Investment Home Primer

For those new to the OBX market, here is a quick overview:

Rental income is largely determined by your distance to the ocean.  An oceanfront property will always rent better than one that is 3-4 rows back.  They get a higher rental rate and typically rent for more weeks out of the year. A newer oceanfront home can rent for 24 weeks of the year, whereas a house that is 3-4 rows back may only rent for 16-18 weeks.  With most investment properties, the strength of the investment is based on the cash flow (money in vs. money out). The way to analyze this is GRY (Gross Rental Yield).  This is calculated by dividing the gross income by the purchase price.  An example would be:  If a home has a gross income of $85,000 and cost $1,000,000 the GRY = 8.5%.  A general rule of thumb in our market is if the home produces a GRY of 8% or above, it should cover most all of the expenses, including mortgage.

Expenses can range from utilities, taxes, mortgage, property management, insurance, HOA fees & maintenance.  These will vary depending on many things:  An oceanfront home will have higher insurance rates.  Some homes have very low HOA fees and others are quite high.  A newer home will have fewer maintenance issues vs. an older home, etc

HOA fees will largely be determined by the services and amenities provided. Some subdivisions will offer swimming pools & tennis courts but the HOA fee will be higher to pay for these things.  Other subdivisions may not offer an expansive list of amenities, thus the HOA fee is low.

Most of the OBX is on private septic systems, however there are subdivisions with sewer systems.  Areas with septic will usually be platted on larger lots since the septic area takes up space.  If a subdivision is set up on a sewer system, the lots may be very small.  That means the houses could be much closer to each other.  The HOA would also have to charge a fee for the sewer system usage.

Property management is big business here.  There are many rental companies on the beach.  The owner chooses who they want to use based on performance, rates, and services provided.  The rate can range from 14% to 20% of gross rents depending on the services you want them to provide.  You can either have them take care of everything (bookings, pool service, weekly cleanings, linens, landscaping, filter changes, etc) and that rate may be 18-20%. However, if you hire your own pool company and you do the landscaping yourself, that rate would be reduced.  In NC, if the home is in a rental program, the new owner has to honor all weeks booked for at least 180 days from closing.  That way a new owner can't simply cancel everyone's reservation.

All rental money is prorated to the day of closing.  That means if you bought a house and closed on May 1st, you would own all the money from any week booked after May 1st.  The seller would keep any money from the weeks occurring prior to May 1st.

This is an amenity driven market.  The more amenities a house can offer will make it more attractive to potential renters.  Swimming pools, hot tubs, gamerooms, views, theater rooms, etc are what renters desire and these amenities will increase your bottom line. Most of these homes are sold fully furnished, so you get most everything in the home included in the purchase price.

DOT OKs spending $5M-$6.5M to buy land for Mid-Currituck Bridge
The Daily Advance By William F. West And Bob Montgomery

