Durham and Winston-Salem, NC

[Mihal Coyle]

Hello. I'm an investor residing in CA, about to go into NC in the next few weeks for a RE investment. Any thoughts, insights, guidance on the Durham and/or Winston-Salem areas? Main focus/goal is long term equity, with some cash flow along the way. Also debating - SFR or MFR. Thanks in advance!

[Chris London]

@Mihal Coyle

Winston Salem: located in the Triad is considerably less expensive than Durham, typically has better cash flow, and much lower appreciation. While it's reported that WS saw over 14% home appreciation in '21, in previous years it's been well under 10%. 

The Triad is was recently announced to land Toyota's 1st lithium battery plant in North America which is one of many dozens of companies moving to North Carolina. 

Having moved to NC myself (from CA) I think it's important to share a quote from Toyota as to why so many companies are moving here: Toyota lists seven reasons why it chose North Carolina for its first battery plant: an extensive highway system, four international airports and two seaports, onsite rail, a diverse workforce, renewable energy availability, world-renowned education system, and strong government partnership at both the state and local levels.

Winston Salem long term rental example: 1183 Addision Ave. $125K, Estimated piti payment (based on 20% down at a 4.0% int rate): $560, Estimated rent $1300, vacancy, repair, cap x, management $325, estimated cashflow $415/mo.

Durham is located in Durham County in the 'Triangle'. It's possible to still find cash flow neutral or even slightly positive homes, however, IMO the reason to buy here is simple. Huge bets/speculation on home appreciation. Durham home prices appreciated as much as 30% in '21 (depending on what you read). I've said in some of my previous posts that Durham will be Austin in 5-10 years. You can still find SFH in excellent areas in the low $300K range.

Durham long-term rental example: 5022 Silhouette Dr. $335K, Estimated piti $1600/mo, Estimated Rent $2000, vacancy, repair, cap x management $500, estimated cashflow -$100/mo. Personally, I really like South Durham starting at North Hope Valley and anything south to Southpoint. With a short drive to UNC, Duke (2 of the largest employers in the state), Raleigh and RTP you can expect multiple qualified applicants on any decent property.

The one thing to consider in the Triangle is property tax rates. You're close to 2% in Chapel Hill, Around 1.3% in Durham but well under 1% in Apex, Cary, Holly Springs and other Wake County cities. When you do the math the difference in some of these property tax rates while still far under many other cities/states in this country can add an equivalent of a monthly HOA fee to your piti payment that never goes away.

Good luck