Durham and Winston-Salem, NC
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!
Hello Mihal. I have not purchased an investment property yet, but I live in Durham. My wife and I purchased a SFH as our primary residence in the Southpoint/Woodcroft area of Durham 6.5 years ago. That area has been very hot for a few years now with many homes getting multiple offers even before the start of the pandemic, which is really driving up long term equity. Since we purchased our SFH (which is about 1800 SF), the home price has almost doubled. There are also a lot of young professionals living/renting in the area because it is an easy commute to Chapel Hill, downtown Durham, and RTP. It also feels relatively safe, which I know can be an issue in other areas of Durham.
I live in Charlotte and have been analyzing Winston-Salem, Durham, Greensboro, and Raleigh for the past year. Great rental area! I have two properties in Charlotte. My goal is the same as yours. I would love to discuss it with you. I can also assist you with closing. I look forward to speaking with you.
Mihal,
Robert had some good points about Durham that I'd like to echo. Relative to other cities in the Triangle, Durham has long been undervalued and is starting to catch up. The average home price is lower than the national average and lower than the Raleigh, Chapel Hill and Wake County average, making it a prime opportunity to see long term appreciation. We struggle to see hefty cash flow because of this demand's effect on prices, but it can be achieved with multiple units.
I love the long term play in Durham - buy in areas that people love to be in and hold. Let rents rise yearly, let the property appreciate with all the good things the area has going for it (biotech, tech, great universities, the list goes on...) and wake up in 5 years to six digits of appreciation.
As Robert said, the market is extremely competitive right now. I feel this everyday as a realtor - we see multiple offers on coming soon properties that are considered active properties on our MLS but haven't opened up showings yet (sight unseen offers, all you see is the pictures and location) and 30 offers on an underpriced properties with upside that do hit the market and go active.
If you're looking for someone that knows Durham not only by each street but down to the each street's block level let me know, I'm happy to help.
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
@Robert McNeill Thank you so much. Very helpful. May I ask, do you anticipate the area to continue to rise, or do you think it's going to plateau now? From what I've studied, it seems there is more of a rise still to come? Also, sounds like the area is solid for renting too? Meaning, shouldn't be too hard to find reliable renters. Would you say that's correct. THANKS!!
@Mitchell Coles Thank you. Your analysis shows WS as a good rental and long term equity area? I'd love to connect, I'll reach out privately. I do have an agent, but open to any info.
@Chris London Great info, thanks!! I've seen a few of your other posts. You seem to know the areas well, and the details that come with it. What is your main involvement, prop management?
@Kenneth Jackson Thank you, Kenneth. I appreciate that helpful information. I've hear about the multiple offers, and I'd love to hear more about what strategies you've seen to be beneficial to buyers. I have an agent, however am open to conversation. I'll get in touch. Thanks!!
Hi Mihal,
Winston Salem has been a good opportunity, particularly with Raleigh becoming more and more competitive. Growing demos like jobs, income and rent show positive signs and QOZ investment has come into the area showing development and growth potential. When touring a prospective property some good questions can be; who lives here, why do they choose to live, what has the renovation scope been, what are the most recurring fixes and issues, what was the covid effect on the property. Hope these help and best of luck as you get thing started.
@Cameron Braig Thank you for those great questions! Appreciate that. Have you invested in NC or not yet?
@Mihal Coyle, Of course I can't know for certain, but I also expect home prices to continue to rise. At least from what I am seeing, the Raleigh/Durham area will keep bringing in more jobs and therefore more people. There also seems to be a limited supply of entry-level SFH, so I expect prices will continue to increase. I think there is a strong, reliable rental base for that area from the limited amount that I have seen.
@Robert McNeill Thank you, Robert. That's good to know. It seems to be what's happening there ... And it helps to hear from others that that appears to be.