Team Building Recommendations and a Big Question

[Daniel LaMontagne]

Hello BiggerPockets! I am looking to invest in a multi family property in the Springdale or Rogers areas of Arkansas for the purpose of cash flow. I am looking to take the first step in building a team in the area, beginning with finding a real estate agent who is intimately familiar with these markets. I plan to visit the area mid month to meet some potential agents and more closely familiarize myself with neighborhoods, and look at some properties. For a brief history, I am in the process of finishing my second house flip in Southern California and am looking to transition into the multi-family sector. Specifically in an up and coming area where the > 1% rule is still attainable. (Rent equaling 1% or more of the purchase price/month). I am not interested in anything that does not meet this criteria, and expect to do rehab to increase the quality of the property and cash flow. My target is 5 - 20 units for the commercial valuation and value add potential. I’d like to put $20% down on a purchase price no greater than $750k. I have no property management experience and am aware jumping into this type of deal opens the door to many unforeseen problems, but 10X baby. After listening to a plethora of Insightful BiggerPockets podcasts I believe this is the most advantageous way to proceed. I have no problem getting my hands dirty, and have adequate reserves. My reasons for selecting Springdale and Rogers are as follows: Ability to obtain 1% rule, good school districts in general, low crime rate, stable tenant base (Wal-Mart and Tyson), potential for appreciation as Fayetteville has seen substantial growth, and lastly I know a few people who live there and love it. If anybody else is familiar with or in investing in the Springdale or Rogers areas, I would consider partnering and going in on a larger enterprise. I am able to fly for free as I am a commercial pilot, and I have plenty of hands on experience with rehabs I plan to put to use overseeing this endeavor. To add a huge question into this mix, the property I currently have is in the south end of Oceanside .5 miles from the beach. Option A is to sell it in a few months when the project is complete and put the money into the above investment. Option 2 is to rent it for around $800/mo cash flow, hope for appreciation, and make a smaller investment into Springdale. Thank you for your time, insight, and real estate agent references. -Danny LaMontagne

[Dustin Davis]

@Daniel LaMontagne... @Andrew Johnson is pretty accurate in saying that dirt appreciation is limited to the "core" areas... I'll detail it a bit more just to keep us all on the same page... I view the 2 cores in NWA as the University of Arkansas and downtown Bentonville/WM Home Office. These are areas where some of the appreciation we are seeing currently will continue and maintain (it's where the money is)... Just to note on a quick exception, housing in DT Bentonville cannot continue to demand $200+ /sqft long term, just sayin'.

Then you have working class cities like Rogers and Springdale where a lot of blue collar folks live and need affordable housing... You won't see the appreciation in these areas continue very long because wage rates for the hourly folks are not following the same upward path and that will naturally keep the balance. 

If I had the money and the time, I'd be looking at Tulsa first, then over to Ft Smith... 2-3 years ago would have been the time to jump on NWA property, now with the inventory level about to correct and values WAY over what they should be caution is highly advised.