Hey BP! Not an "expert" but I house hack Raleigh and work with house hackers in the area every day. If you're looking for the first or next house hack this year, then you're probably doing a lot of research on areas, strategies, layouts, etc. Here's my two cents on what's working in Raleigh right now for house hackers. Feel free to chime in with your thoughts.

Cash Flow vs Appreciation: Our market has been an appreciation market for some time now. House hacking is perhaps the best way to get to cashflow other than buying off market (most likely finding the lead yourself) and doing a ton of work to get it rent ready, which is obviously cash intensive and time intensive. My goal was to conservatively beat rent and at least breakeven after move-out. And then I took several steps to make sure I exceeded that bar. I don't believe you should necessarily invest purely for appreciation. But even breakeven on a house in a super fast growing market like Raleigh will statistically produce hundreds of thousands in return equity over time. Especially being young, that's way more valuable to me than a little cashflow.

But you can have both.

Strategy: I went for airbnb. In Raleigh-Durham they are very str friendly. We are well visited for our 3 tier 1 universities, the research triangle park, travelling educators and nurses, and students. Raleigh isn't as cyclical as many markets, especially vacation markets. I estimated a conservative 75% occupancy on my current house hack but stay nearly fulled booked out. With airbnb you have the highest chance of cashflow while living there. For reference we see around 1000-1200/mo/bedroom. We airbnb 2 bedrooms and live for under $1,000 a month. A 3rd bedroom would have had us right at break even. And so on. Don't forget to factor for this - upon moveout, we reasonably expect to cashflow around $500/mo, which will allow us to maintain and hold for as long as possible to collect appreciation and yes some extra money toward the next investment.

Can you do long term rentals? Absolutely. Here's why I don't. There is a lot of pressure to choose your tenants wisely, and make sure they all get a long. The numbers will be lower, but yes you won't be waiting to see bookings come through and you won't have to clean rooms (takes us about 10 minutes) between stays. Mid-term rentals work well here too for the same reasons listed earlier. We actually end up booking 1 of our 2 bedrooms for medium term pretty much always, right through the airbnb platform. Honestly it's almost less work for us because we don't have to screen, airbnb does, we don't have to deal with leases, airbnb does that stuff, and we don't have to advertise, airbnb does.

Location: If you do str OR/AND you really want the highest appreciation (I wanted both) you want to stick close to RTP and the airport. That's where they fly in, that's where the jobs are, stay as central as possible and your home will be desirable as a rental of any kind, and for resale value. So this makes North and Northwest Raleigh a fantastic spot and that's where we ended up. You'll find Cary and Morrisville to be the most desirable and get great appreciation too but also very competitive still, significantly higher in price, and it becomes much harder to make numbers works. I'm seeing parts of Durham become increasingly popular like 27703 for new construction in addition to Bethesda and South Durham near Southpoint Mall. These pockets are more affordable while still convenient locations, and the new construction appeal mentioned for 27703 is something North Raleigh nor Cary/Morrisville can offer affordably due to being pretty built out. Expect in most of these areas homes built 2010 or older on average, with many solid options built before 2000. Higher maintenance must be accounted for and is annoying, but if you end up refreshing it before renting, that will save you time and money down the road. Just a trade-off for lower price while still being in a hot part of our market. If you need newer, go further out for check out Durham. Always know the trade-offs.

If you do a long term rental and are OK with potentially weaker appreciation, your money WILL go a lot further in NE Raleigh, Wake Forest, Garner, Knightdale. You can house hack any where. And starting is better than waiting for perfection.

Type: Single family appreciates the fastest historically. I can't recommend condos as a solid investment for many reasons. Townhomes *typically* require signed leases for 1 year and many won't allow multiple leases for one unit, forcing you to rent the whole unit after move-out. With that being the case, expect to lose around 200-400 on average per month based on current prices and rates. Side note, if you can breakeven on long term rent, then you will cashflow when rates drop and your home will likely go up in value when the market responds!

We have a lot of older townhomes in Cary and Raleigh, built in the 70s, 80s, 90s. They are your best bet at breakeven or even small cashflow but they will not appreciate near as well as a newer townhome. That may run you close enough to the price of an older single family house, so I opted for that property type. Not having to take care of your exterior and having amenities is an appeal for sure however and townhomes can absolutely work! Keep in mind typically townhomes give assigned parking and limit you to 2 parking spaces, so nearby visitor parking or the option to purchase a 3rd spot would be crucial.

Layout: With house hacking, more bedrooms the better. Now... in our market 5 bedrooms in the hot parts are very hard to find and very pricey. 4 bedrooms opens up a lot of options for sure. And like I said, we are in a 3 bed, renting out 2, and doing fine. So if that's all you can afford or all the risk you want to tolerate, just start with that. With airbnb in Raleigh, they don't allow more than 2 bedrooms rented short term. But you could list the others as 30 day minimum stays through the platform if you wanted. I find this hybrid model allows me more certainty about occupancy, and less work on turnovers, but I can still maximize profit.

We chose a split level home, 1984. Not too old, but nowhere near new. We did a lot of updating ourselves. We even added a kitchen downstairs. We have 1 bedroom, bath, kitchen, living, and walkout private entrance. We essentially created a duplex (for all intensive purposes) in a market where plexes are quite rare and usually don't make sense numbers wise. This is an example option if you are okay with being picky about what you want, patient, and really need the privacy. Otherwise, just buy a home with no HOA (if you want the option to do MTR and STR and not risk them setting rental rules) with as many bedrooms as makes sense for the numbers. Need a lower payment and more cashflow? buy in the right location but take the ugly house and update it. Otherwise, rent ready does a lot for your peace of mind, saves you cash because you aren't renovating it and you can collect rental income right away instead of in a few months (took us 5 to finish our renovations and cost us nearly $3k a month to hold it).

2 bedroom homes usually don't make sense numbers wise - too many set costs in building a home that make 2 bedrooms higher PPSQFT and the appreciation isn't as strong. If you do STR, size doesn't matter *as much* as MTR or especially LTR. We don't have an official pantry, just cabinets, no big deal. We have 2 rooms share a bathroom, no big deal. And one of the bedrooms is pretty small, but not a big deal for a night, or even a week. All that stuff matters a lot more for LTR.

House hacking in Raleigh definitely works! Many ways to do it, and there's a lot to think about. Hope this helps stir some thoughts. Let me know if I missed anything.

Benjamin Carver

Podcast Guest on Show #30

Raleigh, North Carolina

5 Votes