All Forum Posts by: Jacob St. Martin

Hey Wyatt! I am a local investor and realtor and I actually got my start in real estate investing in Charlottesville by house hacking, and am in my second house hack now! It is 100% the way to go and I work with clients all the time looking to do the same thing. Not sure who told you to buy and develop land to house hack but there are a number of reasons that I think that would not be the right move in most cases:

1. Even if those developments bring a large number of jobs to the area, people normally want to live in a place with good amenities more than they want to be close to work. The amazon data center is going to be about halfway between cville and richmond so people will likely just live in one of those two localities and commute to work. 

2. I am not sure about the power plant you are referencing but the amazon data center isn't supposed to be completed for 15 YEARS... You don't want to wait 15 years for you to get the value out of a deal when you could definitely do so sooner. 

3. It takes way more time money to build. Typically, if you want to buy land and build you are going to max out at ~75% loan to cost which means you will need to front 25% of purchase and building costs, and be making debt payments while it is under construction. With a house hack you can put as little as 3.5% down (although I recommend 5%). You also need to be prepared for construction to run over budget because it often does. The cost of construction is also very high in the area right now, so it is basically always cheaper to buy a pre-existing home (even if it isn't that old) than to build a new one. 

4. It also takes at the very least 6 months to go through purchase, permitting, and building but often more like 9-12+ especially if you are doing a custom build. Meanwhile, I could get you into a house hack and help you get it rented out in under two months.

5. You will have a much harder time finding tenants outside of the city and probably wont get as much rent.

6. Believe it or not Albemarle county is worse than the city of Charlottesville when it comes to regulations and permitting. I don't have much experience with Luisa or fluvanna on the zoning/regulation side of things.

Just about the only situation in which I would recommend building into a house hack in this area is if you are very well off financially, don't need/want to move soon, are planning to build an expensive custom "forever" type home but want an ADU or something to house hack to bring in a little bit of income (but not enough to cash flow on an expensive home), can't find something on the market that fits your criteria, and don't want to be in the city.

I would be glad to connect in person to discuss things more and help you either find land or a home to house hack depending on what you decide on!

Hello Mitch, 

Congrats on your success! I would recommend looking at the return on equity in the different scenarios. Return on equity is basically taking the return on investment formula and replacing the denominator with your current equity rather than the money invested. This will show you if your money is working as hard for you as you want it to be! Then you can look at the ways to access that equity and deploy it into other deals and look at your new ROE in each scenario. It is hard to give more specific advice than that because the right answer depends on the numbers and what purchase opportunities you have. 

Feel free to reach out if you have any questions! 

Okay, I have some thoughts that somewhat depend on what your goals are but this is probably how I would structure it: 

There is two road blocks that I am running into when I am thinking about everything that you want to do: First, there are loan products for everything that you want to do but they are always going to want to be in first position. If you got a loan to purchase and rehab you couldn't then go get a building loan on that same property because there is already another loan on it. Second, lenders normally don't want to do one loan for two parcels because if you go and sell off one of them there is now less collateral against the loan. If they are willing to work with you on that then ignore this part but I would just double check that they know it is two parcels. 

I think the best thing that I can think of (assuming they don't care about you having one loan on two parcels) is to purchase, rehab all the units at the same time, immediately sell off the SFH to hopefully pay off a good chunk of the loan (which is possible because it is on its own parcel) and then rent out the duplexes paying down the loan as quickly as possible, which you could accelerate by feeding in capital from an investor or another source. Once you have that paid off, you can go get a construction loan. They normally will go up to 70-75% loan to cost but can you the land/other buildings on the land as the collateral as long as the value of those is more than 25% of what you are borrowing. Then you can build those and do whatever you want with them.

