All Forum Posts by: Chad Gray

So a couple of things regarding your post. For starters, I've lived in Raleigh my whole life and absolutely love it here. If your goal is to buy something here to rent only until the time is right for you to move here yourself, there's nothing wrong with that at all. A 3000 sqft. house would certainly have a tenant pool in this area, but it will be considerably smaller compared to something 1750-2250 sqft. You'll find a renter due to the demand and limited supply here but it may just take a little longer to find that tenant, which means that will be longer that you have to pay the monthly PITI.

Also, are you positive that the expected rental income for a house that price in this area will be enough to cover the PITI payments and property management expenses, let alone have enough left over for CAPEX and vacancies? Your property manager will probably take 8-10% of your monthly rental income. I would be very sure about your numbers before buying something.

Lastly, the market has cooled considerably since May/June. Homes are sitting longer and oftenly selling below list price with fewer offers and lower DD/EMD. I'm not saying the market is going to tank, but it is balancing out to where buyers have more leverage than they did a few months ago. Inflation numbers still aren't great and the FED will likely raise interest rates another .75-1% so I don't see the current market trend immediately changing. The long term growth for Raleigh is fantastic if this is where you're settled on moving to, but personally I think you will be okay if you're patient and buy smartly, even if it takes a few months, instead of buying a house just for the sake of buying something because you can.

You shouldn't sign a contract with a 5K EMD if you don't have it or at least know where you can source it.

I'm going to echo what a lot of others have said and recommend looking in some of your local markets at least for the first property. Maybe the price points in Miami don't make sense, but I'm sure you can find something that does in some of the tertiary markets within an hour drive of Miami. Also start networking with other investors and wholesalers, if nothing on market makes sense, start looking off market.

I live in Raleigh and I can tell you houses for 200-250K in A-B neighborhoods pretty much don't exist. Your best bet for finding something in this price range would be to source it yourself off market in C+ neighborhoods.

@Drew Sygit

Fantastic post, especially the tenant proofing portion.

Really in zip code in Raleigh is fine for rehabbing due to the demand, assuming you can find a good deal. As far as buy and hold, 27610, 27604, and 27603 will for the most part have your lowest price points. Cash flow will be hard to come by regardless but those three zip codes give you the best chance in my opinion.

@Tim Wolak Question for you and sorry if I already missed it, when you say cashflow negative, are you referring to just PITI - rent, or are you also including budgeting for vacancies, capex, property management etc.? There's really no right answer to this question, it all depends on your current situation and investing goals. In my personal opinion, if you're looking for your first property I would stay away from anything cash flow negative, especially if the rent doesn't even cover the PITI payments. Pat raised very good points in both scenarios but in the end it comes down to your risk tolerance. Something that is cash flow positive 350/month will inherently be less riskier to you personally than something that is cash flow negative (200)/month. I would recommend going for cash flow at least on your first property or two and then saving the appreciation plays once you have more experience and a larger safety net with the cash flowing properties. But again, there's opinions on all sides of the spectrum on this topic, just filter through the pros and cons of both and decide what works best for you at this time.

Quote from @Patti Robertson:

I hate to be a naysayer, but this is a terrible idea.  For one, wholesaling is just another job.  You won't build wealth wholesaling, and wholesaling is by far the hardest real estate strategy right now.  Without a job you will never get financing to be able to hold rentals, which is how you will build wealth. IMO it is best to keep the job until you have enough tax return income to qualify for loans from your real estate venture.

With all due respect, it's a good thing she didn't take your advice. Her post is four years old and if you scroll down and see where she's at now, it worked out quite well for her. Wholesaling is a great strategy for this with the knowledge and work ethic to make it work. At the end of the day nothing can beat sourcing your own off market deals.

@Patrick Knapp That's awesome. I'm pretty familiar with the Oakwood area, I have one myself down Oakwood Ave. in front of the cemetery. Don't see many duplexes appraising for 940K around there you must have found yourself a good one.

I would be extremely cautious evaluating deals based on the STR income. How exactly did you come up with an ARV of 900K+?

Hey Felix,

Raleigh is a great area to live and invest in but you're right, cash flow is hard to come by. A house down the street from me sold for 450K to a Japanese hedge fund only to be rented out for 2K. Not the kind of return that I look for but I'm also not a hedge fund. Check out some of the tertiary markets like Garner, Knightdale, Zebulon, Wendell, Apex, Wake Forest, and Roolesville. It should be a little easier to find better cash flowing properties here that will still capitalize on appreciation, albeit probably not at the same rate as Raleigh. Mebane is also becoming a popular place to invest. Feel free to shoot me a message if you want.