All Forum Posts by: Chad Gray

It's very unlikely that you will find a mfh in the Raleigh area where the numbers do work for what you are looking for. Generally speaking there just aren't very many 2-4's in Raleigh. The one's that do hit the market are either priced at a point to where it won't make sense for what you are looking for, or are in C- and below neighborhoods where I personally wouldn't recommend buying. If you want to buy one to help offset some of your expenses sure that would work, but it certainly won't offset all of it, and once you move out breaking even will be difficult. Even if you look off market there is still such a lack of supply compared to demand for multifamily in the area it will be extremely difficult to find what you are looking for. I'm not saying this to rain on your parade of house hacking but this is largely the reality here. I would recommend taking V.G's advice and adjusting your strategy.

Are you referring to actually purchasing the tax lien? Not all states sell tax liens including North Carolina, however South Carolina does so you could start there. 

If this bill is strictly about wholesalers then it should target wholesaling specifically, but it doesn't. There's plenty of rules and disclosures they could require when doing off market transactions. Most of it which I would support, but that's not what they did here. The bill is a joke along with the 30 day day right to cancel clause and the sellers right to retain all earnest money even if they cancel without cause. 

It's a pretty ridiculous bill in my opinion. The bill has one goal and that is to force as many investors as possible to become licensed agents and pay dues. No surprise that the person who introduced the bill is a realtor and likely receives a good bit of funding from the NAR.

It's not about homeowner protection and it's not about wholesaling, it's simply the NAR lobbying the elected politicians so they can receive more membership dues. If it were about wholesaling then the bill would address that specifically instead of including "and related activities" which is any transaction where the buyer is dealing directly with the seller. It's also odd how they specifically excluded if the transaction is to be used for the buyer's personal residence. Whether I am buying to live in it myself or to rent it out, the transaction is the exact same. The intent may be different but not the transaction, so why would one be excluded and not the other?

The 30 day seller right to cancel while also retaining all earnest money is also laughable. In what world does this make sense. I wonder if this will also apply to standard on market transactions.

A lot of good replies here so far, however I don't think there is necessarily a "smartest" option as a lot of it is contingent on your current goals and what you're looking to get out of the property. One thing that hasn't been pointed out is that the property has to be your primary residence for 2 out of the previous 5 years prior to selling in order to avoid capital gains. So, if you did turn it into a rental, if you were to sell after the end of year 3, you would now owe capital gains on the profit of the sale. (I'm not a CPA this is not financial advice). If you don't need the equity out of it at the moment, converting into a rental for cash flow and appreciation wouldn't be a bad idea, however I would be cognizant of the potential tax implications. 

I wouldn't do it. I invest and live in Raleigh as well, it's a competitive market but there are plenty of deals to be had, this does not sound like a deal at all. A few month's of vacancies, capex or tenant repairs and your wife's commission is wiped out. 

Investment Info:

Office Space commercial investment investment.

Purchase price: $285,000
Cash invested: $74,750

Purchased two office condos in North Raleigh to utilize as a furnished shared office space. There are 7 individual offices within the two units that are rented out. Tenants can rent each individual office on a daily or weekly basis. The units were purchased off market direct to seller in which we immediately did a full interior rehab after closing. My wife currently uses one of the offices 3 days a week for her private practice while we rent out the remaining offices.

What made you interested in investing in this type of deal?

My wife was previously renting a similar type of unit for her private practice. Where she was renting was not exceptionally nice but appeared to have quite a bit of demand from other's with private practices. From my perspective, there is a discrepancy between the lack of supply for this time of furnished unit and the amount of local demand.

How did you find this deal and how did you negotiate it?

Purchased off market direct to seller.

How did you finance this deal?

Standard commercial loan from a local bank. We were able to secure owner occupied terms which gave us better financing options.

How did you add value to the deal?

We did a full interior renovation as well as replace the hot water heater and HVAC. Following the completion of renovations we have about 60K in forced equity.

What was the outcome?

So far it is going great and am looking to purchase additional similar spaces in the area.

Investment Info:

Office Space commercial investment investment.

Purchase price: $285,000
Cash invested: $74,750

Purchased two office condos in North Raleigh to utilize as a furnished shared office space. There are 7 individual offices within the two units that are rented out. Tenants can rent each individual office on a daily or weekly basis. The units were purchased off market direct to seller in which we immediately did a full interior rehab after closing. My wife currently uses one of the offices 3 days a week for her private practice while we rent out the remaining offices. Currently it nets $1600/ month with additional upside. At current rates, if all week days are rented, it will net aprox. $2,550 per month, with the potential to reach $3,700 if it is fully rented on the weekends as well. At the moment most tenants are not interested in renting on the weekends which is understandable. TH=his has been a great learning experience and are currently looking to purchase similar investments in the Raleigh / Durham area.

What made you interested in investing in this type of deal?

My wife was previously renting a similar type of unit for her private practice. Where she was renting was not exceptionally nice but appeared to have quite a bit of demand from other's with private practices. From my perspective, there is a discrepancy between the lack of supply for this time of furnished unit and the amount of local demand.

How did you find this deal and how did you negotiate it?

Purchased off market direct to seller.

How did you finance this deal?

Standard commercial loan from a local bank. We were able to secure owner occupied terms which gave us better financing options.

How did you add value to the deal?

We did a full interior renovation as well as replace the hot water heater and HVAC. Following the completion of renovations we have about 60K in forced equity.

What was the outcome?

So far it is going great and am looking to purchase additional similar spaces in the area.

Hey Rafael,

Looks like you've received some good responses here. A couple quick points to some of the questions you raised.

- Don't pay cash, leverage. That's the largest benefit of real estate. Personally, I like to target 30% equity retention in each deal.

- Section 8 income isn't guaranteed. There are cases of local governments delaying payment due to budget constraints. If they do delay payment by weeks / months, which has happened with horribly mismanaged localities, what recourse will you have? I don't invest in section 8 housing and also have no desire to so maybe I am biased.

- I live in Raleigh, 10-50 unit complexes will be hard to come by unless you're okay paying a premium. I would check some of the sub markets 15-40 minutes from Raleigh city center that still benefits from the Raleigh economy.

- Everyone's situation and goals are different but I would assume there are a few quality markets within an hour of where you are located in Florida that would check a lot of your boxes. I would start speaking with residential / commercial agents and property management companies close by and get a feeling if something closer by will meet your criteria.

I would look in the smaller markets in the outer band of RTP. Clayton, Zebulon, Fuquay, Pittsboro, Hillsborough etc. You can find something in Durham and parts of Raleigh, specifically zips 27610, 27603, and parts of 27604 that would meet your criteria, however generally speaking most of the inventory that would fit what you are looking for in Raleigh or Durham would likely be in neighborhoods that I personally wouldn't want to invest in, C- to D type neighborhoods.