Eddie Patella has seen the unique challenges affecting the Winston-Salem real estate market in the face of COVID-19 but feels comfortable with his investments. That’s because he took the time to carefully choose where he would invest and has balanced his costs intelligently. Here are a few things that you need to know if you want to get into this market.
How to Invest in Winston-Salem, According to Eddie Patella
Examining the current real estate investment information for Winston-Salem, Eddie Patella has discovered some interesting information. The average property sale price right now for a property is just over $216,000 with an average of 1,700-square feet. That’s a fairly strong real estate market for the area and one that may provide many benefits.
The tricky thing about this situation is that the market is artificially inflated due to the COVID-19 pandemic. These high prices aren’t likely to go down any time soon, which is great for property owners. However, more owners find that demand is heavily decreasing, which could affect their ability to sell, especially as a home’s sale price may not be congruent with its actual worth.
For example, Eddie Patella has seen 1,076-square foot homes with two bedrooms and bathrooms going for $20,000 more than a home at nearly double the size with one extra bedroom. As a result, he has advised many people to move more into the rental or AirBnB market instead of attempting to resell property just yet.
That’s because rent and AirBnB may provide a higher income than a sale, particularly over a long period. Traditional rent provides about 3.48% return on your investment, with an average rental income of about $1,237. That’s a fairly high return rate, and many real estate professionals are taking note. However, AirBnB may still be a better option.
Currently, Eddie Patella estimates about a 7.35% return on your cash investment with AirBnB. That’s over the return with renting. Likewise, your rental income with AirBnB may average at about $2,637 in the Winston-Salem area. So, is there any reason not to just make your homes AirBnb destinations?
Yes, quite a few reasons. First, you must understand occupancy rates with AirBnb. These rates indicate how often a property gets used and can cause your profits to go up and down. Currently, Winston-Salem has an AirBnB occupancy rate of 68%. That’s not too bad, but the rate has gone down in the face of COVID.
Unfortunately, these less than 75% occupancy rates mean that you won’t be getting rent for nearly one-third of all possible occupancy days. That rate is concerning and, as a result, Eddie Patella suggests a balanced approach. If you can’t sell your properties (which is still the best way to get immediate cash), convert some into full-time rentals and others into AirBnB.
The split you choose here will vary based on your needs. Some people may find that a 50% split works well, while others prefer more traditional rentals. Typically, traditional rentals provide lower, but more consistent, incomes. You may want around 60-70% traditional rental properties for your Winston-Salem real estate profile. Then, you can convert the rest into AirBnB.