All Forum Posts by: Levi Bennett

I find it astonishing that nothing in Western NC made this list. Boone/Banner Elk (Watauga County and Avery County) have literally hundreds of millions of dollars worth of new construction happening right now in a relatively rural area, making, per capita, one of the fastest growing counties in the entire United States, but didn't make the top 5 in North Carolina? Respectfully, a better name for this post seems to be "Real Estate Market in Eastern NC"

A quick google search for top tourist attractions in NC, and you find that 6 of the top 10 are either in Western NC, or Charlotte area (including #1, the Biltmore Estate, which is Asheville and has some of the fastest appreciating real estate in the entire state). While Raleigh/Durham ranks 4th fastest growing metro area in the United States, Charlotte ranks 10th, nothing to sneeze at. But what makes Western NC very interesting is the number of people that have moved to the Carolinas from up North, and brought their skis with them. This has made the High Country one of the most desirable places for vacation rentals in the entire United States with an overall market cap in vacation rentals exceeding the national average by quite a large margin due to relatively low entry prices, and very high returns and occupancy. 

I'm not an expert by any stretch of the imagination with Eastern NC, but I can say with some conviction that I serve clients that seek me out from all over the country to invest in Charlotte and Western NC and the performance of those acquisitions have been stellar to this point. There are several cities and small towns in Western NC that have emerged as hot spots for consistently high yield investments. I think the overall tide is rising in NC, and we've seen a statewide appreciation in value and yield that we all get to benefit from, but for some reason I would be fairly surprised that a town outside of Raleigh would beat the kind of outrageous returns that are commonly seen in the mountains right now. 

I think maybe people are a bit unclear by what you mean as "client"? Do you mean other hosts? I'm a full service STR consultant/broker in North Carolina (soon to be TN, FL and possibly GA) and I've been advising on STR acquisitions for 8 years. I'm happy to connect. Most of my investors do NOT want to self manage, and we're always looking for superhosts to discuss management with.

Totally depends on the loan product you used to acquire the loan, so you're first call should be to the mortgage lender who did your loan. It's all in your lending contract. Many conventional loans will allow you to do it right away, but again.. it depends on your personal situation. An experienced realtor in STRs will be able to tell you what questions to ask your lender before closing. Also, it usually makes a difference if you're renting out your entire property or just a portion of it (like a room or a guest suite), normally you can do this right away assuming that your local government allows this (municipality, county, HOA, etc..) and there are no deed restrictions prohibiting it.

Quote from @Calvin Cheong:

Quote from @Levi Bennett:

Quote from @Calvin Cheong:

Narrowed down to multi-family. Looking at Dallas, Austin, Atlanta, Nashville, Memphis, Charleston. Be interested in hearing from folks with direct experience in those markets. Would love some suggested zip codes to run some research. Hold period 5-7 years. Thanks!

 I notice you picked all southern cities with very low density (low MF inventory). Usually MF trades at very low cap rates in the South. Just curious why these cities? Was it related to MF performance specifically or overall economic performance? 

Looking in the South where I’m long term bullish on economic performance. Given pandemic, have seen a lot of my friends from CA, NY move to the South where cost of living is much better and housing is affordable. Many of these moves have been friends in the tech industry and have seen an influx of VC investments into these markets as well. Further, I’ve seen an exodus of corporations leaving CA for TX due to the more favorable tax climate and educated work force. $1mm gets you 700 sqft in Santa Monica. What I’ve seen in the South for $1mm is quite remarkable and given the right areas (I’m still discovering) could be enticing for single folks and/or families starting out where remote working is now the norm. Just my two cents and I may be wrong. 

 So you're right about all of that. The problem that most investors don't account for in the South is that density is significantly lower than other places in the country, particularly the far West, midwest and up North. This means that MF properties are VERY rare, and very competitive. If you're looking to do a 20-30 year hold, it makes more sense, but they typically don't cash flow for quite some time unless you're buying 200+ units at once. Small MF is just very competitive. I have another comment about this. Overall the market is amazing here, but it's not amazing in the MF space specifically. Is there any other strategy you're considering? 

