Out of State Investing in NC?

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Hey everyone! I wanted to address some questions that I get a lot from out-of-state investors, as someone who was involved in commercial and residential real estate in Southern Californian (San Diego to be exact) and relocated to Charlotte, NC.

I want to purchase smaller multi-family (4-15) and SFR (2-4) deals in Charlotte. Where do I look?

• You will have a hard time finding a deal that underwrites generously and meets many primary fundamental investment criteria for a few main reasons. I list below why this market is still geared towards large-scale mixed-use projects and SFR's and gives you some pointers on what is going on in the local market.

Geography!

• Geography is something that no one can change! The CLT market is mostly flat woodland broken up by Lake Normand and the Catawba river that can easily be turned into housing or commercial properties while still being within a reasonable CLT Metro radius. In San Diego, you have the border to the south, Camp Pendleton to north, the ocean to the west, and mountains to the east. Not a lot of room to support more SFR's or smaller-scale housing in general, and regulations restrict newer large-scale construction that would be needed to counter the housing demand.

Population density!

• There is no considerable market demand for smaller multi-family units here because the city is still in the early stages of what you see happen to other metros as they increase in size. Commute time is reasonable, and the rental market does not support the high rents and cost of construction that you would see in a market with a limited housing supply. Why would a tenant pay $1,200 a month for 950 sqft in a duplex when they could pay about the same for a 1200-1500 sqft house and make the 15–25-minute commute? They can also pay about the same to be in a large-scale multi-family with amenities that the smaller multi-family properties can’t compete with. As the population grows and rental rates rise this will change long term but for now it is what it is.

Cost of living!

• Well, as you can expect, compared to Southern CA it's is a much more affordable market that many first-time home buyers, investors, businesses, or families are choosing to make their home. San Diego's median home price is almost 700k, has higher property and sales tax, which drives the overall costs of basic needs up. A lot more people are stuck renting and not building equity and dream of buying a home outside the metro a few years from now and calling it a win. New construction homes in the CLT market over here go for a median of 295k! With low-interest rates along with FHA and other loan products making it easy for first-time homebuyers, why would you rent?

• As far as multi-family goes, you see large scale projects around 40 units and up with mixed-use zoning. The city has been cautious and learning some lessons from other metros in their expansions and are currently working on completing a large scale trolly system to help alleviate the current transportation network.

So what should I look for here!

Well, I would say SFR'S (BRRR'S, Short Term Rentals, Flips, etc) or larger multi-family deals! You will find strong appreciation and cash flow opportunities here with similar gains you would see in West Coast markets. The only difference is the bottom dollar! Percentages are the same, but the return is different because you get more from the 700k investment than the 250k. But I could have more units with the same long-term appreciation and better cashflow that will end up longer-term, providing more of a return than one unit.

One of the main reasons I relocated was this! I loved the CA lifestyle, but I would never be able to acquire the number of units and properties I had in mind as a local investor and leverage my knowledge to the utmost. The barrier to entry is more significant in CA than in the CLT market, making it a prime location for out of state and first-time investors to get into the REI game.

I also wanted to be what I encountered in the San Diego Marketplace every single day! I bought this 20- 40 years ago when nobody wanted to live in this X area, and the city wasn’t as big. It is worth 8x times what I purchased; I own it free and clear and pocket my monthly cash flow and go to the beach.

Also, it goes without saying the taxes, regulations, and property owner rights are entirely different and very business-friendly compared to what you see in CA.

Please feel free to DM me if you have any questions!