Greensboro vs, Winston Salem
I am looking for rental investments in North Carolina , but since Raleigh and Charlotte seem a little overpriced, I am looking for cheaper locations that are ranked well. Did some research online and Greensboro and Winston-Salem came up as good options. My strategy is to buy and hold as long as the rent covers the costs ( mortgage, HOA, taxes etc) Would love some insights on these cities. What are the good zip codes that would attract a good tenant profile. I would appreciate any insights on 27106 zip code in WInston-Salem. It seems it is ranked well by real estate websites like niche.com and the prices seem to be in a good range. e.g. this listing below could fetch a rent of ~$1450.
Would appreciate any thoughts on both the markets and any potential issues / areas to avoid.
@Imtiaz Koujalgi That's an OK area. Directly surrounding areas can be a little sketchy (especially directly north/northeast/east of town), but that's right next to Wake Forest University, I'd mostly expect undergrad/graduate students as your main tenant draw.
I think that rent range is about right, you probably would need to do some minor aesthetic work first, mostly just paint, maybe new appliances, new outlets/light switches, etc.
27106 is generally a good zip code. 27103 is the center of the bullseye - most desirable neighborhood in town that isn't a luxury neighborhood - draws primarily medical professionals (also where I live) Most places Northwest/West/Southwest of Winston proper are solid.
Hey @Imtiaz Koujalgi you're absolutely tracking in the right direction by looking at secondary NC cities like the Triad market. Don't discount High Point and Kernersville as they are both in the re-development mix with a lot of residential and commercial activity. Overall, anything that's within the urban limits of any Triad city is a good bet right now.
Your math is correct: we have cash-flowing rentals here despite the high-interest rates. Taking your specific example though, with this being a condo, a bit outdated and competing with apartment complexes, you won't get more than $1300/m which (with a 7% int rate) will net you about $200-$240 a month without considering any repairs or capex (which is admittedly low in condos). If you don't want to self-manage and outsource this function, you're handing over $80-$100/m and probably closer to a $100 cash flow or $1200/year which is a 4%-5% ROI. Decent deal these days. But don't forget that there's no range or W/D that your tenants will expect, so you're Y1 and Y2 cash flows are out the door from the start. If your tenants stay there for 3 years (maybe students), you sock away $2,000 or so between those appliances and no repairs. Your 2016 AC is now 10 years old and either needs new coil ($2k) or just has to be replaced ($4k). Low price properties are condos are attractive but can really surprise you down the line with expense vs the price you paid.
Consider though that this home was gone over the weekend meaning you'd be competing with multiple offers - probably a few over-list and a few cash offers - so your CoC and ROI go down with a higher purchase price. Have to dig into each property specifically to really know what you're getting and make sure the back of napkin math works.
Other markets to peak into if you like up-and-comers: Hickory, Burlington/Mebane/Graham, Gastonia. And Fayetteville is an attractive price point.
This is great Pat. Thanks a lot for the detailed response. You are right that the condos can surprise you with costs and then you obviously have the HOA burden with condos that can eat into your cash flows. What I have found attractive about condos though is that they are relatively low hassle since there is not much that can break - since most of the structural upkeep is done by the HOA and apart from some small break fix or appliances, I haven't had to deal with any major repairs, and that's a big relief especially if you are managing properties remotely. Thanks for mentioning that the competition older condos can have from the newer apartment complexes. I think that's key in many markets where there is new construction. I will expand my search to other triad markets. Are there zip codes within those towns that are low-crime and decent prices?
Best zip codes in WS are 27104, 27103, 27106, 27127. The last two are especially large zip codes so you have to be a little careful and work with an agent that knows the area well.
Personally, I would center on the Ardmore area (27103) or Wake Forest University Area (27106). Ardmore is smack dab in the middle of both hospitals. We see a lot of traveling nurses, interns and residents living in that area. And of course, WFU, will bring in students (UG, Med and Law).
The suburbs of Clemmons and Lewisville are pricier but bring in executives with families due to the school district.
Hope that helps!