Charlotte is a very smart market for real estate investors to tap into. It has one of the largest economies in the South, home to many major companies like Wells Fargo, Duke Energy, NASCAR, and Dillard’s. There is no shortage of job opportunities, which bring young professionals and families to the city in droves each year. If you’re new to investing in Charlotte or in general, you’ll want to research all of your options and what Charlotte has to offer before choosing a property.

Know the Neighborhoods

Charlotte is divided into many diverse and culturally rich neighborhoods, and they all will offer something different in terms of property price and tenant demographics. South End is great for young professional tenants, and you’ll see high rental demands in this area. NoDa (North Davidson) is the artistic and cultural center of the city, and you’re more likely to thrive with short-term rentals here. University City will provide a steady stream of rental income from the city’s college students. East Charlotte is a more affordable part of the city that has been growing recently due to revitalization; it may be a smart investment strategy for future large returns. Don’t forget that surrounding cities like Concord, Kannapolis, Fort Mill, or Huntersville can yield high ROI (return on investment) from Charlotte commuters.

Choose the Right Budget

Investing is more than just selecting a loan and enjoying passive income. You’ll need to determine what you can afford, regardless of the type of loan you get. If you end up paying more for the property than you can see a return on, you’ll be in a lot of debt. Down payments are usually 20% to 25% of the purchase price for investors, but this will vary depending on the loan type. You may have to pay as high as five percent for the property’s closing costs as well. Regular costs will also include property taxes, insurance, and property maintenance. You’ll need to make sure you can afford these expenses, especially while you’re boarding the on-ramp for securing tenants. 

Compare Financing Options

While there are plenty of loan options for property buyers, you’ll want to evaluate which ones are more investor-friendly. Conventional loans may be attractive if you have the funds for a large down payment. In general, DSCR (Debt-Service Coverage Ratio) loans in North Carolina are great options for investors, as they will assess rental income over personal income. FHA (Federal Housing Administration) loans will limit investors in what they can purchase, but some multi-family properties may qualify. Local credit unions typically offer the best mortgage rates, but you’ll want to compare all your options before making a choice. Additionally, Charlotte provides a few down payment assistance programs that newer investors may qualify for depending on how they invest.

Research Local Zoning and Rental Laws

To avoid legal issues and hefty fines, you will want to research all of the laws regarding real estate, tenant management, and landlords, including laws regarding evictions and security deposits. If you plan on constructing new properties, you will need to be familiar with zoning laws, especially with commercial multi-family properties. You’ll also need to consider zoning laws if you’re planning on regular short-term rentals. You can consult with a real estate lawyer to ensure all of your bases are covered.

Find a Local Team

You will want to work with professionals who live in or are highly familiar with the Charlotte area to maximize ROI. Find local real estate agents, contractors, property managers, and lenders to give you the best options for the location. You can shop around and compare quotes, but you’ll most likely want to go local for all of your investment and management needs. The real estate agent you choose should also specialize in investors and investment properties. Even if you aren’t constructing a property, contractors are great to have on hand for upgrades, renovations, and repairs.

Set the Right Rental Price for ROI

If you set your rental price too high, you may see fewer tenants. If you put it too low, you may not make any profits. Research average rental prices in the area you’re choosing to invest in—online resources like Zillow or Trulia are good for this. Choose a rental price while keeping capitalization rates, cash-on-cash returns, and average rent costs in mind. 

Improve the Property

You will likely need to renovate or repair the property you purchase, especially if you bought a lower-cost older home. You don’t want to skimp on the repairs, however. Inadequate maintenance can result in serious health or safety issues. You also may deter tenants from renting a rundown property. You won’t be able to maximize rental returns with a lower-quality property. Find a local contractor with competitive rates and solid reviews. They’ll help make the necessary repairs to keep the property looking squeaky clean—and you’ll be able to see higher ROI, too.

Conclusion

Charlotte has an excellent, diverse economy with plenty of growth. You’ll find a thriving rental market here, and it’s a great choice for both first-time and seasoned real estate investors. You’ll need to do proper research into neighborhoods, local agents, and lending options, but you’ll make the most of the market and investment returns.