Areas in North Carolina

15 Replies

so my question is to the people who live near I am which is wake county. I would like to know which areas I should stay away from and which areas are for the really wealthy or the middle class. Correct me if I'm wrong but it seems that holly springs is a little more expensive than were let's say Fayetteville is, but Fayetteville has a lot of homes that I could afford. My price range is 150,000

I own two investment properties in Holly Springs. Single family homes that are both very nicely cash flow positive. Yes, Holly Springs is significantly more expensive than Fayetteville, BUT, it is a much more desirable area to live in, and therefore properties bring higher rents and fewer vacancies. In my experience, it is also far better to have your investment properties close to home, so you don't have to drive 45 minutes every time you need to take a look at something. It's also not a bad thing to be able to drive past in your normal daily life and see that things look in order, etc. They don't come along frequently, but you can occasionally find one of the older Holly Springs homes (not in a subdivision, and make sure it is zoned for Wake County schools), that you can buy for under $100K and renovate before renting. (This is what I do, anyway.) Good luck to you, in finding your first investment property!

Also, if you don't want to "sit and wait" for an affordable property to come on the market, I'd look at Garner before you go to Fayetteville...it still has Wake County schools, there are more affordable properties than in Holly Springs, it's not as far to drive to, and it is close to downtown Raleigh (desirable location). I anticipate that Garner will be one of the next in line to experience an "upscale boom," which has already come to pass in Holly Springs.

thank you so much! that was exactly the response I was looking for especially since I know nothing about the local areas.@Lori Verni

My pleasure!

I don't know anything about Holly springs, but Fayetteville is a fantastic area for real estate.

Cheap home prices, high rent ratios, and because of it's transient nature (thanks to Fort Bragg) most people here prefer to rent. I've never had a vacancy last more than 10 days. That said, I think Lori is probably right in that you don't want to travel too far for your first rental, especially if you are self managing. Within a 20 minute drive can be very beneficial for the first one.

Lori has the right idea, buying older properties with good cash flow in growth-oriented, appreciating areas. Smaller homes can make great returns over time in HS and in Garner. Both are good demographically. Realize that the "standard" Garner and HS numbers you see from theoretically knowledgeable data sources are significantly skewed. See my post about "Macro Data" for Garner opinions about perceived growth.

While Lori (and I) will see appreciation, it's because of scarcity of product. Here's the easiest ways I can drive home the point. Drive south on Avent Ferry Rd. Start at Hwy 55, but start paying attention after you pass the schools on your left. As you drive along, hopefully slowly or with a passender who can help with your 'test', count the number of new developments going in. No, you won't see signs. Too early for that. Count the number of bulldozers, clear cut tracts, new "improvements" (roads
without anything else (no houses yet...) and you'll get an idea of what 2005 looked like about 5 miles north. I stop at New Hill Rd, since I always turn right there to go to our storage unit.

Turn left to explore and see if the home building explosion continues. It may... and eventually you run into Fuquay, which went through a growth spell like HS several years ago, and continues today. It is still be going on.

So.

How many new houses going in (being built) are 1000 sq.ft? None. How many under $100K? None.

Lori and I are in, percent wise, a shrinking market with our <$100K houses. Well, probably >$100K now. Builders build at $250K+. But there is constant, and increasing, demand for reasonably priced rentals. Hence, our products become more valuable over time.

When growth eventually stops, our rent increases stop. But values increase due to scarcity of product (reasonable cost housing) and our 'rent floor' continues to rise as growth continues. It's the classic 'value proposition' model that REI celebrate in (primarily population) growth centric areas. Costal cities see this effect in scarcity of land. HS sees it in scarcity of entry level rental property.

My 2 cents.

@Jesse Mictretta  I agree with Chris's 2 cents based on the assumption he is making that you are talking about buy and hold investing. You didn't mention if you are B&H or F&F. Fayetteville is full of great B&H inventory. If you are just starting out, there's an argument for FAY in that it's a lower entry fee. There's an argument in staying close to home so you can have eyes on the property. The expansion of 540 will impact both the towns that it crosses through and the cities like FAY because of the shift in drive time between work and home. 

I manly want to be B&H properties and maybe down the road to a couple of flips when I have more experience, I took a drive around yesterday to get familiar with the area I found Knightdale which had a lot of really nice houses (non multi family) in my price range that are in wake county. I am really tempted to start there it seemed like a nice place and a good area for good rent prices. Any one have experience with this area? @Adam Schneider @Chris Martin @Lori Verni

