Are you one of the thousands of people considering buying an investment property in North Carolina? You have undoubtedly heard that our real estate market is on fire and you want to capitalize on it. Who wouldn’t? The Research Triangle Park (RTP) area (between Raleigh and Durham) saw an almost 30% appreciation in home prices from spring 2021 to this winter.
Why is North Carolina such a hot place to buy an investment property?
Over 19 major corporations are investing millions and billions of dollars to expand to our home state. Here are just a few:
- Apple – RTP
- FujiFilm – Holly Springs
- Biogen – RTP
- Abzena – Sanford
- Invitae – Morrisville
- Syngenta – Greensboro
- Jaguar Gene Therapy – RTP
- CARsgen – Durham
- Thermo Fisher Scientific – Mebane, Greenville & Asheville
In light of this, how can you get in on investment property here?
First let’s begin with some critical questions:
- What are your investment strategies/goals?
- Do you want to hold the property long term as a positive cash flow rental?
- Do you want to hold onto it short term and resell quickly for a quick return on investment?
- Do you want to buy, renovate, rent, refinance and repeat (affectionately known as BRRR)?
- Or do you want to renovate and flip?
- Are you a cash buyer or do you have to finance the purchase?
- How liquid of a buyer are you?
- How many units do you want to purchase?
- Multi-family?
- Single Family?
- Townhouse?
- Is this your first investment property or are you a seasoned investor?
- If seasoned, then how many units do you currently own?
- Is this a 1031 exchange?
- What was your last investment purchase and why?
- Most importantly, what is your expectation and why do you want to buy here?
Determining where to invest
Hence, how you answer these questions will determine where in North Carolina we can begin to look for your investment property and what you can invest in. Some investors are only looking at the RTP area and discounting other towns that are also greatly appreciating. There are so many lucrative areas to consider! And you may be surprised to learn what is considered to be a suburb town of Raleigh, for example. Therefore, working with a seasoned Realtor that knows the area will help you navigate better.
Rental income vs appreciation
Rents in our area are expected to increase 3% this year. Many investors include a clause in their lease agreement that addresses annual rental increases. Why is this important? Perhaps you are planning to finance and your monthly payments are greater than your rental income, then you will need to know at what point you will become cash flow positive. Also keep in mind, a $300/month “loss” across 12 months is only $3,600. Let’s say your initial $500k purchase has potentially appreciated 25%, then that is a $120k increase. If you sell after only one year, then you are left with $116,400 before expenses. Not bad if you ask me.
Here are a few additional notes and resources that I feel are important:
- Having a reputable property manager can be crucial to your investment. Don’t just go for the cheapest option out there… your return could seriously suffer. I highly recommend Above All Property Management in the RTP area.
- Check out Rentometer. This website will allow you to compare rents for different areas.
- Whether you are new to investing or a seasoned veteran, the BiggerPockets website, podcast and books will be invaluable to you.
Ready to buy an investment property in North Carolina?
When you are ready to dive in, please reach out to me and I will be happy to assist you every step of the way! My investor clients will be all too happy to tell you about their journey into gaining financial freedom through real estate investing!
