Fayetteville multifamily market

[Samuel Bavido]

My brother is considering house hacking in Fayetteville, so I was looking causally through realtor.com, and the market looks very odd to me. There are a ton of multifamily properties for sale, and most of them at very low prices. I know that prices vary by market, but a lot of these properties would be above 1% even at the list price. I'm wondering if anyone with experience in that market might be able to shed some light on what's going on there. Is there a reason that prices are low? Have they dropped recently, or been that way for a while? Are there any expenses related to holding properties there that an outsider wouldn't think of? 

Thanks!

[Cornelius Garland]

@Samuel Bavido I lived in Fayetteville for a year (2015-2016) and that was around the time when I started investing heavily. I knew a guy at the REIA that was doing a lot of lease option deals because there just wasn't enough equity in the homes to buy at a significant discount. Regarding the multi-units (and SFRs), I think the issue is too much inventory. It is so cheap to build property in Fayetteville and everybody has a VA Loan so most of these people would prefer new construction over an existing property. Once the military personnel get transferred, they rent their houses out. This causes there to be quite a few rentals on the market and not enough tenants. The ample inventory is also causing the rents to remain low due to competition. The sellers are likely trying to sell high because they overpaid for the property and need to cover the mortgage and their walk away money. This might also explain why you're seeing properties at such a high listing price.

From my understanding of the market, the prices have been consistent and didn't dip too much even during the recession. That's what the gentleman from the REIA explained to me back in 2015. It's a market that I, personally, wouldn't invest in though. You may want to try the Raleigh-Durham area, which isn't too far away from Fayetteville and will likely have more opportunity with less risk.