All Forum Posts by: Kenneth Jackson

@Zac Hales is right - location plays a big factor. Quality does as well. I'd say 2 out of every 3 flips are poor craftsmanship and lack a wow factor that attracts the buyers that are in the market now.

As an flipper, you have to put yourself in the shoes of buyers. If you're losing your pants and shirt to get in a home plus you're stomaching a serious monthly payment due to higher than recent interest rates, you want to maximize what you're paying for. I see the same groups every weekend and it's a piranha fest of buyers moving from the only good house one weekend to the only one the next weekend. Our inventory is a major issue, but that doesn't mean you can throw some spaghetti at the wall and it'll stick. Buyers are super picky right now.

How does your product stand out as a flipper? Are you putting in hardwoods instead of LVP? Double vanity in the master? Tile instead of a shower surround? These are things buyers are looking for and passing when they're basic builder grade. They'd rather overpay for something premium than settle for something middle grade. 

You also have to consider Durham's permitting process. Like every city they take a while, but Durham is inundated with projects and don't have the planning department to process this high volume so things are really backed up. Complex projects are passed from planner to planner with no one making the final decision. My simple subdivision of a lot has taken 4 months to complete. The holding cost isn't fun when you're flipping a house and waiting on permits to pass through structural, plumbing, etc. and your home is ready to go but you're waiting on the city. 

You really need to know the market down to the street level in downtown and the neighborhoods in South and North Durham if you're flipping something in those areas. The complexity of all of these factors - finishes, timeline and financing make margins hard unless you really know what you're doing.

Great post Jared. 

As someone that lives and does a significant portion of their business in downtown Durham, it's easy to see why it's so desirable. There's 20 great restaurants and as many great bars (not to mention the Durham Bulls Stadium, DPAC, and American Tobacco Campus, which is expanding) within a 1/2 mile radius from the heart of downtown. 

Durham is diverse, with a rich historical background. There's a grit to it and it's attractive to live in a place with a downtown that is centric to many great neighborhoods that have an oozing of character. We've learned from Raleigh's NIMBY struggles, with the building and allowance of ADU's and AirBNB's, not stymying any urban infill that can happen and not to mention there's incentives in our UDO to build in the urban core. This is a brand new build in downtown Durham, with 3 en suites, and you're so close to anything and everything that you don't need a car if you work from home. 

I will argue that our price points have creeped up enough that you have to get creative with investing, even house-hacking a duplex on a low down payment (like this one) might not come good for a few years. Very few small multi-families were built in our area between 1970's and the early 2000's, creating a very thin market for small multi-family. I anticipate our AirBNB market becoming over-saturated like many large cities (if it isn't already) and creating the best product you can will keep vacancy down. There are still great opportunities to buy in South Durham and appeal to the RTP crowd for AirBNB, and if anyone is interested in those specific areas I'm happy to share offline. 

One note - Downtown Durham and South Durham (near I-40, close to RTP) feel like very different places. I've seen several big mistakes made recently by investors not engaging a trusted professional to be on their team to advise. It's important to work with someone that knows it down to a neighborhood/street level if you're going to buy here and especially if you're looking to invest. 

This property is so unique that you get to decide what it's worth to you, just like the listing agent or owner who presented it at this price.

$1,500 might be a stretch for rent for a 750 SF home in this area, especially with how tight each space is in the home. You can get a studio in the Peace building in the heart of Glenwood South for $1,655 with arguably a better layout and a little less square feet.

We are definitely an appreciation market, if you bought at $900,000 and could charge $1,200 in rent right off the bat you'd be close to breaking without property management fees. While I'm not versed in AirBNB as much as long term rentals, I don't consider the AirBNB returns without knowing I have an exit strategy to rent it long term and the above numbers barely make sense at $900,000 depending on your strategy.

Also, Raleigh has stricter AirBNB laws than its Durham counterpart (https://raleighnc.gov/services...). See Number 6.

1. For any multi-unit living use, no more than 25 percent, or two dwelling units, whichever is greater, may be used for short-term rental in any single building.

So do you have a strategy that has two long term units and two short term units? 

I think this one is a no-brainer as to why it has been sitting at the list price. For a house hacker that qualifies for this it would be an enormous stretch, for an institutional investor thats looking to park money there's no cake on top at the current price (appreciation) and there's no cash flow. Unless you're looking for a pretty house and don't care about investment principals I think this one will continue to sit. 

