Great Time to be an Investor in Wilmington NC–Rents Higher than mortgages

Hi I’m Jay the team leader for JustNewLlistings.com and I work and live full-time in Wilmington North Carolina.  I also have a team in Northern Virginia and Washington DC on so I have in my background about $50 million of contracts negotiated the past 12 years.  ah recently I was running numbers for a client of mine, an investor,  and because I had a chance to do some real specific calculations and numbers I wanted to share them with you to make the point that right now Wilmington North Carolina real estate is in investors paradise.  And I will show you the data you come to your own conclusions, and I also want to show you how relatively simple it is to find out if something is a good investment property or not.  You know run the numbers and see where they come out.  And then you taken the other factors– taxes, Association fees, condition of the property, demand for the property–let’s just look at a little bit of all that for you right now, and the main goal I have is to let you know this is a crazy good time to buy if you want to invest in real estate. Everything is almost positive cash flow and we can make it happen for you.  All right let’s get started.

Okay keep in mind while I do this video I am dictating it so that does change the style of my presentation and takes away some of my personality.  I just put that disclaimer out there because these can be a little bit dorky sometimes.

Okay let’s look at the numbers… in 2012 we had a mini boom last year.  Some prices went up this graph shows you how they median list price went up from 251 to 258 across the board.  This is for single-family houses.  So that some mild increase in home values.  The big picture though inventory plummeted 60% the number of transactions skyrocketed 30% or 40% you combine all those factors and have a nice real estate cocktail:  high demand, low inventory, prices starting to inch back up.  So the market turned the corner in solid fashion last year now let’s look at some specific investment properties and run the numbers on them.

For the 2 investment house we look at we are going to keep in mind that typically a home is selling for 95% of list price right now.  Okay the 1st home is 5006 Carleton is listed for 172,000.  It is a townhouse of block away from UNCW campus that is sort of the classic investment property scenario:  buy something near the college that University kids need to rent out.  Often they can rent out these homes less than they can from the campus housing itself in the dorm rooms.  That makes them high demand properties. And now let’s  look the specific numbers on this.

The comps are at and these are all on the same block $1200, $1150, and $1125.  That’s what the last 3 have rented for.  Now going to try to enlarge the screen for you. Now if you take 95% of the list price you come out to $170,000.  If you put 25% down you end up with a down payment of $42,500.  This leaves you with a mortgage of $127,500.  With an interest rate of 4% your monthly payment is $608 a month. Factor in taxes for the year their $1631; that comes out to $136 a month.  And real quick I’ll show you a picture of the taxes data.  That comes from the county website and the main thing I want to point out is you have new Hanover real estate taxes, but you also have the Wilmington real estate tax because this property is within the city limits.  Being inside the city limits increases your taxes and almost doubles your taxes so if you, if you buy an investment property outside of the city limits you’re cutting your taxes by 40%.  That is a huge deal, however we are in such uh excuse me, however we are in such an investors paradise right now that one still has positive cash flow within the city limits of Wilmington on almost any home they buy.

So when you add the mortgage payment the monthly tax and 8 $220 HOA fee you end up that $964 a month.  You subtract that from the rents of $1150 and you end up plus $186.  That’s if you put 25% down, however if you put 50% down like so many investors do, you end up at nearly $400 plus cash flow per month. The good thing is the home happens to be appreciating so you’re also gaining equity through appreciation and $400 positive cash flow month plus a tax write off. This is a great hedge against inflation which is coming.

Let’s take at the next investment property.  This is 233 Dixie Ave. a list price of $162,000, and what are the comps for it?  You have this home on oriole that rented for 1600 a month, this home on Collingwood court rented for $1500 a month.  These are all the same size homes near the University.  And finally you have this home on Bayside which rented for $1800 a month. So with the sale price of $155,000, again that’s 95% of list price, if you put 25% down and a 4% interest rate your monthly payment is $556 a month.

The taxes are $103 a month however this time there is no HOA fee.  Those HOA fees cut into your profit big-time your monthly payment comes out to $659 a month. Keep in mind though these homes the single-family homes were renting considerably more than the townhouse was so if we just use a modest rental, of only $1400 a month, you still end up after your monthly payment with plus $741 cash flow if you put 50% down you end up with plus $927 a month. that is just sick and I say that “sick” in a good way.

Now the one scenario I did not cover is buying an investment property outside of the city limits so you’re cutting your taxes by 40% and with no HOA fee.  And that’s where the gravy is.  But even without those extra bonuses it’s still a great investors paradise here because you’re coming out with positive cash flow at most a price brackets. So you can do this and when this much or he can go all out to be very picky, take off the city taxes and HOA fee and come out even more extreme with your positive cash flow ratios.  I’m here to do it with you and for you as a team I’m sure we can make sure you have good experience.

And real quickly just a quick shout out to my website this is Wilmington-real-estate.com you can find lots of these articles right here. for example this one is summarizing the porters neck plantation boom 2012 home sales. this one is landfall country club fees in Wilmington North Carolina.  Then an interview with the builder at Edgewater trace another interview with Mallory Creek or Porters Point, typical walk-through video, anyway you get the idea.  I do what’s called real estate blogging; often it has video. Often it is hard-core and intense and analytical.  And the whole purpose of this is to build my resume for you in terms of showing you my knowledge that way you have confidence in letting me be your realtor and to negotiate for you.  And again my team up in Virginia has about 40 deals year I do my own 20 in Wilmington, so I am a top half of 1% buyer agent and I love it and I can’t wait to meet you soon. Bye bye.

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