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Considering investing in a single family home in Raleigh (Apex), NC
Posted on 4/26/23 at 11:02 pm
Posted on 4/26/23 at 11:02 pm
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Currently have a condo as an investment property and am thinking of putting $100K down and financing the rest for a $400K Lennar new SFH in Apex, NC. I'll be happy as long as the rent covers the mortgage and property tax payments. It doesn't necessarily have to be a cash flow positive investment. Will have to get a property manager tho as I live nowhere close to NC.
I understand the Research Triangle area is growing fast due to all the tech jobs and it might still not be a bad place to invest, unlike Austin which has gotten so damn expensive and out of reach. Thoughts from the Money Board?
Currently have a condo as an investment property and am thinking of putting $100K down and financing the rest for a $400K Lennar new SFH in Apex, NC. I'll be happy as long as the rent covers the mortgage and property tax payments. It doesn't necessarily have to be a cash flow positive investment. Will have to get a property manager tho as I live nowhere close to NC.
I understand the Research Triangle area is growing fast due to all the tech jobs and it might still not be a bad place to invest, unlike Austin which has gotten so damn expensive and out of reach. Thoughts from the Money Board?
6
Posted on 4/26/23 at 11:19 pm to rickgrimes
quote:
I'll be happy as long as the rent covers the mortgage and property tax payments. It doesn't necessarily have to be a cash flow positive investment.
Assume some credit losses along the way and you’re looking at a negative cash flow property. You want it for appreciation, which I get. I’m not that far from that area and it certainly is a growing, promising area. But at what point would you be looking to capture your (potential) appreciation, while carrying it?
quote:
Will have to get a property manager tho as I live nowhere close to NC.
Although that’s a great area for real estate investing, no or negative cash flow, plus being an absentee and needing a PM would spell hard pass for me. 40 years in and I can’t predict success or failure with a RE investment, but that scenario has some bright red flags IMO.
Posted on 4/27/23 at 12:29 am to rickgrimes
I've got a few thoughts. I've been researching where to invest so have put some time into this.
1 For a $300k mortgage you're probably looking at around 2100 a month (assuming they tax you a little more as an investment property) and the average rents around there are in the 2300-2600 range. Refinancing when rates drop would have you in decent position.
2 Property management will take 10% of collected rent, so you might come out just ahead when rent is collected. But of course, there are tax benefits and equity growth.
3 Experienced real estate investors usually assume an extra 200-300 month in expected costs for a year long lease to cover repairs, cleaning, and vacancy. So while you may break even month to month, with that slim of margin you should expect to lose 2-3k per year cash (not counting the previously stated tax and equity benefits).
4 Is it truly a single family home or a townhouse? A short look at the rental listings there show a ton of townhouses on the rental market for 30+ days, but very few houses all getting contacts and applications quickly. If it's a standalone home then you will likely have a good place in the market.
5 It seems like a strong market with job stability so no qualms there.
6 I'd personally be reluctant to spend 100k on an investment property and I'd rather put that toward 3 smaller ones with slightly better cash flow, but that is simply preference.
1 For a $300k mortgage you're probably looking at around 2100 a month (assuming they tax you a little more as an investment property) and the average rents around there are in the 2300-2600 range. Refinancing when rates drop would have you in decent position.
2 Property management will take 10% of collected rent, so you might come out just ahead when rent is collected. But of course, there are tax benefits and equity growth.
3 Experienced real estate investors usually assume an extra 200-300 month in expected costs for a year long lease to cover repairs, cleaning, and vacancy. So while you may break even month to month, with that slim of margin you should expect to lose 2-3k per year cash (not counting the previously stated tax and equity benefits).
4 Is it truly a single family home or a townhouse? A short look at the rental listings there show a ton of townhouses on the rental market for 30+ days, but very few houses all getting contacts and applications quickly. If it's a standalone home then you will likely have a good place in the market.
5 It seems like a strong market with job stability so no qualms there.
6 I'd personally be reluctant to spend 100k on an investment property and I'd rather put that toward 3 smaller ones with slightly better cash flow, but that is simply preference.
This post was edited on 4/27/23 at 1:08 pm
Posted on 4/27/23 at 6:16 am to rickgrimes
I alwys get cash flow. $300 minimum. I'm selling off one that's just $350 due to crazy HOA I'm wanting to get from under. My others flow 500-800 monthly.
That said, wish I kept almost every home I've ever sold.
That said, wish I kept almost every home I've ever sold.
Posted on 4/27/23 at 6:23 am to rickgrimes
quote:
It doesn't necessarily have to be a cash flow positive investment
Sir. This is a terrible idea.
Posted on 4/27/23 at 1:55 pm to I Love Bama
I think what I meant to say was I'd be okay with breaking even on the rent and the expenses. I certainly don't want to have a negative cash flow. Positive cash flow would be nice, but I recognize that at the current mortgage rates it may not happen.
Posted on 4/27/23 at 2:13 pm to rickgrimes
I don’t know your projected numbers or if you have a written business plan here. But if you’re targeting breakeven, my guess is the margin of error will take you into negative cashflow at least part of the time. So you’d be laying out $100K in cash plus any negative cashflow to carry the property. Those are some of the negatives. On the positive side, you’ll have certain tax benefits and you *may* get appreciation over time - that makes this more of a speculative play.
I personally don’t invest in real estate if I have to pay to carry it - plus use cash that could be deployed elsewhere (unless it’s land and I have a well defined plan and holding period).
But as I said, that’s a great area. I don’t know how good a deal this is on purchase price, but there definitely should be appreciation in that area. Good luck whichever way you go.
I personally don’t invest in real estate if I have to pay to carry it - plus use cash that could be deployed elsewhere (unless it’s land and I have a well defined plan and holding period).
But as I said, that’s a great area. I don’t know how good a deal this is on purchase price, but there definitely should be appreciation in that area. Good luck whichever way you go.
Posted on 4/27/23 at 3:20 pm to rickgrimes
I'm surprised you can even find a $400,000 home in Apex. I live just down the road in Holly Springs. The prices here are insane
Posted on 4/27/23 at 3:42 pm to rickgrimes
quote:currently renting in the triangle. Having my first home would be a dream. Congrats on potentially having 3.
Thoughts from the Money Board?
This post was edited on 4/27/23 at 3:43 pm
Posted on 4/28/23 at 1:18 pm to Jag_Warrior
Thanks folks for all the insights. Very helpful.
Posted on 5/1/23 at 7:10 am to rickgrimes
very competitive market right now for affordable housing. I am in Holly Springs which is the next town over. I bought a house for 320K in 2017 and i am regretting not to keep it as a rental.
Posted on 5/2/23 at 5:09 am to lsuCJ5
quote:
very competitive market right now for affordable housing. I am in Holly Springs which is the next town over. I bought a house for 320K in 2017 and i am regretting not to keep it as a rental.
Where are you in Holly Springs and do you play golf?
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