Why North Carolina is One of the Hottest DSCR Investment Markets in 2025

From mountain towns to coastal metros, North Carolina’s rental real estate boom is reshaping the DSCR landscape for investors.

If you’re a real estate investor in 2025 and North Carolina isn’t on your radar, you’re missing out on one of the strongest rental markets in the country. With a perfect storm of rapid population growth, investor-friendly laws, and surging rental demand, the Tar Heel State has emerged as a powerhouse for DSCR (Debt Service Coverage Ratio) financing. From Charlotte’s towering skyline to Asheville’s scenic slopes, there’s a compelling case to be made for putting North Carolina at the top of your buy box.

At American Heritage Lending, we’ve financed thousands of DSCR deals across the U.S., and few markets today offer the same mix of opportunity, rental cash flow, and long-term appreciation potential as North Carolina. Let’s unpack what makes the state so attractive right now — and where savvy investors are deploying capital in 2025.

Whether you’re seeking high-yield short-term rental plays in beach towns or long-term stability in growth metros like Raleigh-Durham, this market offers a diverse array of investment opportunities. For portfolio-minded investors, the state also provides a hedge: balanced supply-demand fundamentals, rising incomes, and favorable demographic trends. With property values steadily climbing and rental yields staying healthy, it’s no surprise that out-of-state capital continues to pour in.

The DSCR Boom: Why North Carolina Is Ground Zero

​In recent years, North Carolina has become a focal point for real estate investors utilizing Debt Service Coverage Ratio (DSCR) loans. These loans, which allow qualification based on a property’s income rather than personal income, have surged in popularity. Nationally, DSCR loans accounted for approximately 50% of all non-QM mortgage securitizations by early 2025. North Carolina stands out in this trend, with several factors contributing to its prominence.​

Key Drivers of DSCR Loan Popularity in North Carolina:

• Diverse and Growing Markets: Cities like Charlotte and Raleigh-Durham have experienced significant population growth, leading to increased rental demand. For instance, Charlotte’s average rents have surpassed $1,900/month, reflecting the city’s robust economic expansion.​

• Investor-Friendly Loan Terms: Lenders in North Carolina offer favorable DSCR loan terms, including 30-year fixed rates and interest-only options. These features provide both seasoned and first-time investors with flexible financing solutions to scale their portfolios. ​

• Streamlined Approval Processes: The emphasis on property income over personal income simplifies the approval process. This efficiency is particularly advantageous in competitive markets where quick closing times are essential.

• Attractive Interest Rates: As of early 2025, DSCR loan interest rates in North Carolina start as low as 6.125%, making them a cost-effective financing option for investors. ​

Statistical Insights:

• Rental Yield: North Carolina boasts an average rental yield of 6.8%, positioning it among the top states for DSCR loan investments.

• Loan-to-Value Ratios: Lenders typically offer Loan-to-Value (LTV) ratios up to 80%, requiring down payments between 20-25%. ​

The convergence of these factors underscores North Carolina’s emergence as a prime destination for DSCR loan investments, offering a blend of favorable financing terms and strong market fundamentals.

A City-by-City Breakdown: Where to Invest in 2025

Charlotte: Steady Cash Flow in a Diversified Powerhouse

Charlotte continues to be the state’s largest and most dynamic rental market. With 5% annual job growth and massive in-migration, it’s no wonder investors are drawn to its 8%+ vacancy rate (driven by temporary overbuilding) and 5.5% cap rates. That slight softening in rents? It’s likely short-lived, offering a window of opportunity before upward pressure resumes.

Charlotte’s economy is anchored by finance, tech, healthcare, and logistics — and that’s reflected in demand across Class A, B, and C rental assets. DSCR-financed investors are finding success in urban multifamily rehabs, suburban build-to-rent homes, and short-term furnished rentals for traveling professionals.

Raleigh-Durham: The Growth Investor’s Paradise

Tech jobs, elite universities, and biotech hubs have turned this region into a magnet for young professionals and high earners. Rents soared over 30% since 2020, and while construction has briefly tempered the growth curve, forecasts show a return to steady increases by late 2025. DSCR deals in the Triangle are being fueled by strong absorption and growing household incomes.

What sets the Triangle apart is its ability to consistently attract top-tier talent, which translates into a sophisticated renter base and low delinquency rates. Submarkets like Cary, Apex, and Wake Forest are seeing some of the strongest cash-on-cash returns in the region. With home prices now stabilizing, this is a great time for DSCR borrowers to re-enter or expand in the Triangle.

Asheville: Boutique Yields in the Blue Ridge

Asheville may be a smaller city, but it punches well above its weight with near-$2,000 average rents and chronic housing shortages. Vacancy was once under 2%; it has risen slightly but remains tight. Investors using DSCR to fund Airbnb or executive rentals here are seeing strong ROI, though short-term rental regulation is something to monitor.

Asheville’s appeal is deeply tied to lifestyle: it attracts remote workers, creatives, retirees, and tourists in equal measure. This allows for hybrid investment strategies — long-term rentals in the city core, short-term lake and mountain rentals in surrounding areas. DSCR financing is especially helpful here due to high nightly rental rates that make for strong income-based underwriting.

