I am by no means the biggest expert on this area on BP, but I have been seeing a lot of questions, especially from out of state investors, about this area. I thought I would take some time to put together this short guide, please correct me if you disagree on any of this...

The Overall Market

Raleigh-Durham has been named on nearly all of the recent “Hottest housing market”-type lists, and for good reasons. Home prices in Raleigh have increased by 20.5% in the last 12 months, and Durham has seen a 21% increase in the same time, compared with 16.7% nationwide. High-wage jobs from incoming companies like Apple, Google, and Eli Lilly, as well as an influx of migration from NYC, SF, and similar high-price metros, will continue to drive up the amount homeowners here are able to pay. Another factor pushing up prices is iBuyer market share, which is among the highest in the country here at 2.7 - 2.9% (Source: Yahoo News). To dive deeper though, let’s walk through the specific markets. I’m going to put similar markets together to simplify things a bit...

Downtown Raleigh/Downtown Durham

At this point, these are established downtown areas. Like most of the rest of the country, buying a single-family home, condo, or townhome here is extremely unlikely to cash flow. The best strategies here are largely commercial development, or perhaps a value-add older commercial building. Residential investing will be quite difficult for the foreseeable future, but a STR strategy might work.

The rest of Raleigh

Home values have shot up throughout Raleigh, and homebuyer demand continues to be extremely strong. Many high-income families are attracted to buying in this area, which depresses rent-to-price ratios. Flipping and new development may work well here, but traditional buy-and-hold is unlikely to cashflow.

UNC/Duke/NC State

Within core Chapel Hill, Durham, and Raleigh, this is one of the only strategies where cashflow will be likely. If you can find a deal with enough bedrooms, you can get up to 1.5-2.5x what a family would pay by renting out the individual bedrooms to students. Demand will always be strong, and near-zero vacancy if managed well, make these relatively attractive areas to invest.

Cary/Chapel Hill

Excellent schools define these two markets. With some of the best public schools in the US and many education-focused families in the area working at the universities and RTP companies, rent-to-price ratios are quite low here due to buyer demand. They are, in my opinion, excellent places to live and grow up, but terrible places to buy-and hold. Flipping and new development may work well here.

South Durham/West Durham/Morrisville

Many of the residents here work in the Research Triangle Park, the Triangle’s legacy business hub, which is why I lumped them all together. These areas tend to have slightly lower price points with a lot of first-time homebuyers, but still certainly plenty of expensive neighborhoods. Cashflow on a long-term investment may be possible if you find a good deal, and I expect these areas to continue to see strong appreciation. There are still some bad streets in South/West Durham, so make sure to talk with a local realtor who is an expert on the area before making a buying decision.

Apex/Holly Springs/Wake Forest

Appreciation and demand from core Raleigh have descended on these areas hard. Quiet suburbs only 10 years ago, these are some of the fastest growing areas in the Triangle, and prices have begun to make it difficult to find cashflowing traditional rentals. These areas are quickly adopting similar market dynamics to Chapel Hill and Cary, so I expect flipping and new development would have a good chance to work here.

North Durham/East Durham

I love this area from long-term rentals, as it has the highest rent-to-price ratios in the core Triangle, but this comes at a cost. This part of Durham was wildly dangerous 20 years ago, but a wave of revitalization/gentrification has overwhelmed this area. Some streets are full of million-dollar new construction, while others are still C/D/F areas. I expect this area will see high appreciation in the next few years, and will end up with quite similar dynamics to the rest of the Triangle at some point in the future. Flipping/BRRR/buy-and-hold/new development all have a chance to work, but you need good boots-on-the-ground if you don't want to get burned here.

Like I mentioned above, I am not BP’s Raleigh-Durham expert (hopefully those people can add their opinions below), but I think this gives prospective investors a reasonable idea of what the market here looks like. Just make sure to leave some deals for me, and good luck :)

Raleigh, North Carolina

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