All Forum Posts by: Pat Lulewicz

@Keith Amado Mailing address is in Raleigh, but I work and live in both Raleigh and High Point. The Triad and Triangle are only an hour away on a good day which makes them perfect complimentary markets. I've done a few flips in Charlotte too and that only puts you a 2-2.5 hour drive away. Once you find a good contractor or have enough reps in with subs, it doesn't take much time/work to get a house renovated.

Welcome Owen! You're definitely entering an extremely expensive and competitive market. I have a flip in North Raleigh at the moment, and have met a few individuals outside of BP who have tackled projects in your desired farming location. If you aren't going to be hands on and the price/competition becomes difficult to overcome, I'd highly recommend the Triad as well - Greensboro, High Point and Winston-Salem. More accessible price points, comparable % return margin, and you can draw on great contractors from the Charlotte area given the proximity. I personally do most of my investing in the Triad.

Happy to connect if you're looking for an agent to write offers on MLS properties and can also be a resource to help you manage jobs if proximity becomes an issue.

Congrats on the recent purchase, Nolan, and the upcoming one. Which NC market are you in?

Not easy to find MFH properties, at least not true MFH since there are a lot of converted SFHs into Dupl/Tri and such. With that being said, solid tenants will be a matter of screening. I've seen "great" tenants (e.i. those who pay and don't demolish the place) in literally any part of town. 

Value-add is probably the bigger question. I'm going to presume you're thinking C class that performs well. I'm a fan of NE Greensboro up O'Henry as there's more MFH builds there, and newer construction closer to 840 will help the area. The closer to downtown, the better and there's only so much buildable space left within 840.

We're talking multifamily right? Some people like to use cap rates in SFH conversations. I'm seeing 6.5 - 7.5 on appraisals/BPOs in the B and C class areas, respectively

Great snag Adriese. That's a hell of a steal right there and fantastic economics.

Like any market, this'll depend on what your criteria are. You'll always have more competition at lower price points however Cash Is King will always apply and now is no different. The market is still a viable option to find deals, and myself and many of my clients are doing just that. Absolutely agree with @Shane Wolf that you've got to be ready to pull the trigger quickly, however a good investor will pull the trigger quickly in any market conditions when they spot a good deal.

After about a month since you've listed this question, @Justin Lamb, have you locked anything up in the Triad?

Agreed with TJ on considering the potential for vacancies and repairs/maintenance now and in the future for both the primary residence and rental investment. Especially in the first 12 months after buying a property, things just always seem to need fixing; prepare for it accordingly.

To your FHA question - again to TJ's point - if you satisfy the 1-year live-in requirement, you can purchase another home after 1 year and use another low-down-payment product (though I'd recommend a conventional 5% down loan each time > FHA) and do another low-down house hack. DTI will be your biggest issue in qualifying though, granted much more lenient on DTI (usually up to 50%) than an investment loan (usually under 40%).

Last idea - give thought to downpayment assistance programs. If you're a first time homebuyer, or haven't owned for the last 3 years, most states will have programs to give you part of all of the downpayment (assuming you meet income and home purchase price limits). This would make a huge impact on ROI calc and the amount of time you have to save up.

PM for any more Qs if you have them!

John - going to assume you have accurate property tax, PMI and insurance numbers. You did not include any closing costs - any reason? Generally you'd see $5k-6k given your choice of a low DP loan, so that would drive down the CoC.

I agree with you on CapEx and Maintenance, but VERY low vacancy. For normal rental investments I use 5-8% depending on the area...it can be even higher for a house hack since you're just renting out bedrooms and potentially shared bathrooms to people. ESPECIALLY given how high of monthly rents you're expecting ($3.6k), you'd be well served to be conservative on either the rent side or the vacancy number. Caveat - no idea where this is or the spec of the home so cant help with the numbers.

Finally - don't forget to consider electricity (and gas, if applicable) as utilities that you might stomach. Generally renting by the room will include you paying for utilities and including that cost assumption in your rents. Other times, based on area and if you can find tenants who will agree to split, you may just be able to split it between tenants, however that can get tricky based on usage.

I'd get a little more conservative with closing costs and rent-vs-vacancy, and rerun. Finally - also consider running it as a stand-alone rental after you move out in the future and see what renting the whole thing out (instead of room by room) based on market rents would look like. Happy to review an update.

Sounds like a sweet deal! Agreed on certain trades - drywall is one I will forever outsource. Always worth the money.