Wilmington: Coastal Growth Meets Investor Demand

Wilmington is no longer a sleepy beach town. With 25% growth in renter households since 2020 and cap rates nearing 6%, it’s become a serious contender. High construction volume has lifted vacancy to 8%, but with demand roaring back, that’s more of a rebalancing than a red flag. Investors using DSCR loans on coastal rentals or single-family homes in the suburbs are well-positioned.

The area benefits from multiple demand drivers — military, medical, tourism, retirees — which makes its rental base diverse and resilient. Vacation rentals and long-term leases are equally viable here. As new inventory gets absorbed, we expect rent growth to resume, pushing up DSCR coverage ratios on deals originated today.

The Triad: Greensboro & Winston-Salem Go Mainstream

The Piedmont Triad has historically lagged Charlotte and Raleigh, but that’s changing fast. New economic development, like Toyota’s EV battery plant, is driving job growth and rent demand. Investors can find 6%+ cap rates and lower property prices, making DSCR financing highly viable.

This region is particularly attractive for cash-flow-focused investors. Property taxes are lower than in urban cores, while appreciation potential remains strong thanks to public-private investment. We’re seeing increased interest in value-add duplexes, small apartment buildings, and workforce housing plays that yield high DSCRs out of the gate.

Secondary Markets Worth Your Attention

Beyond the big names, here’s where DSCR investors are quietly winning:

• Fayetteville: Military demand + rent spikes = high yield. DSCR is especially useful near Fort Liberty for mid-term rentals, where turnover is predictable and demand is stable due to base operations.
• Emerald Isle & Outer Banks: Vacation STRs with strong occupancy and revenue potential. Seasonal rents often outperform long-term leases, and many properties can gross over $50,000 annually with the right management and marketing.
• Greenville & Boone: Student housing and regional growth are driving consistent rental demand. These towns benefit from strong university presences, and DSCR investors are finding duplexes and triplexes that easily meet or exceed 1.25x coverage.
• Johnston, Cabarrus & Union Counties: These fast-growing suburbs surrounding Raleigh and Charlotte offer strong appreciation potential and steady demand. DSCR loans are helping investors acquire both new-builds and resale homes in areas with rising rent-to-price ratios.

Also worth noting: municipalities like Hickory, Rocky Mount, and Lenoir are seeing revitalization efforts and infrastructure investment, setting the stage for long-term buy-and-hold success in tertiary cities. With low acquisition costs and improving local economies, these markets are ripe for first movers.

Policy Perks: Why Investors Love North Carolina

Few states are more landlord-friendly than North Carolina. Key advantages:

• No rent control laws statewide
• Judicial eviction process that balances efficiency and fairness
• Reasonable property taxes and insurance (except coastal wind/flood)
• No state-level DSCR restrictions, and a growing number of lenders are offering 30-year fixed, interest-only, and short-term DSCR options.

Additionally, the state has shown support for development and housing access through zoning reforms and tax incentives. This increases the pace at which investors can build or convert properties. Even local municipalities are becoming more DSCR-friendly, with streamlined permitting in high-growth zones.

2025 Forecast: A Healthy Plateau with Upside Potential

After three years of meteoric rent growth, most North Carolina metros are entering a balanced phase. Construction has caught up with demand, but vacancy rates are expected to stabilize as fewer projects break ground. Rents may flatten in the short-term but are likely to resume modest growth by late 2025, especially as interest rates trend down and population inflows remain strong.

For DSCR investors, this means better entry points, more favorable loan pricing, and stable cash flow in high-demand areas. Whether you’re chasing yield, appreciation, or portfolio diversification, North Carolina offers a compelling case for deployment in 2025.

We expect core markets like Charlotte and Raleigh to maintain modest rent growth (2–3% annually) while secondary markets continue to outperform with yields in the 6–8% range. As financing becomes more competitive again and inflation cools, DSCR loan products will become even more attractive — particularly for investors focused on long-term holds or BRRRR strategies.

In fact, we anticipate a second wave of investor activity in mid-to-late 2025, spurred by lower borrowing costs and stabilized construction. Seasoned investors are already positioning themselves for this rebound, locking in acquisitions before pricing heats up again. The next six months could prove pivotal for building a scalable portfolio with DSCR financing.

Additionally, cap rate compression is expected to resume in high-demand urban areas by 2026, which could boost asset values for investors who buy today. Those who act early in 2025 could enjoy a rare window of strong yield plus near-term appreciation — the DSCR investor’s ideal scenario.

Final Word: The DSCR Dream of the Southeast

North Carolina has all the makings of a DSCR investor’s dream market. Strong cash flows, flexible financing, population growth, and investor-friendly policies create an environment where smart capital gets rewarded.

From beach towns to mountain enclaves to growing suburbs, there’s no shortage of opportunity — only the question of where you’ll strike first. Whether you’re closing your first DSCR loan or optimizing a 10-property portfolio, this state offers the tools, demand, and infrastructure to support your next move.

At American Heritage Lending, we work with investors nationwide to source and fund DSCR deals in emerging and established markets. If North Carolina isn’t part of your 2025 plan yet — it should be.

Let’s talk strategy. Let’s talk deals. Let’s talk North Carolina.