A few weeks ago, I told you about a house that we fell in love with in Wilmington. And how it sold before we had a chance to decide we loved it. And how coming to that realization made us decide that perhaps buying a house in Wilmington was something we should continue to seriously consider.
Well, since that time, we fell in love with another house in Wilmington. It was a little on the pricier side, but the location was great – just barely outside the historic district (so no annoying preservation rules), but still super close to downtown and the riverfront. There was a classy mini-mart to the right of the house, and a lawyer’s office to the left, and the backyard led to a giant park.
And it was super cute. Part of the layout involved three smallish living rooms, each connected to the other through a doorway so you could run in a circle through them, and at center of the circle was a three-sided fireplace. It had actually been moved to it’s current location so the foundation and roof and most systems were actually pretty new despite the house having been built in 1923.
Because this house was on the pricier side, the only way we could make it work would have been as a short-term rental. It needed some repairs but not so many that we could have “flipped” it. And the amount of money we could have charged for a long-term tenant wouldn’t have been enough to cover our costs. But this was fine, because what were looking for was a short-term rental that would allow us to stay there when it wasn’t rented out. But the problem with this is that when were doing a little research on confirming costs associated with a short-term rental to make sure that we could make it work, we discovered that there is a permit required for short-term rentals in Wilmington, and once one house has a permit, no other houses within 400 feet can get a permit. And because of exactly where the house was located, it actually overlapped with the 400 foot diameter of several actual B&Bs. There is ongoing litigation about this permitting rule, but as it stands, we would not be able to *legally* operate an airbnb there. Our real estate broker who has our best interests at heart, really wanted us to buy the house and just run an airbnb anyway.
So that house was a bust.
At this point I realized that it wasn’t necessarily worth our time looking at more houses in Wilmington until I cross-referenced this listings with permitted short term rentals. And quite frankly I did not have the energy for this.
But you can see that this post just keeps going.
A Real Possibility
But a cute looking house came up in my Zillow search feed the other day, and on a whim, I decided to look up if it was in a zone that would allow for an airbnb. As it happened, this was the house with the permit that would prevent all other surrounding houses form getting a permit! So that box is checked.
Because it was an airbnb, it had a million gorgeous pictures to really give you a feel for the house without actually seeing it. And reading several of the 400+ airbnb reviews, the house sounds to be in great shape. So that box is checked.
Looking at it on a map, I could see that it was a good ways away from the main part of downtown, but only a couple blocks away from a cool brewery, fancy pizza place, and general hipster hotspot that we discovered on a recent trip to Wilmington. Within the last week or so, I had also read about a new food hall that’s being planned less than a block away by the same developers that did the Transfer Food Hall near us in Raleigh.
So we decided to hop in the car and drive down to Wilmington to check it out. I texted our realtor on the way to see if he could schedule us a showing for that day. I think before he had gotten around to responding, I had figured out that they weren’t allowing any showings until two days later on a Tuesday, and that there was an open house the next evening. When the realtor finally responded, he also let us know that the seller wanted all offers in by Tuesday afternoon and that they would be reviewing offers that same evening.
When we pulled into Wilmington to check out the house’s exterior and get a better feel for the neighborhood, we became more enamored. The location is closer to everything I mentioned than it appears on the map. It’s in a transitional neighborhood on the edge of an industrial area. Most of the houses on the same street appeared to be nice and well-kept but there were some possibly rougher areas a little further away. The industrial area seems to consist of a lot of abandoned warehouses, which is of course what paves the way for breweries and food halls. The house is a block away from a train track and on the corner of what looks like it could be a fairly busy road so noise could be an issue but it was definitely quiet when we were there on Sunday afternoon. The house backs onto an alley and the backyard is quite large so I see huge potential for adding an ADU down the road, if permits could be obtained. So aside from potential noise, more boxes were checked.
We felt comfortable enough with the home at this point to put in an offer, even though we hadn’t actually been inside. But our realtor did kindly attend the open house and take a couple quick videos for us. He was incapable of providing us with a CMA, but did send me one reasonable comp and one from over a year ago that both suggested that the market could support the asking price. Since he wasn’t much help, we dug up our own comps as best we could from Zillow (ideally houses of similar condition, similar size, same neighborhood, sold within the last 3 months) and found that a average sales price for this house would be about 30K less than what they were asking.
Our realtor, who has our best interests at heart, suggested we offer 10K over asking in order to be the new highest comp.
We decided to offer asking price, to which our realtor responded by telling us that the seller reported already having seven offers and expecting four more and are we sure we don’t want to offer more?
I’ll be sad if we don’t get this house but the asking price was definitely on the absolute high end of it’s current market value. It would work great as an airbnb at this price, and we could make it work as a medium- or long-term rental at this price. But if we paid much more than asking, we would basically be losing money if we couldn’t airbnb it.
And whether we could airbnb it is still up in the air. The current owners have a permit but that permit isn’t transferable and the permits are awarded on a first-come, first-served basis, meaning someone else might be able to obtain a permit when the current owner loses/ gives his up. On the other hand, the North Carolina Vacation Rental Act requires that “Buyer will take title subject to vacation rental agreements that end not later than 180 days after closing”, meaning we would be legally required to honor all airbnb bookings already on the books. And I’m not clear if we’re supposed to do that without a permit? So these will be things to figure out if we find out our offer has been accepted.
I’ll keep you in the loop!
Leave a Reply