All Forum Posts by: Dave Olverson

@Michael Jackman - there is no requirement for the property to be owner occupied. Within the city limits (I think both suburban and urban tiers) you can now have, by right, up to 3 units (2 in the form of a duplex and 1 in the form of a detached accessory dwelling unit).

Of course, the problem is that construction costs are so high, ADUs are difficult, but if you have a garage that could be converted easily, that could be a good way to go!

I have not heard anything about sprinklers and don't think those would be required in the main house, so I can't imagine they'd be required in the ADU.

@Dana LaBerge - thanks for following up. For what it's worth, I think what people say is true. I HATE repeating this phrase because it feels like such a copout, but it truly is block to block. In fact, I know some streets where I would feel more comfortable buying on one side of the street than the other due to crime associated with a street that has properties with a back yard that meets the back yard of one side vs the other.

It is a very hot market and I think that cash flow based on no improvements is not really possible. Cash flow based on buying a distressed house and rehabbing it are certainly possible if you find the right deal, but you have to be really careful that you know the specific area well to know if it is a good investment.

I even know really "hot" areas that still have high crime (or perhaps have even higher crime than they used to because they are hot and gentrifying, which causes tension).

Durham just passed legislation called Expanding Housing Choices which makes ADUs and duplex conversions legal throughout the city. I think the only way I would invest in single family rental homes here right now is if I could get them for a deal and add an ADU or split it up into two units in a cost-effective way.

Of course, others may have more appetite for risk than I do and I certainly think that Durham as a market is continuing to rise and get even more robust with many more people moving to the area every day.

Just thought I would leave this here: https://www.bizjournals.com/triangle/news/2019/08/20/reporttriangle-hotel-market-among-the-best-in-the.html

Additionally, just scanning airbnb, there is not a ton of competition still. It's actually pretty confusing. Maybe investors here don't consider short term rentals? Maybe the overall low supply of housing means people don't really have to get creative in terms of strategies?

@Eric Weireter is great and specifically works with investors. I'd recommend PMing him.

Very cool @Justin Bock! Looks like you did a great job. We are slowwww rehabbing the property that we are currently occupying in Durham. What neighborhood is this house in and did you eventually find some good people to work with? I'd be happy to chat about people that we have used so far and our experience with them. Feel free to DM me.

@Phillip Jones - +1 for Eric Weireter - great to work with!

Also, shouts to @Andrew Kerr - love that other Durham investors are actively thinking about this! But honestly, not surprised - love the Bull City!

I recently read a great article on Urbanophile that touches this issue (not from an individual investor standpoint, but a wider lens):

http://www.urbanophile.com/2013/02/03/is-urbanism-...

Many investors like to puff out their chests and talk about how they are helping their neighborhoods and I don't disagree with them, actually. But there is a ton of nuance that they gloss over because it is convenient. It stands to reason that if you improve an area, even just by NOT being a slumlord in some cases, market prices will and should go up. So, like you said, it is really tricky.

However, one possible idea is to focus on creating NEW inventory (in your case, buying lots and building new houses in your neighborhood). Creating more supply should, in theory, temper rising costs in an area. Population density can be a good thing in this regard (a lot of YIMBY groups are big proponents of increasing density). And depending on your cost structure and market, I imagine there is still money to be made.

Of course, with population density, you get a ton of push back from current homeowners who don't want new inventory because they want to see their own property values stay high and generally, people dislike change. If you are just buying lots and building SFHs, I don't think anyone will raise a stink. But, if you want to help your community, you could voice your opinion on these issues through your city government as one way to be an active participant.

I sort of threw out a bunch of disjointed ideas, but hopefully some tidbits to think about as you move forward!

@Chris May - to echo previous comments and put it in the context of your original question. Cash flow in Durham itself is probably possible, but getting less and less so with the booming market. If you are interested in cash flow, those other areas just outside of Durham might work better.

That said, the potential for appreciation in Durham is pretty high! Overall, I would guess that:

- Appreciation is good, but probably not as much crazy upside as Berkeley

- Cash flow is more possible than in Berkeley, but probably not as good as you were hoping (unless you look outside of the immediate Durham area).

Raleigh and Durham - @Eric Weireter