All Forum Posts by: Pat Lulewicz

@Wendell Butler you're going to find A thru D depending on where you look, as with any city in NC. By avg price per unit, are you specifically directing this question towards multifamily? The $/unit will vary on size of the multi and your asset class. If you're referring to SFH though, you may be more interested in the $/sq ft metric.

Same goes for rents. You're seeing ~$1/sq ft. Smaller properties in good locations that have undergone a beautiful reno can get closer to $1.5/sq ft.

Narrow down the product type, criteria, and goal, and happy to help provide more specific locations and #s.

Rarely is a city a single asset/tenant class. Any of the top 10 cities in NC (as a blanket statement that I can be confident in) will have parts of town that are "A" class and others that are "D" class. These will be relative to the city itself as an A-class home in Wilson, NC (for example) will be very different than one in Raleigh. Asset class is generally associated with the age, condition, location and, if relevant, amenities (apartments). 

Tenant/neighborhood class usually goes in lock-step with assets: as an asset gets older, less love and commands lower rents, the tenant class decreases since these become for affordable). That's not to say you can't have a B- or C-class asset (less amenitized) in an A area. Cary, NC is a prime example where you can have new $800k townhome in booming DT Cary next to a beat-up, Frankenstein triplex that should probably be torn down. Usually a result of a non-involved landlord holding out for the big bucks from a developer.

Take the opposite perspective which is usually seen in highly regentrifying neighborhoods like DT Durham and S or E DT Raleigh, which would be considered a C-class area (even D-class in certain areas) that are getting A-class assets from developers.

There is plenty of A-class product and areas in Greensboro where people are as wealthy and pay as much for a home as the Raleigh A-class products/people. It's a micro-geographical and asset-specific conversation on "class" of an asset or tenant/area.

@Charles - use Harry Marsh Law, or now I believe they rebranded to 24 Hour Title? Both are great options and service the entire state of NC. Quick turns. Good prices. And most importantly they are familiar with what you are trying to do.

@Evan Langston the "wics" hurts my and the other 14 Polish people living in NC's feelings

North Carolina will great for all 3 of those points, @Tom Wang, however your strategy will effect barrier to entry. Charlotte and Raleigh are fantastic long term appreciation growth markets and will continue to see income, price and rent appreciation. It is extremely challenging, however, to see any Y1 cash flow on LTRs. MTR and STR are good strategies, but have to watch different regulation on whether a specific home can or cannot be used for those strategies.

Secondary markets like the Triad (Greenbsoro, Winston Salem and High Point) are fantastic and where I and most of my clients are currently looking for cash flow and continued growth in the market.

Other markets such as Alamance (Burlington, Mebane and Graham) and Fayetteville are solid cashflow markets.

@Kelly Secosky if you aren't going to close before the end of the month, I would recommend you request the current owner (seller) provide a 30-day notice to the tenant BEFORE March 1st. Otherwise, you'll have to wait until end of March (before April 1) to give notice and they won't be out until April 30th under that sequence. Sellers will sometimes push back on this as they don't know if you'll close and you are asking them to get rid of a paying tenant...if so, offer them some more due diligence (if that's part of the deal, or introduce non-refundable $) to compensate for the potential of lost rent if the tenant vacates and you don't close.

Realtor and Investor in Central NC area. Durham at that price point won't get you very far, and you probably don't want that SFH inventory for a long term hold. Would require significant value add and still have a little while for the upswing to go in your favor. You'll be teased in by townhomes or condos, but the HOAs usually make it prohibitive to cash flow. Plus at that size and rent price, tenants would just go to an apartment complex and get a gym/pool.

High Point, plus don't forget Greensboro and Winston-Salem (considered the Triad), is a fantastic cash flow market. The tenant base is hungry for good product, and rent growth and appreciation are tracking with the Raleighs and Charlottes of the area. We also have a very strong Housing Voucher program with all 3 cities, so you have the ability to go down the "guaranteed rent" path if you're open to it. Having family in the area would be extremely helpful on the $ side and could avoid needing a PM, saving you $60-$100/m and assisting you with the 4-5 calls you'll get during a year for maintenance or otherwise. At the very least, they would give you an unbiased opinion on a property when they walk it with your Realtor.

Let me know if I can help you in any way and provide you some examples of investment properties we've recently looked at

@Armando Montrond Wesley should rent for more than $1,600. @Chris London thoughts? Furthermore, that $1600 rent (more like 1800 in my opinion) is a LTR rent and therefore won't be your responsibility. If you go and MTR or STR it, sure $300 should do, but then your income SHOULD be much higher, thus the point of switching it over to one of those strategies. Otherwise looks right.

Keep in mind, this isn't the midwest. Raleigh/Durham is one of the fastest growing areas in the country. Cash flow is TOUGH to find here. Is you can get breakeven on a LTR with Y1 rents, you found a nice little diamond. The STR/MTR strategy and time for LTRs to rise is what gets you that cash flow. Just make sure to buy that in the right location of town.

If we're just talking "cap rate" on a SFH investment, Greensboro, High Point and Winston Salem (collectively the Triad) of North Carolina can hit your 8 cap number with the components you outlined. Furthermore, a cap rate by nature won't have an "equity buildup" (I'm assuming you're referring to principal paydown for this) component since it's an all-cash metric.

I think this question, and many like it, will miss the boat on RE investing though and the major benefits of it...all of those other investment vehicles (in their most basic form) don't allow you to get 70%-85% leverage on your invested capital. Furthermore, if you did get debt on your shares of Amazon, it won't have the ability for somebody else to pay off that leverage via rent payments. In fact, a margin call can sink you because you have no control over the underlying asset as you do with RE. Real estate also allows you to do a cash-out refinance once you have enough equity in the property to literally be given a tax-free payout as an "attaboy" for doing a good job for the communities you serve.

Finally - completely discounts the value of depreciation and what makes most/all of that income tax free (if you're leveraged). You get cash flow along the way (yes shares pay dividends but nominal) and generally won't pay much or any tax on that. Depreciation, in many cases, can also be applied against your active income. Let's not forget why everyone got mad at Trump and demanded his tax returns...

I do not invest in Birmingham, nor do I know much about it. I had previously looked at multi-family there and it seemed to pencil. With that being said, my understanding is that Birmingham will be more of a cash-flow market. As a Raleigh investor and Realtor, I can confidently say that Raleigh is not a cash flow market on Y1 rents...at least not from an LTR perspective. MTRs and STRs will get you there. If we find you a break-even LTR deal, you crushed it. We're a 2% CoC Y1 at best, but you will also enjoy the hyper-growth that has come in this market, so safe to say the Triangle is an appreciation play or patient capital as your rent rises for the next 5 years to get you to a cash flowing property.

If you want a good cash-flow market that's attainable from a price perspective and growing, take a look at Greensboro, High Point and Winston Salem (collectively the Triad). We have great deals here across any tenant class and property type.

Bonus: IF you do choose to invest in North Carolina, reach out to me about your lender downpayment situation. We have a local bank that I work with that does 15% downpayment, NO PMI investor loans between 6.375% - 6.875%