Huntsville AL Questions?

Question

Hi BP, my name is Aaron Kawamoto, I'm a real estate investor from Mililani, Hawaii. I recently completed a cash out re-fi, and I'm looking to invest some capital OOS (SFR/MFR). I'm very interested in Huntsville for its stable job opportunities (Red Stone Arsenal, FBI HQ, etc.) and reasonable (*compared to Hawaii) home prices. I understand the Huntsville market is hot right now, so buying a SFR/MFR off the MLS probably will not meet the 1% rule, but would like some sort of cashflow ($200 after expenses if possible). Few questions for any HSV locals or investors out there:

1. Is it possible to get approx. $200 cashflow off the MLS after expenses (including property management and umbrella policy)?

2. What areas of Madison County would you invest in for SFR/MFR (duplex-quad) knowing what you know now?

3. Do you have any other lessons learned you care to share with a newer investor?

Look forward to hearing any responses. Have a great day!

Asa Ifill · Answer

What's going on @Aaron Kawamoto! I will live in Hawaii one day! Congrats on completing your cash-out refi! Now it's time to purchase another property. I am an investor/realtor in the Huntsville, Alabama area. You are 100% correct on the job growth coming to our city. Facebook data center, FBI coming to the Redstone Arsenal and Amazon just put out their statement of adding a fulfillment center to the Madison area - this will bring 500 more jobs!! Yes, the Huntsville market is hot. But that doesn't mean there isn't any deals to be made on the MLS. I've seen several properties go within the last month that could potentially hit your 1% rule while gaining some sort of return. QUESTIONS TO YOUR ANSWERS:1. Yes, you just have to keep looking, it will not jump out at you.2. Knowing what I know now, I would probably purchase property in the same area I did a year ago. I purchased a triplex in Toney, AL about 1-15 mins away from Huntsville and 5 mins away from the new Facebook data center! Toney, Harvest, Athens, Meridianville, Hazel Green and lastly, Decatur. These would be some markets I focus on for the next year or so since the Madison/Huntsville area is growing in price and forcing people to move outward into the areas I mentioned above. 3. Some lessons I will share with you is to network, network, network. Find a good pair of boots on the ground here in the Huntsville area and gain a connection with them. They will be your best bet of purchasing a home in the area since you are OOS.Good luck and I hope to connect with you soon!Thanks,

Caleb Bryant · Answer

For the Cashflow you mentioned 35810 is probably your best bet. It's a C class zip code for the most part that is beginning to appreciate quickly. It'll be tough to get that deal off the MLS, you'll want to be talking to wholesalers, property managers and agents for what they know is coming up off market. If you come into town let me or my team know and we will show you some cool spots!

Stacey Bochenski · Answer

@Aaron Kawamoto I second what @Caleb Bryant said. I have purchased 3 sfh properties off-market this year in 35810 and 35805 that meet (or slightly exceed) the 1% rule. They're out there, but you have to be ready and move fast!

Lane Kawaoka · Answer

I own 7 apartments (1000+ units) in HSV...1. Is it possible to get approx. $200 cashflow off the MLS after expenses (including property management and umbrella policy)?Not really when you include all the needed capex reserves, 5-8% vacancy, property management, and 8-10% repairs. 2. What areas of Madison County would you invest in for SFR/MFR (duplex-quad) knowing what you know now?Madison is a really nice part of town. That said I don't think you will be able to CF out there. 3. Do you have any other lessons learned you care to share with a newer investor? I don't think there are any turnkey providers in HSV because its a smaller market. If you have any more specific questions please let me know.

Aaron Kawamoto · Answer

@Lane Kawaoka thank you for the information and advice. Looks like you’re killing it with syndication! I don’t intend on investing all my capital into any deals I can’t “afford”, ie I will be keeping some reserves for mr murphy. If I have to expand into other surrounding areas to find higher cashflow, I’ll do that. As long as the numbers make sense.

Aaron Kawamoto · Answer

@Caleb Bryant Thank you for that information! I will DM you shortly. We are always willing to network with as many like minded individuals as possible. You can never know too many good people...

Lee Hampton · Answer

@Aaron Kawamoto What is your timeframe? I'm actively kicking tires, so still in concept stage, so timeframe is not immediate, more like 6-12 months. High level: Purchase a moderate size piece of land in Huntsville/Madison County, Land will be subdivided and several quadplexes built from the ground up. Subscribers will be entitled to their own subdivided piece of land complete with a new construction quad. I'm a builder/developer from Houston. My target is to get all subscribers close to 1% and definitely cash flowing.

Sandra Morrison · Answer

@Aaron KawamotoI have a son living in Huntsville and several friends that grew up there. I have been watching, learning and visiting the market while finding a team there.Have you visited?

Keola Nishikawa · Answer

@Aaron Kawamoto I live in Mililani too. I’ll send you a message.

Percy N. · Answer

Bumping this thread to see what people are seeing.We own around 1,200 units in the Huntsville/Madison area and just bought a Built-for-Rent community in Athens. We find that it helps to have scale and focus in the market.There is some new supply coming but the demand is still strong.