Rental Property Investing in North Carolina

[Jewel B.]

I'm strongly considering investing in NC as an OOS investment option (though I am still looking locally for a future househack too).

I am interested in cash flow and do not have a crazy budget to buy high end appreciation focused properties in boujee areas :)

I am most interested in small MFHs (2-4 units), though I am open to SFHs in certain (niche) cases.

What are the best reasonably-priced cashflow-friendly areas (cities, towns, or zip codes) in NC for...

1. Traditional MFH LTRs

2. MTRs (hospitals)

3. STRs (tourism, whether from out of state residents or locals)

4. Section 8

5. Student housing (universities)

While I understand I can look up a (really long!) list of schools and hospitals and attractions in NC, an insider scoop to narrow things down would be extremely helpful.

I'm also open to hybrid situations within a property such as (1) MTRs in cooler months (coincidentally sick season) and STRs in warmer months (coincidentally travel/vacation season) OR (2) (furnished) student housing during the school year and STRs during the summer.

Lastly, if there are any areas to definitely avoid, I would appreciate the pointers!

I also appreciate Core 4 recommendations.

Thanks!

P.S. I selected North Carolina due to its landlord-tenant laws, property taxes, income taxes, insurance rates, proximity, climate, cash flow, and my pleasant personal experiences there :)

I have NOT yet researched STR laws there or city specific / non-owner occupied property taxes.

[Drew Sygit]

@Jewel B.

Your biggest question shouldn't be WHERE to invest, but HOW you will invest!

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

Good luck with whatever you decide😊

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