Rental Investments in the High Country Common Real Estate Investing Terms:
Before you can consider a rental investment in Appalachian North Carolina know these important terms about real estate investing to determine what fit is the best for you!
- Short-Term Rental (Vacation Rental or STR) is a furnished home, condominium, or apartment that is rented out for short periods of time, anywhere from one night to a month or two.
- Long-Term Rental (Traditional or Student Rental) is an investment property bought for the purpose of renting out to tenants for a long period of time, for six months or more.
- Equity refers to the difference between the present market value of a property and the amount the owner owes on the property’s mortgage. The value of equity builds up gradually over time as the mortgage balance reduce and the property’s market value appreciates.
- Cash Flow refers to the amount of money that an investor takes home at the end of each month after payment of all operating expenses, including loan payments, taxes, insurance, supplies. Cash flow can be positive or negative. The goal, of course, is positive cash flow!
- Predictive analytics is the analysis of big data using historical data to predict future trends. Predictive analytics provide real estate investors with reliable forecasts of the ROI they can expect from a particular investment property.
- ROI- Return on Investment is the ratio of a profit or loss made in a fiscal year expressed in terms of an investment and shown as a percentage of increase or decrease in the value of the investment during the year in question. The basic formula for ROI is: ROI = Net Profit / Total Investment.
- Net Operating Income- is income that is generated annually from an investment property after deduction of property expenses. Such expenses may include property tax, property management fees, and utilities.
- Capitalization rate or CAP RATE is the ratio of the net operating income produced by an investment property to its capital cost or current market value. This is one of a few real estate investing terms that refers to the rate of return expected from an investment property.
- Kiddie Condos are homes in a college town that students to live in. The condos provide rental income and can raise the student’s credit score if their name is on the mortgage. Kiddie Condos are a great investment for students as it can help them establish residency to become an in-state student and qualify for lower tuition. The term comes from the FHA loan that allows parents to help their children buy their first home even if they won’t be living there. Many investors, even without students in school, purchase kiddie condos because they know that they can build equity quickly in a college town.
- POA (Property Owners Association): Because we have many developments with vacant lots, this term is more commonly used in this area than HOA. (Home Owners Association)
- R1: In town zoning allowing for residential use only. No short term rentals and no more than 2 unrelated people can occupy the property.
Long Term Rentals
Now that we have some basic terminology ironed out, there are several different types of rental investments available in the High Country. Many people want a LTR, as they are easier to manage with less turn over. With a STR you have more opportunities to make a higher income monthly and have a mountain getaway for you and your friends and family to enjoy too!
Because the High Country encompasses the town of Boone, there are great opportunities to have a high ROI when you purchase a property that would work for student housing. What students pay per bedroom is only increasing. Anything close to ASU and near an AppalCart stop is sure to stay rented!
The town of Boone is somewhat of a transient community with people coming in and out to work at the university. Those people often want to rent for a while until they figure out the area and decide where they would like to put down roots. There is always a need in the area for LTR. If you are interested in purchasing something for student housing, be sure that you check the zoning and the area covenants for any restrictions that might be in place.
Short Term or Vacation Rentals
Let’s face it, we all need to getaway and relax. Away from the hustle and bustle of busy city life. There’s no better place than the High Country to spend time in nature. Many people cannot afford to purchase their own getaway, so they will want to rent yours! With mountain views to enjoy and babbling rivers and creeks to listen to, it is easy to slow down, be present and relax around here. If you recharge like we do, you are probably looking for a little more adventure during your time off. The Blue Ridge Parkway, cycling, motorcycling, hiking trails, rock climbing, fly fishing, canoeing, zip-lining, skiing, tubing (snow or river) or catching an Appalachian State sporting event, are all reasons why people chose to vacation here. With cool summers and snowy winters, the climate alone will help get you renters! Don’t forget the breweries, wineries, museums and other cultural opportunities we have to offer. Lots of reasons people love to #LiveItUp in the High Country!
A STR Investments gives you the opportunity to come enjoy all the High Country has to offer, while using your investment to make money! They aren’t making more mountain property, so investing in mountain real estate will only make you money!
Here are some common features we’ve realized people are searching for in vacation rentals in the Appalachian High Country…
- Mountain Style Home: It doesn’t have to be a log cabin, but there needs to be a mountain style element to the property. You can even make that happen in a condo! Most renters are looking to really feel like they are getting that mountain experience.
- Modern and Updated Finishes, Décor, and Furnishings: People look for all prices ranges of places to stay when they visit the the Appalachian Mountains, but your chances of appealing to a wider audience increases greatly if they feel comfortable in the space. When listing your property on Vrbo, AirBnB, and the like, keeping updated professional photos of your property online is key to attracting reservations.
- Hot Tubs: While they are not for everyone, hot tubs are a huge draw for renters in this area. Talk about relaxation and a year round opportunity for renters and owners alike! Local rental agencies have told me that you can increase your bookings significantly if you have a hot tub.
- Game Tables and Onsite Amenities: We mentioned earlier that folks are looking to relax. They may hit up the grocery store on the way in and then plan to not leave the house! Having amenities like a game table, fire pit, or water feature makes your property special and stand out. These things can help you earn five star reviews and repeat renters!
- Larger Homes with 3+ Bedrooms: Renters benefit when there is a 2nd living space. A place to send the kids when the adults want to relax, or play, is an added bonus when selecting a rental.
- Easy Access: Renters driving in on a Friday evening for a few nights in the mountains do not want to get lost on a curvy, steep, mountain road. Out-of-towners probably don’t have 4-wheel drive. When purchasing a vacation rental property, choose a location with easy access situation on well maintained roads.
- Proximity to Tourist Attractions: Renters coming in for a ski weekend will likely want to stay near ski mountains. These locations have much to offer year round. Beech Mountain’s new resort updates include fantastic summer activities such as their summer concert series and mountain biking. Being close to Appalachian State University can be a huge draw too! Those parent weekends and home football games attract student’s families and alum.
Other Tips to Consider
Be sure that you are searching in areas that allow short term rentals. Many developments restrict against them, as do many downtown areas (with rare exceptions). Check zoning and neighborhood covenants before you make a purchasing decision. Use a local management company to help you with bookings and maintenance. In the age of technology, it is easy to consider using sites like AirBnB or VRBO with keypads on your door. If you are renting your investment from afar, a local company may make more sense. There are extra considerations in our area, like the lack of reliable handymen and cleaning services. These local rental agencies have trusted and reliable resources for keeping your rental in tip top shade.
Whatever route you choose, investing in the High Country is a smart move and will benefit you. If you’re interested in finding your dream rental property, contact us for assistance!