Little Rock Arkansas!

[Matthew M.]

I'm reaching out to the bigger pockets community to find out about the Sherwood area and the Jacksonville area just outside of Little Rock Arkansas. I'm looking to purchase a single-family home as a rental unit that has been rehabbed on the border of Sherwood and Jacksonville. Jacksonville cut off road.

I would just would like to know if you guys and gals own any single family homes in this areas or any rental properties for that matter and if you can lend some of your experience

[Damon Cluck]

You pointed out one of the two key factors driving this market right now, low supply. If you look at a market report, you’ll see that week over week, our inventory is down about 40%. That combined with the cheap money flooding the market, is exerting a lot of pressure on the market. My experience is also that Little Rock has gained a little notoriety right now due to favorable price to rent ratio’s and very favorable land lord tenant ratios. Finally, Arkansas’s economy has weathered COVID better than many.   I spoke to my property manager yesterday and he said that out of 500 doors, he currently has 5 vacancies, and rent collections are still strong. Unemployment is still fairly low. I say all this to explain that the market has changed pretty dramatically on the last year I am not sure that these conditions reflect a long term trend. 

Outside of the conditions that I mentioned above, these are not area’s experiencing rapid growth or strong appreciation. I would say at before Covid, Appreciation has been fairly low, but cash flow has been strong do to the rent to price ratios. 

The biggest factor in Jacksonville and to a lesser degree Sherwood is the presence of Little Rock Air Force Base, which provides a tremendous amount of stability.  So it you were buy for cash flow, I would say these are strong and stable markets. If you are buying for appreciation, thaws have not been historically strong markets. Most of the true growth in Arkansas has been in the northwestern part of the state. 

Its there high demand, job growth, rent growth?

We are experiencing some rent growth right now. I have had a couple of very good BRRRR lately. Houses that I bought in the 40-50 range, added 20K and then rented in the 950-1100 range, but do to the pressure I mentioned earlier, deals are a little harder to find currently. We do have a lot of very active wholesalers right now but even they are getting g a premium on their deals right now. I recently looked at a Horder house. Garbage piled up knee deep all the way through, non functioning HVAC. Wholesaler had it listed for 48k. After a week he sold the contract for 61K. That would not have happed a year ago.

You may want to consider are you buying for Appreciation or cash flow. There may be markets where you can get both, but historically that has not been central Arkansas, but we do have a lot of stability and usually a lot of good BRRRR opportunities.

Hope That helps.