We're located in Northern Virginia. For the past 8 year's we've done very well flipping homes in the D.C. Area. We have cash and we want to put it into cash flowing assets in other markets. The Norfolk area is one that we've identified as a target market.
I have a portfolio of properties in a coastal county in NC so I know that flood zones and the associated insurance can be a cash flow killer. Does anyone have anyone have any other suggestions on areas to focus on or stay away from?
Hi Justin! Welcome to the Hampton Roads RE market. I live in Alexandria, VA, but invest primarily in Hampton Roads.
I work with Liz Moore & Associates for my multi-fam RE deals. My specific realtor is Valarie Miller and she has experience dealing with investors for SF, multi-families, and commercial deals.
Doing flood zone due diligence is a good flag for this area. If you're planning to do any buy and hold deals, the only other thing I'd flag is that the quality of tenants can range greatly from neighborhood to neighborhood. Having a good property manager will be key if that's part of your strategy.
Norfolk generally is a great area with a lot of potential, but I'd be wary of deals on the MLS. If you watch the new listing they are either overpriced and end up being reduced over time or they stay on the market for long periods of time because of significant issues. Ghent is a great area as well as the area around downtown Norfolk (due to signiganct city investments). It's a great time to buy in Norfolk if you can find the right deals (usually off-market).
Best of luck to you and your team!
Hi Justin. I landlord and PM in all of our cities. One other tip is to be sure all of your offers are contingent on a moisture termite inspection, even if they are as/is. Ask me how I know. ;)
Also in Norfolk specifically, if you contract a duplex that is vacant, confirm current zoning to see if it is conforming or non-conforming. Norfolk is trying to reduce density and many of the old duplexes are non-conforming. That's not a problem if the property has been occupied and operating as a duplex in the last two years, but once they are vacant for two years or entered into use as a single family home for at least two years, the grandfather expires and you have to convert it to a single family. Fortunately I have never personally made this mistake and a friend who did shared his story with me so I was able to learn from his mistake. I've known several other investors who purchased duplexes though, intending to use them as duplexes, only to get a rude awakening from the city.
Also, be aware of historic zones. While they do offer historic tax credits, they do limit what you can do and greatly lengthen the time it takes to get any renovations made.
@Ayana Miller thanks for the information. How often do you travel down to Norfolk? Are you buying multi family? What's your strategy.
@Patti Robertson thanks for responding. Great info! I never mess with non conforming multi families. I bought a duplex once that was a converted rambler. It actually turned out pretty good but I certainly saw the potential problems.
I plan to make a couple trips down there to get to know the area.
Does the future look bright for Norfolk in your opinion?
I travel pretty regularly to Norfolk, @Justin Pierce . It's where my family lives and where I grew up, so I'm most comfortable investing there because I understand the market and already have connections when I need to respond to something on my properties. I also plan to move back to Hampton Roads when I "retire," but for now the D.C. market provides the w-2 job that allows me to invest aggressively.
My strategy (along with my husband, @RC Miller) is buy and hold with multi-families. We also own a restaurant in Norfolk (along Granby and College Park).
I completely agree with @Patti Robertson 's suggestions too, especially regarding the moisture termite inspection. We make all our offers contingent on a home inspection and a moisture termite report.
IMHO Norfolk is the best city to invest in rentals, although I own in 6 of our 7 cities. The city is well run and rents are strong. Best of all, they have resources available to help tenants prevent homelessness, which allows low income landlords to reduce vacancies.
@Armando Melchor Hello. How's the market down in VA Beach?
@Justin Pierce - The ones I'm talking about were actually originally built to be duplexes, but zoning has changed over the years. Unless you check zoning you wouldn't be aware there is an issue because it's not the building that was converted, but the zoning allowance.
Hi, Justin. As my wife, @Ayana Miller , said above, we invest in Hampton Roads (thus far primarily in Hampton, with an interest in targeting Norfolk in the future), where we are from. We are in Hampton Roads about two weekends a month between family, real estate and business interests there.
The market is very investor friendly as many are looking to rent for a variety of reasons (military, students, recent relocation, etc.). The future looks bright in Norfolk, specifically, with a number of businesses (ADP, IKEA, etc.) coming online this year and next. The city is also making strides to grow its already attractive downtown area with the revitalized Waterside opening earlier this year. With two universities, in addition to a thriving community college network, there are any number of attractive audiences to target when thinking about buy-and-hold strategies. If you would be interested, I would love to connect over coffee in the near future.
Hello all! Glad I came across this thread, I am looking to purchase my first investment property by December, in Norfolk.
@Ayana Miller , When you say "off-market," are you referring to driving around? Do you recommend how a newbie, like me, would find off market deals? I would be interested in multifamily, live in one side and rent the other for now...
Driving (or walking) around neighborhoods is definitely one way to find "off-market" deals. I mean basically anything that isn't on the MLS.
I think engaging with the locals on the BP forums is a great start! I've also made it a habit to ask sellers that I'm working with on an existing deal if they have other properties they are thinking about selling in the future. Sometimes when someone is an investor and is off-loading properties, it's because of a major life change. Where there's one investor property for sale, there may be more on the way...
