All Forum Posts by: Pat Lulewicz

@Chris Martin these are some good points, Chris. I appreciate the stats/graphs behind it as well.

@Roy Gottesdiener "ok" neighborhood is going to be subject and biased. I've lived anywhere from a duplex in E Raleigh to new builds in Morrisville and a couple of stops in between, so my personal opinion and experiences will be different from yours, and any other person's. In addition, our underwriting assumptions and lending scenarios will effect the ultimate "cash flow" number. With that being said

NE Raleigh is a great place with high demand. Garner and Clayton have nice cash flows. N Durham has plenty of inventory. I bring up these locations because I'd argue you can reach cash flow buying "retail" properties that are rent-ready from Day 1, but also provide opportunities for value-add which is where my equity positions have come from. I'm not buying every property that pops up; only need a few triples or home runs to make a good portfolio/career out of it.

Very similar to you cashing out of your $130k properties, finding value-add deals in Raleigh/Durham and having less than 20%-25% in after the refi, plus still cash-flowing in Y1. Rent rates in these expensive markets have been flying up recently so we're able to raise rents higher (net $, probably similar as a %), which makes the ROI look insane. Add the appreciation or, at the very least, market demands for reasonably priced homes in Raleigh/Durham. Plus big cities have great tourism which allows (certain) homes to be used as STRs, thereby exploding the ROI.

What kind of lender is this? Are you getting a conventional loan or a hard money loan? I've seen HML's switch their criteria and even their rates mid due-diligence if the time between pre-approval and contract overlapped with Fed rate hikes or company-wide underwriting changes.

With that being said, you just have to re-underwrite with the new numbers and make sure the deal makes sense to risk the extra EMD. I'd also look into "worst-case-scenario" lenders like a bridge loan. For example, I know a few bridge lenders that will lend at 70% of ARV (so a 30% down payment if you're buying a turn key property) at 8.5%-12.0% and 1-2pts. If you could stomach that type of interest rate/points if your "new"/second lender doesn't come through, then you have fall back options so there's some protection of your EMD.

Also, whenever you're asking for extensions, I ALWAYS ask for a period of time longer than what I think I reasonably need just to give some buffer. If your new lender(s) ends up taking 50 days, you won't have to go back and ask for ANOTHER extension which you may not get.

Can you provide some reasons, or other sources or support, for why you don't think the Triangle/Raleigh or Charlotte are great places to invest?

Welcome John - investor and realtor in the Triangle here. This is a great place to meet a few people and take the conversations off-line. I will add that @Shane Lafleur has a monthly meet-up at the end of the month at rotating locations. Also Ryan Casady does a meet-up monthly for some great networking opportunities. Looking forward to meeting in person and talking shop.

Appreciate the insight and prudence with both of your posts @John Underwood and @Troy Gandee. I've done the prelim 50 hours of research into both STR requirements and general market insights, and it seems like N Charleston, Hanahan and Mount Pleasant will work for OOS investors that aren't looking to have an SC driver's license. Would either of you happen to know any investors or PMs who operate or manage STRs in the greater Charleston market?

Experienced investor in LTRs, and relatively new to STRs with a purchase in NC last year that has done exceptionally well. Love the model and have been looking at STR markets, other than my current one, to have options given the competition and lack of inventory. Plus would ideally love to have STRs in multiple areas that I enjoy visiting or could provide a vacation destination for friends, family, co-workers, employees, etc.

Charleston, SC has been creeping up regularly in both preference and analytically; I have been dissecting the market from afar and will be planning a (business) trip to feel-out pockets in early 2023. Does anybody own or manage STRs in Charleston that could provide some empirical evidence, preferably analytically based, on their experiences? Happy to swap data from my STR in NC if you're looking to diversify markets and wanted some info. PM preferred. Regular forum responder but first-time forum asker, so thank y'all in advance for taking the time.

There are some HMLs who will lend to you base on appraised value, not purchase price, so you may be able to get under the 20% DP amount, but you'll have to get some killer deals and hunt down a lot of lenders. Looking in secondary markets (Greensboro, Winston, Fayetteville) and tertiary markets (Wilmington, High Point, Burlington MSA) in NC are great cash flow havens and have done very well on the appreciation front lately as well, as people move from primary markets to secondary/tertiary markets to save money.

I wouldn't discount the Triangle or Raleigh for cash flow, but of course that all depends on what your desired returns are. NE and SE Raleigh has very reasonable price points and the rents are high and still rising. I speak to this often but Y2 cash flow will almost always be higher than Y1 cash flow given rent increases, so you can't just play on a 12 month horizon. 

Everyone said Raleigh doesn't cash flow well last year but we bought my client a $240K SFH, we put a $1,600/m tenant in, and it was throwing off $200/m (on paper) for ~4.0% return. I'll also add that they had $3K of principal paydown and $7k of depreciation which completely ate up any tax they would have had to pay on the rental income. Fast forward to 2022, rent went up to $1,800/m and it'll be spitting off $400/m (on paper, but more like $460/m w/o vacancy period) for ~7.6% return. House has also appreciated by at least 10%. Let's not forget another $3k of principal paydown and another $7k of depreciation to offset the entire (higher) cash flow. Without considering the extra tax effects on his W2 income (I'm not a CPA [anymore] and don't want to speak to specific situations), that's almost $14k of tangible net worth over 2 years in the way of cash flow and equity paydown and another $25k of appreciation on the home.

 Based on those facts, that information is fantastic and leads me to the same conclusion that price vs commute is a trade-off that many folks living between the 2 metros are willing to make. It's a very positive statistic for any investor concerned about the city's direct economics to realize that people will commute 30-60 minutes to take advantage of great price points (and more land in many cases). Great finds @Jared Trindade