All Forum Posts by: Pat Lulewicz

Hi @Brian Fulmer - you're definitely looking at a great state to invest in! Can you provide some more context on your goals as it may help "team members" know more of what you're looking for. Asset class, price point, distress vs turn key, cash flow expectations/desires, etc. All are helpful to know what you want to accomplish and how we can help get you there!

Flying in can be a good idea to get a feel for areas, neighborhood, etc. I think it shows agent(s) that 1) you're real (fraud schemes), and 2) you're serious (we get tens/hundreds of requests from investors to help them buy rental property. 

Like most have said, cash flow in Raleigh will be tight on cash flow, if any. That's before considering capex/maint, vacancy (almost guaranteed when buying a vacant home), or any even improvements needed to get it rent ready. If you're going to buy for break-even cash flow, you at least need to buy with some equity or force the equity so that you're not buying a lose-lose.

If you like NC, look at Triad - Greensboro, Winston, High Point - or Alamance - Burlington, Mebane, Graham. I usually point my investors that direction these days for LTRs because you're still getting a great, large market but a lower price point where you can find positive cash flow.

Your HOA may cover your lawn; case by case. Sometimes they only do front. Sometimes both.

Your HOA may cover pest control, but that's something to consider.

Regular Maintenance - within the 1st year on a new build, you shouldn't pay for anything. The builder warranty should cover you but make sure you read ALL the docs thoroughly; this is the biggest advantage of buying a new build, so use it A LOT. Also, make sure that around month 9, 10 or 11, you get a THOROUGH home inspection done so the builder can repair any/all items that fall under the warranty up to that 1-year mark. Finally - make sure you register HVAC and appliances. Most HVAC systems will have a 5-year parts warranty; you need to register it to get 10 yr.

Water/Sewer/Trash/Recycling is usually under the same bill through the City. Some HOA's may cover 1 or multiple of these 4. Each neighborhood is different, especially with new builds, since they can straddle cities/counties or be unincorporated, but generally speaking you will be responsible for all of the above 4.

This staging company looks like they got you. Were they affiliated or recommended by the mastermind? Would really love to get that answer? That is robbery for a 2/1.

Mastermind seems HIGH ticket for an STR tutorial. I personally wouldn't include a mastermind in your "cash invested" or ROIsince that's just a general/high lever business expense, not an investment in any particular. This also goes for what you're grouping into OpEx...some are just overall business management so the asset looks worse because of your accounting for them.

Overall though, $6k of cash flow, $Xk of principal paydown, tax benefits, and 3% appreciation seems like a fantastic investment. People seem to forget their guests are paying down a mortgage and the taxes you're saving is real dollars...consider rerunning your calc to improve your perspective. 

Don't forget RE isn't a 3 year hold...10 years (less with other benefits from above included) is not a long period of time with a physical asset. It sounds as just like you got pulled in with a mastermind class for $10k, you see shiny objects like crypto or stocks going up and think your approach/investment is bad. You need to take a 30-50 year approach.

@Logan Carter like everyone has said, y'all need to read the lease to get your answer on what each situation's requirements are, including  the month-to-month scenario. My leases revert to month-to-month unless written notice is given that we're offering only an annual renewal option. If it reverts back to M2M, a 30 day notice is required to terminate the lease from either party to the other.

Depending on the location that you would be comfortable with or the level of renovation you're willing to take on, its getting very hard to find something like this in your price point (for turn key) or that will cash flow after renovations and occupancy.

@Jaron Walling generally speaking I would agree, but in the Triangle, there's probably less chance that he'd be successful in finding an existing multi where it would make sense. Plus location of existing multi's that are "affordable" hurts the cash flow numbers. On the flip side, having more choice in location with an existing product could be advantageous to both his personal life and the earnings potential; add in the second unit having the potential of being a STR/MTR and location becomes even more important.

The contract/permit side CAN be challenging location by location; assuming he's working with someone who knows what they're doing, Raleigh makes it easier to get permits for these larger "small scale" projects than Durham.

Assuming that you are thinking of finding/converting a basement unit: There's some opportunity in Raleigh for this type of conversion, but they are definitely far and few between, and price point will generally make it prohibitive since they are in higher priced pockets. There are many more of this type of property in Durham as older homes with basements are still price accessible.

To make it a "legal" or permitted duplex, the process is definitely cost and permit intensive, and in most cases may require you to use a GC or similarly licensed tradesman for parts of the project. Review each cities Codes before getting too far down the rabbit hole so you aren't disappointed when you're under contract or post-closing.

What are your cash flow/ROI expectations and what calculations/assumptions are you making to get there? Is it $1 per month when you subtract PITI from rent? Or is it $200/m with 10% Capex/Maint baked in?

Take a look at areas such as Burlington, Mebane and Graham (Alamance), and Greensboro, High Point and Winston-Salem (Triad). These markets are very large in NC (comparable and larger than Fayetteville) providing for great economics as well as a more diverse employment base.

Doing a renovation is not as intimidating if you have the right team that can provide you comfort with before-and-after's of other projects they've done, plus accurate $s surrounding those projects. You just have to decide if Purchase + Reno still meets your investment return goals.