensacola city limits(they are different), if you are interested just shoot me a message. 

Welcome Stephanie! 

My best advice for getting started is to learn to run your numbers thoroughly and then practice on potential properties that you see listed. As you get ready to start investing I'd encourage you to connect with a local agent in the area that you are looking to invest and they can connect you with other professionals you'll need like a good lender, insurance person, property manager, etc... The gulf coast is a great place to invest and receives tons of visitors every year but we are seasonal(you'll earn most of your money March - Oct) and there is a lot of competition so you can't just pick any property listed in the MLS and make money investing here. You'll want to be specific about what type of property you are looking for and(after you do some research and maybe even visit) where you want to invest.
I currently serve some great STR markets like Perdido Key, Pensacola Beach and Navarre Beach and I'm in the process of getting my Alabama license so that I can work in Orange Beach and Gulf Shores as well. If I can help you with anything please feel free to reach out!

If you plan to move back into the property in the not too distant future you might hold out to do a home equity loan or line of credit as an owner occupant so that you get decent terms and a workable LTV max. Giving up a lower rate on the full financed amount with a refi would be much more painful than just having a second mortgage at a higher rate that was big enough to pay off the CC debt.

Hey Matt,

Sorry to hear about your parents and the forced move.  I have a couple of questions and thoughts:

1) What is the interest rate on your mortgage? If your mortgage rate is lower than what you could get today then completing a refi where you borrow more money at a higher interest rate and incur closing costs on the refi could cause the beach house to be even more negative as an investment. Additionally, since you do not live there any more the loan terms you can get for this property as an investment property are almost certainly worse than what you could get as a primary residence. A home equity loan would be better than a full out refi if today's rates are higher(and they probably are) but HELOC's are hard to get on properties that are not your primary residence. They'll want to loan on a lower loan to value ratio as well which makes pulling cash out to pay off your CC debt hard if not impossible. I would be willing to do a free market analysis to tell you what the property is worth if that would be helpful just shoot me a DM.

2) Are you able to make the minimum payments on the debt now?  If so, then it probably makes sense to do so until spring/summer bookings start hitting your bank account.  It's likely that your credit plummeted due to using a large percentage of your available credit.  If you can throw some of the excess income from the high season months at paying down your balances and lowering your credit usage you will very likely raise your credit score.  

3) With a higher credit score and lower balance you could probably consolidate the credit card debt into a lower interest personal loan.  

4) You need to analyze your listing and your pricing to make sure that you get more off season bookings. Maybe look for a snowbird renter? We are a seasonal market and I make most of my money on my STR in the spring/summer/fall but it's not totally dead in the winter so if you weren't getting any bookings or occupancy fell below 50% you need to work to optimize your off season booking strategy.

5) It sucks but if you can't meet the minimum payments and/or your credit doesn't start to recover then you may want to seriously consider selling the property to get everything paid off. 

I wish you the best of luck.  If I can help with anything(other than the payments lol) feel free to reach out. 

Hey Alex!

I'll try to answer some of your questions about the Pensacola area:

For airbnb, properties downtown or on one of our beaches(Pensacola Beach or Perdido Key) tend to generate the highest revenue.  As you'd expect, they can also be more expensive than areas further into town and you aren't likely to find anything sub $100k there.  

Between people relocating here, retiring here or transferring here with the military demand for MTR is solid. Unfortunately, we are probably oversaturated with supply at this point. Many STR owners have ventured into MTR to supplement their income and we have far more supply than we did 2 years ago.

With your desired price range of under $100k inventory is likely to be very limited.  For example, when I search for single family homes up to $100k in Pensacola there are only 16 options as of this morning and only 27 if I open up the search to include the surrounding areas.  With the number of available properties being that low you could honestly analyze every one of them so the specific zip codes and areas aren't as important as if you were looking with criteria that offered hundreds of results.

I'd recommend getting on the list for some local wholesalers to help and increase the number of potential properties that you are exposed to.  If you need a list of wholesalers send me a DM.

I'll second local bank/credit union.  I have a few good contacts at local banks for commercial loans so if you need recommendations shoot me a message.

Negative: You may find shorter amortization periods with a commercial bank loan so you may want to explore other DSCR type options first if that would mess up your numbers.

Positive: Typically your local banks work well with this and various types of asset and have more decision making freedom.  Also, none that I've used have a pre-payment penalty to worry about.

Hey Nathan! Welcome to Pensacola, it's a great place to live and to invest. Househacking with your VA is a great strategy and works well here. My biggest piece of advice to you is to start looking for deals now and to start analyzing deals now. This applies even if you aren't planning to buy until after you arrive. The reason you want to start looking early is that our multifamily housing inventory is limited and a very few of those properties will be under $300k and also qualify for a VA loan. You want to have some familiarity with the area, with the types of properties that are likely to come available and you want to be able to run your numbers quickly and confidently so that you can determine whether a property is a good deal for you or not. This way you can move quickly when a property comes up that would meet your criteria. I've helped lots of VA buyers house hack in the Pensacola area, please feel free to reach out if I can help you!

@Mitchell Mabee

Congrats on getting to multiple properties!  I'm sure you'll love Pensacola, it is a great town and place to invest.  To answer some of your questions:

- Yes, I'd definitely recommend a CPA.  I'll PM you a couple of recommendations for CPA's in the Pensacola area.

- Opinions vary on your LLC question. Personally, I create a new LLC in two scenarios. The first is when I reach 5 properties or exceed $1 million in property value I'll create a new LLC. The second is when I have a new owner involved. For example, I owned property in my personal name and a single member LLC until I got married. Now that I'm married my wife and I have an LLC. Recently I brought together a few people and we bought a 12 unit property together, we created a new and separate LLC for just that property and ownership group.

- For simplicity I have one bank account for the investing that I do personally or with my wife, an operation account. I have a savings account for those properties where I keep my buffer plus I use it as a sinking fund for taxes and insurance. We did open a separate bank account at a different bank for the 12 unit property to make it easy to keep things separate.

- As far as other things you'll need to know: Those will vary by your personal situation and whether or not you are self managing.  If you are self managing the first thing I would do is familiarize myself with the landlord tenant laws in your new location.  Other than that just having the people and resources to help you answer questions as they come up should be fine. 

Good luck and feel free to reach out if I can help you with anything!