Does it Make Sense to Buy and Hold in the Triangle Area, NC

[Christopher R.]

Hi! I am a total newbie so please take it easy on me. =) But I'm wondering if it's worth it to consider buy and hold investing in the Triangle Area, NC (Raleigh-Durham). 

I just learned about the 2% rule and it doesn't seem to apply for this area. For example, look at this 3 bedroom, 3 bath property in Morrisville NC (MLS 1963147):

• Sale Price: $210,000
• Size: 1,856 sqft
• Built: 2000
• HOA: $40
• Zillow Estimated Mortgage: $1,070 per month
• Zillow Rent Zestimate: $1,340

If I am to apply the 2% rule, then I should try to rent this house at around $4,000 !!!

But the Rent Zestimate is about right for this place, around $1,200 to $1,400 per month. I'm thinking I'll be getting a negative cash flow for this property, and for most properties in the area.

Are some ares just not ideal for buy and hold investing? Should I instead look at another city? I am considering the Triangle area because I live her.

Thank you in advance for your answers.

[Bryan L.]

@Christopher R. 

 There's several things going on here.

1.  Generally speaking, I think it's advisable to invest in the area where you live.  But at the same time, there are a lot of people who are successfully investing in out-of-state properties.

2.  Generally speaking, you are likely to get better ratios in lower-priced properties.  But, if you go too low, you run into other problems (higher turn-over, higher maintenance, more crime, etc).  I like the price-range for first-time blue-collar workers.

3. Finally, and probably the most important - it ain't as easy as just go find a property on the MLS and, bang it's going to be a great deal. There are good deals on the MLS, but you often have to really hunt for them, and you sometimes have to wait a while to find one.

Also, don't trust anything that you find on Zillow.