A little about our market
This Week's Entrepreneur Volo # Post 2
Good morning and peace again!
Thank you so much for all the messages and support I have received since the first post - appreciate it!
Since almost all of the messages I received in private referred specifically to our North Carolina market, I wanted to tell you a little bit about it… because it is truly exceptional.
I work in an area called the Research Triangle that includes Raleigh, Durham, Chapel Hill (this is the triangle), Carrie, Morrisville, Apax, Hillsboro. In our area there are many reputable universities and hospitals, the largest of which are Duke and UNC. In addition, there are many research and high-tech companies here. A lot of people come here for work, study, postdoctoral, etc. But not only. Especially now that we are working more and more from home, our area is very popular for moving just to live here, regardless of the rest. North Carolina is in the relatively southern part of the United States, so the weather is pleasant and not too cold in the winter. We are located in the center of the East Coast a fairly worthwhile drive between New York and Florida in each direction, and in the center of the state (North Carolina) between the mountains and the sea (2.5-3 hours each way), so we also do not have my dramatic weather in these areas. Recently Apple, Google and Microsoft announced that they are opening campuses / offices here… So these are all reasons that the area is just continuing to grow and develop at a dizzying pace. Come on, we have a very strong market of sellers that really started to catch on about 6 years ago just when I got into real estate, and it's only getting more intense year after year. Especially in the last year with the corona - as it has been crazy all over the US - so too in our country and there are areas that have doubled since the beginning of the corona. And it does not stop…
So after I gave a background on why they move here and why the market is crazy… Here are more relevant and maybe a little scary data:
Prices for family-friendly size homes start at $ 300,000 but make more sense at least $ 350-450K with a monthly rent of about $ 1,800-2,300. So do not expect cash flow right now. The advantage in our area is the improvement of the properties, and the rents will probably increase accordingly, but because of the huge growth in the last time and especially in the last year, the rents have not risen enough yet.
There is here (specifically in our country) what is called Due Diligence Fee. This is a sum of money, a deposit, that is paid to the sellers immediately after entering into the contract (after the contract has been signed by both parties, the buyer and the seller). This is not a standard amount, not a certain percentage, and not even based on the price of the property. It is based on competition. Demand. The more competition there is, the higher bid needs to be made to show seriousness. In our crazy market it is already reaching a minimum of $ 30,000- $ 60,000 and up… much up. It is not written anywhere but it is known that bids with less ink diligence are less likely to be accepted. Now what does the Due Diligence Fee mean? You buyers are actually paying the sellers to take the property off the market and let you have your tests done and decide whether to buy the property or not. But, no matter what the tests cost, or if there is a problem with the appraisal, or if for some reason you can not close… This money stays with the sellers! You only get it back as credit at closing. So in this market, when you make an offer, you have to be really, really sure that you are going to buy the property in any situation. Many times these properties are also sold as-is and no longer ask for repairs from the sellers (who usually do negotiate repairs or funds after inspections).
The price - any property that is priced correctly and has no serious problems, is sold with many offers (sometimes 30-40) and at 10% -25% above the asking price, depending of course on the property, location, and the original price.
So now that I'm totally scared of you…. Why invest in the market here at all ?? Very simple - because the increase in value is insane and the potential is that it will continue to grow and develop much more. It hurts me when I see investors who have been looking for two years and want a very specific return and are not willing to take a risk and change direction… and meanwhile lose a potential of hundreds of thousands of dollars because they do not buy. So my suggestion (if you have the budget) - in our market or another similar market, find a good broker who can be trusted and who knows the market and the quality of the assets, have a lot of patience and strength (because it is not easy to lose many offers) and start looking and offering . Do not wait - the chances are that the market will not fall and that prices will not fall, will only rise and it is a pity that you will be disappointed later in retrospect that you did not invest. I have added a curve to illustrate the market by district with us in the last year.
This is for today. If you have any questions, I will be happy to answer and we will all have a wonderful, fruitful and rewarding day.
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