Fayetteville Real Estate and Market Trends

[Lincoln Hancock]

Hi there,

I've been researching investing in some apartment complexes and/or multifamily (single-family homes too, in fact) in Fayetteville, NC. The presence of Fort Bragg there, as well as the affordability of RE in general, is tempting. However, something does not rub the right way. Maybe because I'm based in AZ, and contemplating a move out there? IDK. Anyway, I'd love any and all input on RE market and future outlook of this NC city. Thanks in advance.

[Greg Seawell]

Hi Lincoln I am a newbie to real estate investing. I reside in Fayetteville NC, and own a business here. I would be glad to try and answer any basic questions you have about the area.

[Justin Tahilramani]

Originally posted by @Lincoln Hancock:

Hi there,

I've been researching investing in some apartment complexes and/or multifamily (single-family homes too, in fact) in Fayetteville, NC. The presence of Fort Bragg there, as well as the affordability of RE in general, is tempting. However, something does not rub the right way. Maybe because I'm based in AZ, and contemplating a move out there? IDK. Anyway, I'd love any and all input on RE market and future outlook of this NC city. Thanks in advance.

Apartment complexes, MF and SF? That's quite the range of properties. What rubs you the wrong way about Fayetteville? 

[Lincoln Hancock]

Hi @Justin Tahilramani

Thank you for your reply. I've bought and sold SF and MF in Phoenix AZ. I've researched apartment complexes here too, but to be brutally honest, I was afraid of scaling up and the $$$$ involved. The reason I might contemplate them in Fayetteville NC is the relatively lower entry barrier as far as funding is concerned. Heck, even commercial properties are not off of my radar. Imposter syndrome? Maybe, but I've found that I learn best by jumping in, making mistakes, and learning as I go. So far I've been lucky none of these mistakes was fatal, metaphorically speaking.

What rubs me the wrong way about the place are 1) Low minimum wage 2) high employment rate 3) slow and lower than national average RE appreciation rate 4) low rents and high tenant turn over rate 5) 15% overall vacancy rate 6) It is my wife's idea. LOL, JK.  That's considering the whole city. Specific neighborhoods, naturally, varies. What I like are 1) Potential: up and coming neighborhoods/city development 2) Weather 3) Scenery 4) low cost of living 5) It's my wife's idea (for real this time)

It seems that you live there, as well as, @Greg Seawell (thank you so much for your reply and willingness to help), I'd really appreciate if you could give me a realistic sense of how true/false my fears are. Of course, I understand that these are your personal opinions/perceptions and that any investment decision or lack thereof is ultimately mine.

[Dawn Brenengen]

@Lincoln Hancock Just like any place, if you choose the right neighborhoods, you'll do just fine.  I have a lot of investors who buy in Fayetteville, and they all love it.  I'm from there, and my only concern is that it's a military dependent town, so when the Army is shipped off somewhere, that affects the population. Personally, I wouldn't only invest there as I see it as being a little more risky, but I would definitely include Fayetteville as part of a larger portfolio.

[Justin Tahilramani]

@Dawn Brenengen - we would need another 9/11 event to create a situation where so many Soldiers are deployed that it significantly affects the local housing market. While it could happen, it's highly unlikely to occur in the near future.

[Alexander Felice]

Fayetteville is a decent area to invest, I invest there! 

Sure it has flaws:

ZERO appreciation no matter what anyone tells you, in fact because of the lack of growth above systemic economic increases, you'll find that many houses depreciate as newer homes are built since it often costs a homebuyer the same money to buy new houses year over year, So older homes just get older with no increase in demand. 

Increasing competition in the area make for people buying tight deals that won't ever get better. So you really have to "make money when you buy". If you buy a retail or close to retail deal in Fayetteville you're loooking at 30 years of meager cash flow and nothing else. This makes for a lot of complexity for a meager return, the stock market is a far and away better way to invest than that. 

There are pros though don't get me wrong:

You get economic insulation against the larger market forces. This makes it really lucrative for new investors.

There is a nearly endless supply of renters, so vacancy rates stay low and the price/rent ratio is a appealing.

Also be careful analyzing from a distance. There are pockets of the area that will look appealing on paper but will be treacherous to deal with. I don't really recommend anything under ~750/month rents. 

[Dawn Brenengen]

@Justin Tahilramani I agree that it’s unlikely, but it did happen during Desert Storm in 1990 while I was living there as a kid. Fayetteville became a ghost town as all the soldiers deployed. 

[Alexander Felice]

You guys are funny.

Fayetteville Metro is 450,000 people

The military base is ~40,000 active duty on a good day

I think I have 1-2 military tenants against 32 doors. 

I'm not buying the fear here. 

[Greg Seawell]

I will agree with your assessment on low wages, very low appreciation, and high turnover. What does make the area appealing for investment is the large number of young middle income military families. Many choose to rent since they are usually only here for a few years. I would say to find a good realtor you trust that can steer you away from the many undesirable neighborhoods here. It seems that the younger soldiers prefer to live in the newer apartment complexes that offer many amenities. You will find that the married tend to prefer single family homes. The Fayetteville NC metro population is 386,000 pulled   from chamber numbers as well as google. Ft Bragg has 50,000 active duty soldiers plus their dependents as well as thousands of civilian employees. My perspectives are based on my experience owning a business with a customer base which is 90% military. I am cautious beginning to invest in single family rentals, and hope to scale up to small multifamily. Good luck with your plans

[Dawn Brenengen]

@Alexander Felice No fear.  Just a risk that needs to be understood.  I was too young to understand the RE market in 1990, but I was old enough to see all the businesses close their doors. My dad's business income was reduce to 25% of what it was, but he managed to stay afloat long enough to recover because he was really good with money and my mom was working too.  I can't imagine the RE market was doing great at that time. 

[Lincoln Hancock]

Thank you all for your replies. I did gain a lot of insight. Basically 

1) the city's economy revolves around Ft Bragg and the military, attache, and civilians working there. 

2) There are good opportunities for rental income, provided you recruit a good RE agent who knows the city's neighborhoods well enough to steer you in the right direction 

3) Don't count on RE appreciation, if anything older properties tend to depreciate. But then again, commercial properties (i.e. performing assets such as apartments and MF >4 doors) are not appraised like SFs

Did I miss something?

Again, I really appreciate your taking time out of your busy day to respond here. Merry Christmas and Happy Holidays to you all