All Forum Posts by: Will Kaufmann

@Chris Martin Thank you for providing this information! After reading through I have a qualitative point to make. We have, as a society, been experiencing heavy urbanization for a while now and I think that contributes to the above trends. 

What happens if or when that trend changes? My guess is that the housing needs in the outer edges of the MSAs will increase with the population looking for more affordable pricing and living while still within reasonable reach of the amenities at the core of the MSAs.

What reasons may lead to a trend shift? One issue might be ultimate lack of affordability. Look at the inflation chart below, which is not moving lock-step with increasing housing prices. Additionally, wage increases have been lagging pretty substantially as shown in the second chart. There are also possibilities tangential to something like Amazon opening a huge warehouse in a city like Garner (who would've thought about that even just a few years ago?) and whatever impact that could have. Another reason: overcrowding. I also have a theory that as drone usage becomes more pervasive people will not feel the need to buy in the city to gain access to urban services (e.g., Amazon fresh/prime/etc.).

I am not beating the drum for a housing crash. My philosophy is to look at the cities and counties closest to the high-growth MSAs and provide a better housing product for those who cannot afford the core-city growth and pricing.

To directly answer your question, I think the MSA indicates that when the market eventually does correct, you could interpret the data to show that the outer areas, not the cities, should encounter less negative headwinds, based on a comparison of pre-GR and post-GR trends. What do you think?

@Maricruz Romero, what are your primary goals as an investor? Buy and hold? Do you have a preference on single or multifamilty? Flipping? Development?

You may need to look at vastly different areas for appreciation versus cash flow, and depending on how much "value" you are after. Although the pricing may seem favorable relative to your home area, keep in mind that the rents down here are respectively lower. Personally, I do not think that the rents in the Triangle (Raleigh/Durham) have caught up to the price inflation over the past few years. 

As an aside, unless your friend is a real estate investor, I recommend carefully weighing the free advice that friend is willing to offer with respect to your investing in the region.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $131,000
Renovations: $31,500
Sale price: $212,000

@Joshua Frahm and I partnered up on our first deal for a rehab in Sanford, NC. The deal was brought to us by a wholesaler and ended up being relatively painless and a lot of fun. Seller actually had a real estate agent involved on their end, although the deal was not on MLS. Original ask started at $140,000 and we tried to negotiate to $125,000 with not much movement. Seller came back a few weeks later and agreed to $129,000. Our private money source only needed a 5% return and it was a short hold - about 3.5 months.

What made you interested in investing in this type of deal?

Looking to get experience with our first fix and flip in a relatively low risk deal.

How did you find this deal and how did you negotiate it?

The deal was brought to us by a local wholesaler with good market knowledge and connections.

How did you finance this deal?

Hard money for 80% of the purchase price, and 100% of the rehab cost. $20,000 personal investment. $26,000 private money to bridge the gap between our $20,000 investment and the remaining cash required to fund the deal. 

How did you add value to the deal?

Managing the financing and renovation.

What was the outcome?

The investor made a small return of 5% and wanted to be a part of our first deal to get the company moving in the right direction. We received a cash-on-cash return of 100%

Lessons learned? Challenges?

Extra attention to detail with estimating rehab costs. We budgeted $25,000, which was about 20% below our actual cost of $31,500. The seals on the windows were all shot (20+ windows) and it was an overlooked cost, which ended up accounting for an additional $4,100 in addition to other miscellaneous contingencies such as the garage door repair and appliances, which we simply forgot to include. We had a GREAT agent on the sell-side, which resulted in a sale price of $212,000, above our projected ARV of $199,000. We could have had better market insight on the front-end if an agent was on our team.

@Bin Chen It is probably easier to specify where you do not want to have a rental. Parts of east and most of southeast Raleigh are not the most attractive areas to live. Rents swing widely depending on amenities. I paid $1,700/month for a 2/2.5 townhome in Boylan Heights so I could be walkable to Glennwood. My neighbors are paying $1,800/month for a 2/1 house in East Raleigh because it was completely renovated. You can also pay $1,100 down the street for something much older. Notwithstanding all of this, the Raleigh price points are not attractive as rents are somewhere in the .5%-.7% range rather than they ideal 1%.

@Viktoria Barrett On the topic of multifamily properties in NC, they are not as pervasive as in the mid-Atlantic and Northeast regions. Because of the limited inventory, it seems they rarely hit the MLS and when they do, they are overpriced. A lot of investors are buying multis in outlying communities like Fayetteville and Rocky Mount, but they very much understand those markets and their intricacies. I would advise traveling to/through areas you want to invest in, the small cost of that trip will likely save you big on these investments.

@Jeffrey Stein if you find something on the MLS that fulfills the 1% rule and has upside in the Triangle Area, please let me know where that is. I have the same investing criteria and am finding it difficult in this area.

@Jeffrey Stein Are you primarily looking for buy and hold? Do you intend to purchase off the MLS? What sort of tenants do you want? How long are you aiming to hold the property? I can give you a blanket answer here but each neighborhood is particular to certain investing strategies.

For MLS buying - I do not think that there is not much "value" left in downtown Raleigh insofar as rents are not keeping up with prices. That having been said, there is plenty of room for prices themselves to continue to climb in certain neighborhoods. East Raleigh is a transitioning area that offers upside. Stay away from Southeast Raleigh. Boylan Heights, Historic Oakwood, Six Forks, and Five Points are generally safe and do not offer much upside due to the stability. A lot of local investors are buying up in Rocky Mount which you will pass through along the way. You can buy over at NC State's campus if you are interested in student housing. Cary/Apex/Holly Springs are all solid areas although if you overpay on the buy, you may not realize much appreciation in the short- to mid-term.

If the intention is to buy and hold for a 10-year period you can probably pay more now since the long-term appreciation prospects in these areas are all great.

Hope this helps.

@Josh R. I will be there tonight, sorry for the late notice!

@Dan Moore How was the sale process? Did you find the sale through Wake County's online public listing? I have not yet visited the Wake County Courthouse and am curious about how easy/challenging it may be. 

It looks like you may be able to BRRRR to a no-money in situation, right? Good luck with the upcoming work and congratulations on the purchase!

Welcome Nick! In what areas are you looking to invest?

Will