Charlotte, NC: 22.8% Return on Investment (2011)
Charlotte is a great city that has been hit hard by economic difficulties, as the number two banking center in the United States. Charlotte has lagged many of the other linear markets in its price appreciation and in the value correction. Charlotte appears to have reached its bottom in 2010, with prices expected to stabilize as we enter 2011. Currently, approximately 38% of the real estate listings in Charlotte are from foreclosures.
With healthy cash flows that allow investors to pay for their operating expenses and mortgage payments out of rent revenue, investors in Charlotte have the ability to wait for values to bottom and recover. By focusing on markets with attractive cash flow, it gives investors tremendous power to determine when selling benefits them the most instead of backing themselves into a corner where they cannot afford to carry the negative cash flow
on a property and must sell at a loss. Many investors fell into this trap during the financial collapse, because they were focused on fast gains instead of economic fundamentals. In 2011 and beyond, we expect to see the Charlotte market improve as its values resume a reasonable trajectory of modest appreciation.
The last 10 years have seen a significant population gain for Charlotte, because of the favorable business environment and quality of life. Our models expect that these fundamentals will drive future value movements for the area as its economy recovers from the financial crisis and new areas of opportunity emerge. The principal advantage of following a strategy that focuses on sustainable income property investing is that negative cash flows will not need to be absorbed indefinitely while waiting for a market recovery to transpire. By seeking areas and deals with attractive rates of cash flow from day one, it positions in such a way that market cycles do not need to be timed perfectly in order to generate profits.