Real-estate investing in Wilmington, NC can present many fantastic opportunities to invest in a growing, thriving city. BUT be forewarned as there are many pit traps such as high-risk areas, shady realtors, and individuals that pitch the “perfect” investments. Here are some solid tips so that you don’t wind up with a low performing rental property in Wilmington:
First, are you totally new to real-estate investing?
If you are new to real-estate investing overall it may be wise to obtain a “knowledge base” for real-estate investing. Real-estate investing isn’t rocket science, but there is some upfront knowledge required to prevent yourself from making costly mistakes.
#1. Learn how-to do the math behind a real-estate investment
This is probably the most important. Real-estate is a “numbers games” and calculating a few simple equations can help you really grasp the concept of real-estate investing: NOI, Cap-Rate, Cash-flow, and Cash-on-Cash Return are %90 of what you need to know.
This is a “real-life” example of how I do the calculations on an investment:
#2. Be patient and watch the market
The biggest place I see investors go wrong is they are impatient! Nobody wants to admit they have a “get rich quick” attitude, but MANY investors do. Relax. Watch the market and realize that you need to wait a while to find a good property. If a deal passes you up, just realize one will come later and don’t rush into a deal. It also can be helpful to have a real-estate agent set you up with an MLS subscription to consistently be on the look out for properties!
#3. Start talking to a mortgage person
You can’t buy real-estate without money and much of your success in real-estate investing will be how “well” you obtain financing.
- First real-estate purchase? Ask about “government back loans”
- Are you interested in flipping? Tell the mortgage person this.
- It’s possible to “negotiate” with mortgage professionals so don’t leave money on the table!
- Realize that the objective here is to MAXIMIZE CASH-FLOW ABOVE ALL ELSE
I heard that Wilmington, NC is one of the best places to invest in real-estate! Is this true?
Yes, Wilmington can be a great place to invest in real-estate, BUT so can any location if you look hard enough! As a real-estate investor myself I truly believe that money can be made anywhere that land can be owned. Nonetheless, here are some fantastic reasons why Wilmington continues to be invested in foreign and locally by people of all types:
- Cheap compared to other locations (You can’t get much for $126K in Charlotte, Raleigh, and other major cities)
- Heavily diversified economic base with a major university, tourism industry, port city, and an emerging corporate sector.
- Not much competition with amongst bigger investors, institutions, and hedge funds.
- High growth
Don’t let people fool you, there are some bad things about investing in Wilmington:
- There’s hype building in Wilmington and competition is heating up.
- Wilmington faces threats of over-development
- Cap-rates are becoming compressed (But this is true anywhere as of July 2017)
- Wilmington is the smallest county in NC land-wise. Developing land is expensive and difficult to make profitable.
Where is the best place to real-estate invest in Wilmington?
Many people wonder where are the best places to real estate invest in Wilmington. This is a very difficult question to answer and will depend on many factors. Broadly speaking there are three main investment areas in Wilmington:
- Near UNCW
College rentals are a very popular subset of real-estate investing and Wilmington is LOADED with college rental properties. They do have higher returns, but they also come with some risk. Check out my article, for an in-depth explanation of college rental investing.
Put blankly, I’m not a fan of down-town investing. There’s tons of cheap investments, BUT they will be very management intensive. If you are interested in properties with high-cash flow and huge risk, Wilmington downtown may appeal to you. Most investors are seeking wealth building and downtown has poor appreciation potential. This isn’t ALWAYS the case and there are some areas with good wealth building potential.
Mid-town is great if you are seeking a property in a “blue collar” subdivision and don’t want to go the college investment route. Mid-town actually has a larger supply of investments then the college market due to it’s size. There is also a very healthy economic base with hospitals, offices, and businesses about!
- Beach (Depends on what you call an “investment”)
Just like downtown, I’m not a fan of beach investing either. Properties on Wrightsville Beach and Carolina *usually* have abysmal returns, but not always. Be very wary when beach investing because I’ve seen a ton of brokers that “puff up” the pro-forma in order to make the property look more appealing. Also, beach investments have such volatile cash-flows that they are very hard to predict how well they will perform.
Want more in-depth information? Check out my other blogs!:
- 4 Great Neighborhoods To Invest In Wilmington, NC
- 3 Investment Properties near UNCW
- 3 Tips For Finding A College Investment Property in Wilmington, NC
- Duplex Investing in Wilmington, NC
- Triplex Investing in Wilmington, NC
- Vacation Rental Investing in Wilmington, NC
- Why Is Vacant Land So Expensive In Wilmington?!
- Places To Get Investment Property Financing
- What Is A “Good” Rental Property in Wilmington?
More helpful tips when buying real-estate investments!:
- Gauge your risk
Remember this simple slogan: “More return = more risk“. Do you like evicting dead-beat tenants? Do you love fixing properties that need tons of work? Do you enjoy screening potential tenants like a private investigator? Buy a piece of real-estate that has a %15 percent return and that’s what you’ll get!
Before you jump into a property with a %15 return (Yes, there are properties in Wilmington that do!) remember that when you see something with a huge return, it means there’s a ton of management involved.
- Do the research and stick to your guns
Every invested off a “stock tip” from your drunk uncle? I did and I lost my investment! Real-estate investing is no different. Stick to the numbers and don’t buy into the hype. When you hear someone say things like “Perfect investment”, “HUGE returns!”, “High GROWTH”, just brush it off and look at the numbers. I’ve seen many investors get caught up in the new “thing” and lose money when things didn’t pan out.
- Stick to a specific area
I’m a real-estate broker, so I have the privilege of being paid to look at real-estate ALL DAY. The vast majority of investors don’t and will burn themselves out trying to become an expert on every corner of the market. Real-estate deals are lurking around every corner and trying to seek that “perfect” investment somewhere will drive you nuts. The most successful investors I’ve ever seen didn’t make fortunes investing in areas they didn’t know.
- Call people, network, and speak with real-estate professionals
We all know that real-estate is a “people” business, but have you ever asked yourself why? It’s mostly because real-estate is “hyper local”; meaning that the information can’t be found online or in one specific place. In order to become a true expert in your area, you have to get out there and see what other people are doing. Let others know you are interested in real-estate. Read books on real-estate, talk about real-estate, and/or start a real-estate blog like I did to share knowledge.