Personally, I buy my properties as a combination of B&H (for now), but always with significant future land value potential. For example, one of mine is a small, single family home that is the first lot next to where the new hospital will eventually be built in Holly Springs. Give it 10 years and the property will be valuable in and of itself, as developers will be looking to buy up the land to build medical office buildings next to the hospital. My other one is on the corner of Holly Springs Road and a residential street, just a few blocks from Main St & Holly Springs Rd. Give it a number of years and my .75 acre lot fronting Holly Springs Road will be more valuable as a commercial property. For now, both are nicely cash flow positive and renters are literally clamoring/overlapping one another to get in them. There are literally NO (or so few they can't be found) places to rent in Holly Springs for the rent I'm able to charge for these, yet I'm still cash flowing nicely. Personally, these are the types of properties I look for, and if I were chomping at the bit to buy something quick rather than waiting for something just right to pop up in Holly Springs, I would be looking at Fuquay or Garner, as they are currently and/or next up in the "upscale boom/future land potential/can't get any more of these/everyone wants to live there" market. Knightdale, while still in Wake County (a positive) will not see that situation for a very significant length of time, as there is still way too much available over that way. Also, it may not seem like a far drive when you're cruising around, but it would feel far when you have to run over to fix something or meet with the tenant for some reason. I'm not saying you couldn't buy a property and have a fairly easy time renting it in Knightdale, I'm just saying that I don't think that area has the same investment potential as these other areas (using the formula I just described). 

As an aside...the value of both my rental properties being within 3/4 mile of my home? Priceless! ;-) 

I'm not saying sit and wait forever, but do keep in mind that good opportunities do occasionally pop up...the key is to be ready to pounce (finances in order, already have a relationship with a mortgage person (if one will be needed), paperwork ready to go, etc). An example is, about 3 months ago, two properties came available right in downtown Apex for around $50K each. They were sold within hours. They were (what I consider) perfect investment properties: Small, need renovation, cheap, walk to downtown, tons of future land value potential. When was the last time before that when I saw something like this come up in Apex? Maybe a year ago, possibly longer. My point is, while you might have to wait quite some time for something like this in Holly Springs or Apex (because there's not much left), you could much more easily find something like this in Fuquay or Garner without having to wait as long, yet still offering the positives of convenient location, very desirable rental market, and future land value.

This is only my strategy. I'm sure others have great strategies that work for them too. Just sharing my experience in the hope that my perspective may help in making your decision. Good luck!

A couple quick comments. We exited the Knightdale market in late 2013 for some of the reasons Lori mentioned. Our $21K little Great Recession house in Garner fits in with Lori's philosophy... but many of these "deals" take a lot of time and effort (now that GR is long gone) and some investors don't like the time/money tradeoff. I guess that's why there are different investment methods and different philosophies.

I don't have time to go into detail, but be careful about your zoning change assumptions. Look at the parcel on Ernie just down the road... the SDIRA owned SFR that was bulldozed. And no, it's not mine;) It's zoned R-10 or R-20. Yes, I did have a serious look at it when EconoHomes took over marketing/sales since the price dropped significantly. Next door is commercial. Makes sense that best and highest is commercial... but I doubt HSTC will allow it. Not today. A zoning change hearing will be required and all the burden that comes with it. Not that it can't be one, but for one parcel? I passed for this reason. But 10 years from now, who knows? SDIRA investors inherently take a long view.

So which do you think in your experience living here will be a better long term investment for appreciation or cash flow, a single family in garner or fuquay? Lori has said she thinks Gardner is going to get the next upgrade with construction would you  concur with this? @Chris Martin

I would stick with properties close to home. How much is your time worth? Do you want to drive far away to scout properties and do deals all the time? It might not sound like a big deal at first but trust me it will get old. There are deals to be had everywhere you just have to find them and you may have to change your strategy. So if it were me I would invest in properties close to where you live.

@Jesse Mistretta if I was looking for a single family home up to $150k, I would look at holly springs, some specific neighborhoods close to downtown Raleigh (Biltmore Hills, Rochester Hills, Worthdale Park), knightdale, and some of the neighborhoods in Raleigh in the 27616 zip... In that order. 

The areas Dawn identified have promise.

Pricing in both Fuquay and Garner have crept up for "like kind" property. But for $150K, if I were still committing capital for SFR investments today, I'd start there.

If you are really bold, looking for 'home run' potential, then consider South Park. From the southern beltline, take the Person Street exit into town. google maps doesn't do it justice, since as you 'drive' along you'll only see a backhoe on the right and a dumpster further down on the left. Turn L at Dan's old place (MLK Blvd), go 1 block, then back down S Blount and you'll see a few more rebuilds.

@Dan Gabrielli might have more insight.

I know the area has some history (e.g. https://www.youtube.com/watch?v=HzYf7n9cU0g ) and there was a police shooting at Bragg and East earlier this year. But the changes appear to me to be at or beyond the tipping point. It might not become Oakwood or Boylan Heights, but it may be worth exploring where the action is....

Thank you guys . How is the rent to Arv in these NC areas. Is there different tax rate for investment properties? How's the rent to ARV ratio? What are growth prohections? There too many new construction. Is it a good idea to buy these new homes as rental properties ?

I have added Garner and arounding areas to my investment list.

Next I would be looking to build a team of agents and property managers. 

Cheers

Shan

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