North Carolina Small Multi-family - Where are the listings?

Question

As part of my analysis to determine target market I want to look at whats available 2-4 units in Charlotte and Raleigh/Durham. There are 3-4 listings on realtor, same ones for zillow. Loopnet has two larger multifamily properties listed. That's all!

What am I missing? Does NC trade on a different website, or perhaps not on a website at all (perhaps a handful or brokers?), or is it simply that the market is so hot nothing even gets to the point of going up online? Or perhaps 2-4 unit properties are very rare in NC..

Any insight is much appreciated!

Jason E. Smith · Answer

Hey Richard, Hope you're doing well. Your research is pointing you in the right direction. From a job growth, population growth and long term hold stand point, Charlotte and RDU areas are both good investments. They have better long term potential than most other North Carolina cities. I would consider North Carolina landlord friendly as well. So I agree both areas are good for investments. The next part I'll break into two sections. First residential: There is no special website for residential multi family properties here. Through pocket listings and relationships there could be some off market deals still taking place, but it's no secret the market is heavily seller favored and selling at premium prices. Therefor an agent would reduce their commission by selling off market at intrinsic value compared to listing it on the MLS and letting multiple offers push the price, and their commission, as high as possible. And I don't know the exact quantity of 2-4 unit properties built in those areas but I agree it does seem to be less than some other cities in the US. So a combination of seller market, fewer total properties and where we are at in the capital cycle, there is very few available options in both markets today.

Second is commercial: Yes there is a special method of finding deals in this manner. The last handful of properties I've been requested to offer on never made it on loopnet. In a particular area where you have say 50,000 residential realtors, you'll only have about 50 commercial agents. It's a relationship business and very different from residential. To find these listing you'll need to get on the brokerage mailing list. Hope that helps, feel free to message me if you have any further questions. Thank you!

Second is commercial: Yes there is a special method of finding deals in this manner.  The last handful of properties I've been requested to offer on never made it on loopnet.  In a particular area where you have say 50,000 residential realtors, you'll only have about 50 commercial agents.  It's a relationship business and very different from residential.  To find these listing you'll need to get on the brokerage mailing list.  Hope that helps, feel free to message me if you have any further questions.  Thank you!

Brian Corbett · Answer

Small multi family listings are very limited right now across NC as a whole.  I would connect with a couple of local reputable Realtors and commercial brokers in the markets you wish to pursue.  They should be able to keep you in the loop about properties that hit the market and possibly some that aren’t “listed” for sale but might be for sale by the owner outside of the MLS.

Eric Nelson · Answer

Small multis are rare in all of those cities and the markets are very hot right now. Generally, the only ones that get listed on the MLS are in bad condition.

Austin Largusa · Answer

@Richard Wallace I’m looking in the same areas and have been working with a great realtor

I can send her info. And answer any questions of what I’ve found so far as I’m a California resident looking to invest therw

Alexander Felice · Answer

The asset class has not been in demand for a while, so they don't make many new ones, if any at all.

So everything you want to buy is old and is already owned by someone. Considering where we are in the market cycle most of the limited supply for this type of property has been (largely) scooped up already.

Raul R. · Answer

Inventory of Small multis in both locations is very small.. You can reach out to local Realtors and setup small multis MLS searches but it won't be much different..

If your goal is to find small multis other markets are better suited and yes 2-4 are rare especially good quality 2-4 units..

Richard W. · Answer

@Austin Largusa that sounds great thank you!

Richard W. · Answer

@Chris Martin thanks for linking to that, great post and reassuring to see that the data stacks up to confirm the same result: 2-4 units not a good strategy for NC due to lack of properties available and generally poor cash flow for those that do exist.

I suppose I should have said: it rules out NC for me for now. Looks like a great market when I'm ready to move into commercial multi-family. However need to gain experience with small multi-family first, plus makes sense to use my 10 traditional financing bullets up first (locking in 30yr money at good rates), before moving to commercial lending (typically up to 10yr fixed I believe).

Chris Martin · Answer

See also Total Available Market - 2, 3, and 4 units for Wake county (Raleigh area) market sizes, areas, ages, etc.

Interesting that you rule out the state based on a single asset class. The 2-4 family products, at least in Wake county, historically sell at a premium over SFR. So as a cash-flow investment, I've never pursued or owned a 2-4 unit property.

Richard W. · Answer

@Alexander Felice thank you!

Sad to say I have now ruled out NC and looking at Dallas and Denver where the supply of small multi-family units is far higher

North Carolina Small Multi-family - Where are the listings?

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