I'd also recommend going to local meet-ups. The info about the ones in Hampton Roads are around here somewhere. The ones I know of are TRIG of VA and PREIA. There are one or more members of those groups who are active on the forums and should have more information. You can also google them and the meet-up info is available publicly.
And finally, yellow letter campaigns are another tactic for potentially creating your own off-market deals. If your search for it on BP you'll find tons of info on what yellow letters are, how to use them, and the benefits they offer.
Others might have other suggestions too!
@Justin Pierce as far as the greater VB/Norfolk area goes it's good, not the best, but still able to find 2% deals at times. I want to get into out of area markets in the next year to maximize my returns! If you're in a position to do out of area deals; Dallas, Denver, Portland seem to continually top the charts among a number of other locations. What area are you focused on now?
@Armando Melchor , I don't need 2% deals. I'm pretty happy with about a 1.3-1.5% deal. I also prefer secondary markets over top performing markets. I've been doing this for over 15 years and I find that, in most cases, if a market is top performing now you probably already missed the opportunity.
I'd be more interested in cities like Indianapolis, Saint Louis, and Kansas City. Probably not going to get the same appreciation that you may get in Denver but I think businesses are going to start moving to secondary markets as technology makes their operations more mobile and they realize it's cheaper to do business in smaller markets.
@Justin Pierce that makes sense, I am most favoring Austin, TX right now with an estimated population growth of roughly 11% by 2020 among other factors. It will take another evaluation when I statt branching out in a year or so. How are you acquiring 1.5% deals in those cities already?
@Renard Miller thanks for the input. I like Hampton VA for the simple fact that you don't have to cross the bridge, or I guess it's a tunnel bridge. That saves a lot of commute time especially during beach season. There are also some very nice looking little communities in there. I just don't know about the tenant base in Hampton. I assume there's more employment in Norfolk and that the potential tenants there would probably not want to cross the bridge either.
When I'm looking at the MLS prices in Norfolk and Portsmouth I like what I see. There's a wide gap between fixer upper and remodeled homes. That is a good indication of opportunity. But, you have to know the market to be sure. You also need a team.
So, I'm in the early stages right. So far I like what I see but I'm trying to do my homework.
@Armando Melchor , I'm not buying in those cities. I just used them as counter examples of more preferable smaller markets. One market that I am concentrating on is very small, Jacksonville NC. It's also a military town. I just put a town home under contract for $45,000 it needs a little electrical work and carpet and paint. I expect to be into the home for less than $55,000 after fix up and closing costs. It will rent for $750-$800 per month. That hits about a 1.4-1.5% rule. It will be worth $80-90k when the dust settles.
I found that deal by just networking with realtors. It was a VA foreclosure. I am also running craigslist adds to connect with wholesalers and doing some targeted direct mailing.
I have 3 other rentals in the town. One I've owned for 15 years. They have been very good properties.
@Ayana Miller What restaurant do you all own? I was born and raised in VB and went to ODU, so I am down there quite frequently. I'd love to check it out!
@Justin Pierce There is definitely more employment in Norfolk and people only tend to cross the bridge recreationally or if their job is particularly high paying. For the jobs that are more common throughout the area, people tend to live and work on at least the same side of the water.
@Robert Rodriguez we have not gone down the Section 8 road thus far, so I will let someone else speak to that, but that is something we would be open to exploring in the future. Thus far, we have inherited tenants at each property, so we may explore more options once we have vacancies and can make the repairs/changes necessary for Section 8 compliance.
Hi @Amy H. ! Thanks for asking. We own the Bonchon on the corner of College and Granby in Downtown Norfolk. Definitely check it out the next time you are in the area!
@Justin Pierce Welcome to HR area. For your flood issues, I personally work directly with my RE agent and avoid any areas in or extremely close to a flood zone. He's given me enough access that I can check properties daily in the MLS and check off any properties in a flood zone. I've been pretty successful in the Portsmouth area but you have to buy it correctly. Just recently closed on a short sale for $140K (ARV $210-$215K) and got it rented in 12 days.
As @Patti Robertson mentioned, Norfolk is really good for rental property...but I'd stay away from the historical districts...too much of pain in the know what with renovations.
@Robert Rodriguez - Yes, I have about 100 section 8 leases and section 8 in all seven of our cities. In my opinion, it's the only way to go in very low income areas. There's no waiting list to get your house in section 8 per se. The tenant has the voucher and the tenant has to choose your house. From the time you accept them as a tenant, best case scenario, you can move them in in 20 days, assuming you pass inspection the first time. That's true in all of our cities except for Portsmouth and Chesapeake. Chesapeake is just slower because it's a smaller operation with fewer people. Portsmouth is slower because they require a two step inspection. You have to get a city inspection whether you section 8 or not and then if its section 8 you have to get a second inspection. The rest of our cities accept the section 8 inspection and lieu of the city inspection.
I wrote a blog about section 8 that will answer most of your questions. I'll put the link here.