Having trouble getting started
Hello, my name is Dan. I currently own my own home outside Charlotte, NC. I am looking to purchase my first rental property. I have cash to do it and have an approval for a mortgage. I have read a few books and have some basic knowledge but no real work experience. My issue that I am having is that I am having difficulty finding a property that would be profitable. Every property I look at and analyze in a proforma comes out looking like a bad deal. Is this typical? Is it normally difficult to identify a good deal or am I just doing something wrong? Could it just be the current market environment and now is just not a good time to buy? Any advice would be helpful, thanks!
Quote from @Daniel Gilbert:
Hello, my name is Dan. I currently own my own home outside Charlotte, NC. I am looking to purchase my first rental property. I have cash to do it and have an approval for a mortgage. I have read a few books and have some basic knowledge but no real work experience. My issue that I am having is that I am having difficulty finding a property that would be profitable. Every property I look at and analyze in a proforma comes out looking like a bad deal. Is this typical? Is it normally difficult to identify a good deal or am I just doing something wrong? Could it just be the current market environment and now is just not a good time to buy? Any advice would be helpful, thanks!
Hey Daniel, I Live in Charlotte as well. It’s definitely difficult to make the numbers work if your strictly looking on market. Not impossible but tough. What is your goal that your working to achieve? ( Cash Flow, Appreciation over long term, a place to park some money?). I know in my zip code homes are averaging 475k with rents around $2,200/ month. Using the property as a short term rental or housing for Nurses may be another avenue. I’d love to chat more and help you however I can. I am an agent as well so feel free to shoot me a message any time!
Hey Daniel. Right now on market properties are tough to make work. I'd recommend two different routes: 1 off market or 2 going into a new market where the numbers still work. Happy to discuss with you about how I got started.
Hi @Daniel Gilbert, I am from Concord. Nice to see someone from the area!
For the Charlotte market, most will not cashflow unless you are buying a cheap home (<300k) and are doing some sort of value-add.
A lot of institutional investors are buying up properties here. Their goal is not cashflow.
They are buying these properties so they can capture appreciation and write off taxes.
It is a wealth management tool, not an income tool.
You can look at cheaper properties, get creative, change strategies, or find a different market.
Hope this helps! Let me know if I can be of any assistance.
Hey Daniel,
Are you solely looking in Charlotte or are you looking in surrounding areas as well? I'd love to connect and hear a little more about your process as well as what exactly it is you're looking for.
Thank you for all the replies and advice. I think I may look at another market, possibly Myrtle beach area. Prices seem to be way more reasonable there and the demand for STRs is high. I know someone who has multiple properties there and he says they are profitable. I’m looking for some cash flow and tax benefits mostly. First propety I’m thinking 250-300k range but I plan on doing multiple and buying a more expensive property down the line.
Just PM'd you! I had a lot of trial and error on my first couple of units (also in NC in the 250k-350k range) but now I sorted out the issues I was facing and was able to narrow my criteria down to what worked for me.
@Daniel Gilbert stay out of SC for the investor tax and Airbnb's are facing a downturn right now too. My advice would to be to hold for time being and let the dust settle with the volatility, reassess in a month or so. I'm also an investor in Matthews and own a STR, happy to connect and share my two cents
@Steven Moore makes a great point. Getting clear about what your goal is will help you remove some of the barriers to taking that first step. It sounds like you’re ready to jump in the pool, you’re just not sure where to swim once you’re in. Good luck, I’m excited for you.
@Daniel Gilbert
I am an agent in Myrtle Beach. I'd be happy to discuss the market here with you and see if we can find a property that works for you.
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Real Estate Agent
- King One Properties International
@Colleen Goldstein ok this is useful information I haven't heard yet. I do know someone who owns a few properties in Myrtle Beach and says they are profitable. He has condos and condotels. Maybe holding is best for now. Im just a bit confused because when I crunch the numbers on properties around the Charlotte area I can clearly see they won't cash flow but the numbers in Myrtle Beach look way better so there must be something im missing.
@Daniel Gilbert - Myrtle Beach is still a great market, but the market is changing quickly down here. What is tripping investors up right now is that the past ~3 years here have been incredible and now prices are to the point where many investors are questioning the longevity of the huge demand. Myrtle Beach is great fundamentally for a host of reasons including 20M+ visitors per year, a ton of long-term residential growth, and a wide range of properties to choose from (condos, condotels, SFH) but you need to make sure you are looking in the right condo complexes, right zoning and investing into the property itself to stand out from the crowd.
As many have pointed out, with the way the market is right now, it's tough to find on-market deals for long term rentals right now. It's not impossible, but definitely hard to do. I'm in the Topsail area between Jacksonville and Wilmington, NC. The area around Jacksonville, NC, and where I'm located in Sneads Ferry, are growing areas with more affordable prices than what I expect you're probably dealing with in Charlotte. It's still very competitive, but you'd have a better chance of finding something in the $250-300k range in Jacksonville, NC.
Topsail is great for short term rentals if you decide that's the way you want to go. The price range is going to be a little higher on Topsail but it's a friendly area to STRs.
@Daniel Gilbert If you are finding that the numbers don't work then maybe you can drive by the property and check it out to see where you can add value. If it is possible, you could add value to a property and leverage it i.e. heloc, cash-out refi or sell the property and 1031 it.
In this market you need to be able to add value in some way. @Alexander Knowles is giving you good advice. You need to be honest with where you can add value and buy properties that fit. For example, can you add value with construction that far away? Or, do you need to find something where you can add value with better management? You usually need to bring some value add to the table to make deals work in this market.
@Daniel Gilbert You’re not alone! This happens to a lot of people. Thankfully when I started investing I had my husband to ping pong ideas off of. Now we work with a lot of first time investors and I see a lot of them go through this. You need to find a team you can trust and just start placing offers. Make sure you’re using current rents as prices and rents have both gone up in most markets. It may take 15 offers to get one good one, but it’s worth it! Best of luck :)
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Stop reading books, stop watching podcasts and submerge yourself in real estate. Real life will teach you 10x more than any book will
I am also in the Charlotte area and go between Denver and Charlotte which are both a bit harder markets for cash flow with what is available on the MLS. Some really good points above about off market deals or maybe some other markets. There are a lot of other markets out there that might be better for your goals as well. Excited to watch your success.
Hi @Daniel Gilbert,
If you're looking for properties in the Topsail area, I have a good friend that invests there and I can make an introduction.