There may be a better way and I would definitely look into building loan programs in your area and not take my word for it because this is what I recall from my most recent conversation with new construction lenders and I am not 100% confident. Hope this helps! It isn't a super neat solution but it is really hard to build without a good amount of liquid capital. Feel free to reach out with any other questions

What current loan structure do you have on the property? That will likely limit your options somewhat but I would be glad to think through it and help out once you provide more detail

Hello Hunter, 

Congrats on your success as a sales executive and wanting to get involved in real estate investing! I don't necessarily have content recommendations. However, my biggest piece of advice for people with situations like yours is to house hack. House hacking might require a little more creativity in NYC than other places but the fundamentals are still the same. Almost always it will be the highest ROI thing that you can do with your money. My first deal was a house hack and when you combine rent savings, appreciation, loan paydown, tax savings, and in this case even cash flow, my internal rate of return (sorta like ROI but more detailed) was almost 300% annually. Not every deal is that good, I definitely got lucky on my first one, but still house hacks almost always will give better returns than other options.

Feel free to reach out if you have any questions or want to learn more about house hacking!

Hello Italy, 

Unfortunately there will always be risk when doing short term rentals, and things will inevitably get ruined or broken at some point. Expect that and plan for it! Airbnb does have an insurance policy in case a guest does trash a house but I will note that they are very much partial to guests and will normally not side with the host in a dispute unless you have really good evidence. There are a few things that you can do to help protect your listing, this is not exactly an exhaustive list but just a few things: 

- You can install a ring doorbell so that you have video evidence of who is coming in and out of the house. If the guests throw a party against your rules you will be able to show a bunch of people entering the house who weren't supposed to be there. 

- You can require that guests have uploaded proof of ID to airbnb in your settings. This prevents people from making a new account to throw a party, trash a house, get a bad review from the host, then just make a new account so that it doesn't matter. 

- You can require a refundable deposit/place a hold on their card just in case. I don't do this and I wouldn't necessarily recommend it but you can. 

- Have a smart lock. It is really helpful to have a log of when guests were going in and out of the house. This has helped me with airbnb disputes before

- Tell your cleaners to let you know if anything is broken or trashed and to take thorough pictures before touching anything. 

- I believe the other OTAs also have host insurance but not as robust as airbnb. 

- Send a message during the guest's stay checking in and ask how their stay is going. This gives them a chance to tell you if anything is wrong with the unit and if they do not reply or say that everything is going well, it will help you if they break stuff and/or try to get a refund later. 

- Honestly, I haven't had that much issue with people breaking things, I have had more people trying to fraudulently get a refund though. 

- Set aside a % of each host payout you get for future repairs replacing furnishings, expect it to happen, and then you will be prepared when it does. 

Feel free to reach out if you have more questions!

Hello Ethan,

I am an investor/agent in Charlottesville VA and I can confirm that college towns can be amazing! There are of course upsides and downsides to every market but I tend to find that college towns usually have solid fundamentals, companies moving to the area, population growth, etc. If you are renting to students you need to just expect them to be rougher on the house but anything close to the university in Charlottesville is usually leased up about 10 months in advance. Also in college towns there is often a segmentation of areas that are "college" and areas that are more for locals. Understanding those unofficial boundaries will help you identify who your most likely tenant base will be and cater to them.

If you have any specific questions I would be glad to answer!

Hey Jared, 

Welcome to BP! I am a STR investor and realtor in central VA and serve that area. I'd love to connect some time and help you through any questions you might have about STRs or the area!

I would personally recommend going with the full central air system. In a house of that price range people will view the minisplits as cheap even if it is just as effective. Also for only 10k more I think that central air does do a better job

Hello Darnica, 

So sorry to hear that this has been your experience with agents in central VA. Honestly, it was mine too. I have been an investor for several years before more recently becoming an agent. Most agents are not good investor agents. As an investor myself I know what you are looking for for, and I understand the numbers & principals. For my investor clients, part of my buyer representation meeting is getting to know your buy box and specifically how you analyze deals, price out rehabs, etc. Then I search through the market to target deals that could work, pre-vet them by doing some quick underwriting before I send them to you, and send them your way.

An example from a recent investor client of mine: 1/4 signed buyer rep contract, 1/11 sent them a list of 9 pre-vetted potential deals, 1/18 we toured 6 of them, 1/21 I went and toured one where the tenant would not let us in on 1/18 and took detailed pictures and videos, 1/22 under contract on that property for 57% of list price, set to close on 2/14. 

If that sounds interesting to you I would love to talk and see if I can help find you your next investment property!