Quote from @Calvin Cheong:

Narrowed down to multi-family. Looking at Dallas, Austin, Atlanta, Nashville, Memphis, Charleston. Be interested in hearing from folks with direct experience in those markets. Would love some suggested zip codes to run some research. Hold period 5-7 years. Thanks!

 I notice you picked all southern cities with very low density (low MF inventory). Usually MF trades at very low cap rates in the South. Just curious why these cities? Was it related to MF performance specifically or overall economic performance? 

Quote from @Marc S.:

@Garrett Crosby I've been looking at Charlotte MFs. Are you finding that you are still getting good purchase prices? I've yet to get my 1st property. I have made contact with an agent there and haven't gotten many good deals. The asking prices don't even come close to the 1% rule.

MF is not normal here, it's nothing like up north. I think a lot of investors from more dense cities assume Charlotte has a higher density but it really doesn't. Typically, MFs here trade between 3.5% - 6% cap. To compound frustrations, already very low inventory is exacerbated by people all over the country that see Charlotte on the internet as a good place to invest and think they can apply what they know about MF to Charlotte.. it doesn't work, yet (literally) 10s of thousands of new investors look here every year for the same couple of hundred MF properties. To give you more perspective, most of these owners get 1-5 offers PER DAY since 2017. You will not find a "good deal" in MF in Charlotte without enormous luck. If you want 1% rule in the Carolinas, invest in short term rentals. 

A quick update to this thread since it's relevant, I wrote a blog about STR restrictions in NC, and you can read it here!

Hey Claudia, 

I'm a seasoned broker that exclusively specializes in Short Term Rental properties. There are several ways to obtain financing, most people who are doing it for the first time do a second home mortgage to capture the lower down payment, no pre-payment penalties, and lower interest rate (compared to DSCR etc). The nice thing about DSCR loans is that they are approved irregardless of personal income. The lending option only looks at the potential for income as a ratio to the debt service. In many cases, the underwriter will approve airdna projections.

However, I will warn you that the airdna projections, especially in the mountains are notoriously inaccurate for various reasons. I have a full state-wide subscription to AirDNA and look at the full set of data to get a clear picture of where and why the algorithm is being generated and I help clients decide if it's accurate, high or low. Blue Ridge is nice, and maybe I'm bias, but North Carolina offers better acquisition prices, more inventory, higher elevation and more amenities (Biltmore Estate, skiing, Blue Ridge Parkway attractions, etc..). 

Most new investors make the mistake of thinking the location is the most important aspect to a successful STR, but in fact, it's amenities (view, hot tub, etc..), interior design, availability in a given market, and acquisition price. I suggest working with someone experienced in successfully analyzing these traits in an investment property for STR and find something that really pops. There's always a recipe for success in STR.

Quote from @Anthony Fulchi:

Quote from @Angie Castro:

There are deals here in NC. Either off-market, some new construction, or a  property that allows you to create value by doing some renovations. I really like the Seven Devils & blowing rock area. 

Same, Seven Devils and Blowing Rock are good if you can find a property at a reasonable price. We just closed on a property in Seven Devils and are starting renovations. The most wish-listed property in the US for Summer 2022 was the "Glass Treehouse" located Banner Elk (right next to Seven Devils), so definitely an area people have an eye on. 

The "glass treehouse" is in Eagles Nest, which is very much it's own eco-system and has a plethora of amenities not available to people outside of the neighborhood. There are very unique opportunities in there, as I've helped close two in this neighborhood, the numbers are pretty outrageous. However, it's not for a newbie investor. Starting price point is about $1M, but have returns deep into 6-figures very consistently depending on what you buy or build. Again, location doesn't matter as much as acquisition and return, which, when working with someone who knows what and where to look, there is almost always a recipe for success. 

@Roy Gottesdiener The surge in pricing there is due to a new casino "Two Kings Casino" that is opening fully in 2024. It is, by far, the largest casino near Charlotte or in the region, and has been drawing thousands of workers from out of town pushing rent prices, and investment opportunity very high. From, a short term rental perspective, it's also very interesting as contractors have basically rented up everything in town for the forseeable future. It's not a migration to the town from Charlotte as suggested, although statewide growth has been consistent, Kings Mountain is a bit far from the economic gravitational pull of the Charlotte metro area, and the out-pacing in pricing is due to the casino, not so much a shelter from higher prices in Charlotte.