Every flipper/investor wants to get their money out at some point, so somehow, someway it'll move. This one was bought at $375,000 in June of 2020. I can only guess how much they've invested in the past two years of the rehab and holding costs, but can't imagine it's put them back $500,000k in that period. I just think it's overpriced and the delta between your price and their price might take months to find an agreement, months when you could've deployed capital and energy elsewhere.

Really loaded question here Henry. There's speculation on the area improving over the next 5 to 10 years because the property values are less expensive than other parts of Durham. The supply/demand curve in our area is primed for anyone, investors or your average joe home buyer, to pursue homes that are under our median home price ($413,000) in a highly competitive market. The value add potential is there for investors with many landlords buying the homes for pennies on the dollar 20 years ago and deferring maintenance for several market cycles. There's a pocket of really cool homes in the historic district that you can get tax breaks on if you fix them up (intricate process) and there's a good opportunity to BRRRR in the area when that's not the case in much of Durham due to home prices but renters are there - you just have to know what the renters want :)

It's also a cool little area nonetheless with great people and awesome food.

I’ve never done one, but know multiple people that use Victoria and have only heard good things.  I can’t post contact details outside the marketplace, but feel free to message me to share.   

Victoria Templeton, Esq., CES®

Vice President | Exchange Counsel

Investors Title Exchange Corporation

Investors Title Accommodation Corporation

Hey Daniel,

I use Giles and Flythe for all my structural engineering assessments and inspections. 

You should get a structural contractor out to give you an assessment and figure out if you’re comfortable with what they say. Getting an engineer out and having them turn around a full report in a week might be tough. How much do you have in earnest money? Technically you can back out whenever in the contract period, so you could still have an engineering come out and give you an inspection. Then you can negotiate repairs all the way up until closing. 

Mihal,

Robert had some good points about Durham that I'd like to echo. Relative to other cities in the Triangle, Durham has long been undervalued and is starting to catch up. The average home price is lower than the national average and lower than the Raleigh, Chapel Hill and Wake County average, making it a prime opportunity to see long term appreciation. We struggle to see hefty cash flow because of this demand's effect on prices, but it can be achieved with multiple units.

I love the long term play in Durham - buy in areas that people love to be in and hold. Let rents rise yearly, let the property appreciate with all the good things the area has going for it (biotech, tech, great universities, the list goes on...) and wake up in 5 years to six digits of appreciation.  

As Robert said, the market is extremely competitive right now. I feel this everyday as a realtor - we see multiple offers on coming soon properties that are considered active properties on our MLS but haven't opened up showings yet (sight unseen offers, all you see is the pictures and location) and 30 offers on an underpriced properties with upside that do hit the market and go active.

If you're looking for someone that knows Durham not only by each street but down to the each street's block level let me know, I'm happy to help.

Isaiah, 

Good to see another Bull City resident on here and the plan you bought looks cool. I am not particularly well versed in the permitting process (I've done some, but usually my contractors handle it for me), but a cheap way you could find out if you can do it is to take the plans to the city and see if they'll grant you a build permit before you take out a loan or starrt buying materials. 

Personal loans are always great for projects like this, especially if you think you can build it for under 25k and get it occupied. Just make sure the city will let you host in it first! I have a hard money contact as well that can lend on building if you start to eclipse that 20-25k number.

I second @Paul Vail in that I like the Durham market a lot. I've spent some of my adult life in Raleigh and shifted gears to Durham in the past 4 years. I've been successful buying properties under market value here, forcing equity with updates, and refinancing out to do it again.

Many folks here on BP invest in Greenville and Fayetteville and there's a wealth of knowledge for those markets on this forum. Although they might not see the appreciation like Durham, you can find some good cash flow and build a nest egg with the BRRRR strategy. I don't know these markets, but with some time and research you can learn them.

With that said, why not have both? Durham gives you the upside of appreciation with the opportunity of cash flow. You may not get the 1% rule now, but in 5 years when there's still a housing shortage, rents have gone up, and your property value has gone up because you're in a desirable area you'll be thanking yourself.

Let me know how I can help.

Hey @Jay Wang!

I'd suggest hitting up the David Greene team and having their house hacking specialist find you a creative solution to house hacking in the bay area! If you need a referral to someone in that shop, I'm happy to help. 

Another option is to invest in the triangle area (Raleigh-Durham-Chapel Hill) with a strategic mindset. While Raleigh is strict with their STR laws, Durham is more open to the strategy. Durham is the undervalued market in the triangle - average price is 400k, below the national average (443k), almost 50k under the City of Raleigh average (448k) but still has great proximity to RTP. Current estimates has the Triangle market growing another 8-10% in 2022 alone after almost 20% growth in 2021.

Hope this helps!