Short Term Rental Purchase? (1 Viewer)

[St. PreDATor]

Hello all I was wondering I have been reading on STR in NOLA the last couple weeks and keep getting conflicting info, me and the wife were possibly thinking of investing in a small place in NOLA and we live in California I Know as of 2019 there are new rules and was wondering if anyone had some good info or personal experience on this.
We were wanting to maybe purchase and airbnb it out most of the time and then come visit and stay in it when we could during the year. any info would be appreciated thanks.

 

[buzd]

Hello all I was wondering I have been reading on STR in NOLA the last couple weeks and keep getting conflicting info, me and the wife were possibly thinking of investing in a small place in NOLA and we live in California I Know as of 2019 there are new rules and was wondering if anyone had some good info or personal experience on this.
We were wanting to maybe purchase and airbnb it out most of the time and then come visit and stay in it when we could during the year. any info would be appreciated thanks.

We have an apartment we've done that with on occasion, and it really depends on where you are. If you are in a historic district, you probably won't get a license, and if you are trying to be a remote owner, it can be difficult to get a license as well. Plus you will probably incur the ire of your neighbors. Plus rates and occupancy are pretty low right now, and if you do short term, you have to deal with flipping it and/or finding and paying someone to do it for you. That with property taxes and insurance and you could be underwater quickly.

 

[Mr. Blue Sky]

We have an apartment we've done that with on occasion, and it really depends on where you are. If you are in a historic district, you probably won't get a license, and if you are trying to be a remote owner, it can be difficult to get a license as well. Plus you will probably incur the ire of your neighbors. Plus rates and occupancy are pretty low right now, and if you do short term, you have to deal with flipping it and/or finding and paying someone to do it for you. That with property taxes and insurance and you could be underwater quickly.

All of this.

NOLA has been really cracking down on STRs for the last year or three... the gravy train from , say, 2010-2018 is over.. i almost bought a B&B in the Marigny from a family member a couple years ago, and boy am i glad i didnt pull the trigger on that.

 

[guidomerkinsrules]

no but seriously, the rents are too **** high

 

[Poison]

I posted a thread on this a little while back, but was basically looking into doing the same thing. Given my buddy and I typically pay $1500 for a four or five night stay when we come for Saints games, even during weeks / on weekends where there is nothing much else happening, we figured that some of those same places are being sold for approx $200,000 that it might be a better idea to just buy a place and lease it as a STR on AirBNB. I mean, we haven't been in town for Mardi Gras yet, any playoff games, etc. where I assume the rental yield on places like that would be significant. It would also make it way easier for us to have a home base in NOLA.

However, as outlined above, it looks like getting a licence is a really tough ask. I've read the council ordinances and so forth and it looks like there is a freeze on new applications.

An alternative idea we contemplated was buying a double shotgun and getting in a long-term tenant in one side. I had understood that it was still permissible to lease out one half of a shotgun house on a short-term basis where you had a permanent resident in one side. Of course, I have not inquired into this in any great detail (mainly due to travel restrictions and COVID - I'd never buy something I couldn't physically inspect), though I wonder if that option remains viable or if the permanent resident has to be an owner-occupier.

 

[nolaswede]

Yeah, not that the city always checks, but it’s pretty hard to get a license for STR. It’s actually not allowed in some neighborhoods!

 

[Mr. Blue Sky]

An alternative idea we contemplated was buying a double shotgun and getting in a long-term tenant in one side. I had understood that it was still permissible to lease out one half of a shotgun house on a short-term basis where you had a permanent resident in one side. Of course, I have not inquired into this in any great detail (mainly due to travel restrictions and COVID - I'd never buy something I couldn't physically inspect), though I wonder if that option remains viable or if the permanent resident has to be an owner-occupier.

This is probably a realistic and feasible idea... I have known many, many people over the years (for decades predating AirBNB or VRBO) who have done this exactly.. the vast majority occupy one side while renting out the other; the idea of sharing a wall with a tenant never appealed to me, especially since it’d be way too easy for them to knock if a toilet overflowed at 3am or something.. but you could do it, rent out one side long term which might cover your mortgage, or maybe more- then just stay in the empty side whenever in town.

ETA actually a good idea might be to rent out both sides, but give the tenant on one side a dramatic discount on rent to maintain the property for you, with the understanding that he/she vacate whenever you’re in town... S***, i might steal that idea from myself...

 

[Poison]

This is probably a realistic and feasible idea... I have known many, many people over the years (for decades predating AirBNB or VRBO) who have done this exactly.. the vast majority occupy one side while renting out the other; the idea of sharing a wall with a tenant never appealed to me, especially since it’d be way too easy for them to knock if a toilet overflowed at 3am or something.. but you could do it, rent out one side long term which might cover your mortgage, or maybe more- then just stay in the empty side whenever in town.

ETA actually a good idea might be to rent out both sides, but give the tenant on one side a dramatic discount on rent to maintain the property for you, with the understanding that he/she vacate whenever you’re in town... S***, i might steal that idea from myself...

I like your thinking with the second portion - problem is I would want to be pretty trusting as it relates to the tenant who I'd be asking to vacate while I was in town. Also might get a bit messy given it would be a breach of a standard lease.

I do actually wonder whether renting out one side might be adequate to cover whatever mortgage repayments needed to be made while leaving the other side vacant. In an ideal world we might not even need a loan at all - depends how long we have to wait and how much we can save until we're allowed back into the USA. I'd probably be happy with $600-800US or so per month in rental income if we just leased one side.

 

[buzd]

A tenant in one side of a double won’t be sufficient to cover a note or allow you to get an STR license.

 

[Poison]

A tenant in one side of a double won’t be sufficient to cover a note or allow you to get an STR license.

Forgive my ignorance, but what does cover a note mean?

 

[buzd]

Forgive my ignorance, but what does cover a note mean?

You won’t get enough rent to make a mortgage payment once you figure in insurance and taxes.

 

[Mr. Blue Sky]

A tenant in one side of a double won’t be sufficient to cover a note

How can you possibly know this, without having any inkling of what he’ll be putting down, or price of the home, neighborhood, etc??

 

[Mr. Blue Sky]

Forgive my ignorance, but what does cover a note mean?

“Cover a note” is basically American speak for a mortgage payment, for instance if your monthly mortgage payment (Note) is $1200, and the monthly rent you’re collecting is $1100, you’d be short of “covering” the note By $100

 

[Mr. Blue Sky]

I like your thinking with the second portion - problem is I would want to be pretty trusting as it relates to the tenant who I'd be asking to vacate while I was in town. Also might get a bit messy given it would be a breach of a standard lease.

It would be a unique situation no doubt- but if you are renting out one side long term for, lets say $1200, but you’re charging the guy on the other side $600, with the understanding he maintains the property , fix issues that arise, and stay with a friend or family member whenever you’re in town- trust me, there are plenty of folks in NOLA who’d be all over that deal.

 

[buzd]

How can you possibly know this, without having any inkling of what he’ll be putting down, or price of the home, neighborhood, etc??

Because with the state of insurance in this city, if he is getting a place decent enough to draw any significant rent, then he will pretty much have to pay cash for the house for a single rental to cover costs. And if he is paying straight cash, the argument is kind of moot anyway.