Thursday, November 5, 2015

The N.C. Board of Transportation has agreed to spend $5.7 million acquiring land on the Currituck Outer Banks for the long-awaited Mid-Currituck Bridge project.
Malcolm Fearing, who is the Division 1 representative on the transportation board, confirmed the board made the decision during its monthly meeting in Raleigh on Thursday.
According to Fearing, the state will acquire property currently owned by Towne Bank for what will be the Outer Banks landing for the $440 million, seven-mile bridge crossing the Currituck Sound.
DOT has not yet pursued any land purchases in Aydlett for the mainland landing for the proposed bridge, a DOT spokeswoman said.
Fearing expressed appreciation to Towne Bank for what he said were “very cooperative” negotiations that led to the board’s decision. He also said he was “extremely proud” of the efforts by Gov. Pat McCrory, Department of Transportation Secretary Nick Tennyson, state Sen. Bill Cook, R-Beaufort, and state Rep. Bob Steinburg, R-Chowan, in helping push the bridge project forward.
DOT spokeswoman Jennifer Heiss on Thursday put the cost of the land — about 7 acres — at $5.7 million.
Heiss said her understanding is that the land was a piece of property a developer had once been interested in purchasing to create a development adjacent to the Corolla Bay subdivision.
“So, by us purchasing this in advance, we are able to save money by purchasing land that hasn’t already been developed,” she said. Heiss said the two-lane bridge will cost the state $173 million. The remaining funds for the $440 million project will come from toll revenues.
According to the DOT, the Mid-Currituck bridge over the Currituck Sound is needed because N.C. Highway 12 on the Outer Banks and U.S. Highway 158 and N.C. Highway 168 on the mainland are becoming more congested with traffic by summer vacationers.The bridge is also needed to reduce hurricane evacuation time for residents and visitors.
Fearing said barring any legal challenges to the project, he anticipates construction of the Mid-Currituck Bridge will start sometime in 2018-19, and the bridge being complete in approximately 2½ years. Motorists are expected to pay a toll to cross the bridge.
Currituck County Manager Dan Scanlon said DOT’s action Thursday represents another step in the long-anticipated project.
“As you know, Currituck County has advocated for the Mid-Currituck Bridge since the 1970s, so we are encouraged that the project is now funded within the (state Transportation Department) and that they are moving forward with right-of-way acquisition,” Scanlon said. Thursday’s DOT action comes nearly three months after Currituck commissioners delayed a developer’s request to build homes at the bridge’s Outer Banks landing point in hopes the state would offer to buy the land first. The developer, Northeastern North Carolina Properties, sought approval to create 26 lots on a 14-acre tract that includes the proposed bridge terminus.

In today's modern world, the average American has very little opportunity to witness wildlife in their natural habitat. Thankfully, there are some undeveloped locations around the world that still offer visitors a chance to get a glimpse of various creatures that have yet to be domesticated. One of these preserved animal sanctuaries actually happens to be located near the quaint coastal town of Corolla, North Carolina. It's here where both visitors and locals of the area can occasionally spot wild mustangs grazing on vegetation or trotting along the sandy shores. These intriguing horses are known as the “Wild Spanish Mustangs of Corolla” due to their historical background and current location.

Location

The mustangs of Corolla are some of the last wild horses known to run freely the United States. Prior to the 1980's construction of highway NC12 connecting Duck and Corolla, the mustangs were still romping around the small local towns. Since the area has expanded over the past few decades bringing in additional residents along with more buildings and vehicles, the horses have been relocated to a nearly eleven mile long stretch of undeveloped land just North of Corolla on the Currituck Banks. Visitors to the area can make their way through the sandy dunes if equipped with a 4WD truck or SUV in order to occasionally witness the wild mustangs galloping along the beaches. There are also all kinds of adventure tours available that help spectators get as close as possible to these gorgeous wild horses.

History

The wild Spanish mustangs of Corolla are said to be descendants of the horses that were brought to the Americas by Spanish settlers. The biological connection was discovered after scientists performed genetics tests in addition to comparing and studying their physical and physiological characteristics. One of the first Spanish settlers who was believed to have brought the horses to the New World was a man by the name of Lucas Vasquez de Allyon. In the year 1521, he and his men were sent to the Americas by the king of Spain in order to colonize the coastal area we now know as North Carolina. Once settled along the banks, they began to fight with the local native Indians and were forced to flee the region, leaving behind most of their livestock. Historians claim that the mustangs then remained in the area and are directly related to the ones that still inhabit the area today.

The Corolla Wild Horse Fund and Museum

The Corolla Wild Horse Fund was established in the 1990's to ensure that the wild mustangs of Corolla are protected. The organization was then incorporated as a non-profit in 2001 and has since done their very best to help preserve the habitat of the horses. There is also a museum located at their headquarters which provides visitors with plenty of information about these beautiful creatures.

If you're ever in the area, head on over to the beaches or schedule a horse tour so you can witness these stunning beings in their natural surroundings. Just keep in mind that the mustangs are indeed wild so you won't be able to get too close to them or feed them as their diets are much different than domesticated animals.