All Forum Posts by: Ryan Groff

I was wanting to see if anyone here regularly looked at properties through the eyes of potentially doing master suite additions to some of these small 2 bed 1 bath homes in hot neighborhoods. 

I started my investing in Fort Worth and a number of my flips were in older neighborhoods near downtown where I could add a master suite for about $105-$110 a square foot, and have the finished product selling for over $200 a square foot.

There seem to be plenty of small 600-800 sq ft bungalow style homes near downtown Raleigh and downtown Durham that would be perfect for this. If these homes were 3/2's and 1200-1600 sq ft they would be selling at over $250 a sq ft!

This is assuming that it makes more since to add than to tear down. If anyone has done this in the Triangle, how long has the permitting process taken, and what would you say the cost per square foot would be to add a 700 sq foot master suite with permits included?

Does anyone have some insight as to the legality and laws on rooming houses in the Raleigh Durham area? I have a seller who is renting each room to 4 separate tenants. With what is it bringing in it is over a 23% cap rate. Is this legal in Raleigh and surrounding areas, and also will a property management company handle something like this?

Vikram, If you want to be in Durham and want to maximize cash flow, appreciation, and instant equity you should go the BRRRR method and you are going to have to broaden your year build criteria as well as be open to a detached SFR compared to just a townhome or condo. I just purchased one most recently with the following numbers within a few miles of downtown Durham, Purchase: $70k Rehab: $27k ARV: $150k rented for $1,295 per month. This was a 1969 build. I would look into this route as opposed to something new with HOA fees where it will be most likely impossible to cash flow and you will have little to no equity to start. Feel free to reach out to me if you need local contractors, properties like this, or any other help.

@Chris Billington I'm partial to the Raleigh Durham area. I regularly come across investments in Durham and just west of Durham that exceed the 1% rule. I have also found a couple in Knightdale and Garner/ SE Raleigh that exceed that rule. I also guarantee you will see much more appreciation in this market than areas such as the TRIAD, Fayetville, and other cheaper areas.

If you are looking to leverage that 20-30k you can maybe get something West of Durham, but otherwise you may be stuck in areas like Rocky Mount or Wilson. They will cash flow well, and they are super cheap, but further out and the tenants are not as stable. Reach out if you want some more info or opportunities in those areas. 

Alright, going to piggy back off this post again with a case study. You have an area in Raleigh with the most recent builds being 2006 builds, and at 1500 sq ft those houses with no updates since being built in 2006, are selling for 225k-230k over the past year. First question is what would you call the ARV for a brand new build at 1500 sq ft? Second question, what would you pay for two already subdivided buildable lots on a culdesac in that same neighborhood?

@Gabe C. I have found a couple properties that cash flow near downtown Cary, but I got them at a steep discount because they needed heavy rehabs and the sellers wanted nothing to do with them. Cary is extremely hard to cash flow. I can't imagine that at 260k plus repairs that it would cash flow without a huge amount of your own cash invested.

Thanks @Merrick Loveland I guess what I meant by spec is the fact that they are very similar finishes, and slightly lower grade materials than I would put in any of my flips at that price range, especially in the bathrooms and kitchen to be more specific. But 100-130 sounds great, thanks for the info.

@Ryan Smith I have been in a number of different markets and Raleigh has been without a doubt the hardest to pull rental comps. The MLS seems to have very few, and Zillow hasn't been the most helpful either. I have used a combination of Zillow, Rentometer, and MLS to find my rates, but the best tool I have had is reaching out to property managers in the area. I found found 2 or 3 I trust and their numbers usually line up.

@Louis Bratton I do flips in the Durham areas near downtown and am also a broker, and moving a kitchen can be necessary any many cases in that area. I think a lot of it comes down to the level of rehab you are already doing to the house, the flow as is, plumbing to tie into, how big is the kitchen,  what you would be having to move and relocate besides the kitchen to make it work. However, I can promise you if your comparables have very open floorplans and high end finishes, you will take a hit by having a kitchen tucked away in the back of the house without a doubt.