Thoughts on Huntsville, Alabama?

[Zane K.]

Hi Everyone, 

I am looking to purchase out of state rental properties. I would like to stick to my max purchase price of $250k. My goal is cashflow with appreciation being a bonus.

I am would love to hear your experience with long term rentals in Huntsville around this purchase price. 

Any insight to this market would be greatly appreciated!

[Tom Morrissey]

@Michael S.thanks for that.  I would add that the $144/month ($1728/year) is only about an 3.43% cash-on-cash return (at 20% down).  You would do better in 30-day t-bills (right now ;-)

The hopes an investor might have (if you purchased a property like this) are: 1) inflation to drive rents up, 2) inflation to drive property appreciation, and 3) mortgage rates to drop to refi at a lower rate in a few years.

A lot depends on what someone thinks about the longer-term prospects of neighborhood they're investing in.

[Shane Dreffs]

Hi Zane,

I live and invest in Alabama, but the answer to your question depends on your strategy:

Are you looking for turnkey or distressed / rehab properties, do you plan to self-manage or use a property manager, what class neighborhood, are you buying cash or how much will you put down, are you willing to look at cities just outside of Huntsville? 

Send me a message if you would like to discuss in more detail. 

[Zane K.]

Quote from @Shane Dreffs:

Hi Zane,

I live and invest in Alabama, but the answer to your question depends on your strategy:

Are you looking for turnkey or distressed / rehab properties, do you plan to self-manage or use a property manager, what class neighborhood, are you buying cash or how much will you put down, are you willing to look at cities just outside of Huntsville? 

Send me a message if you would like to discuss in more detail. 

 Hi Shane, 

I am looking for turnkey property. I will use a property manager and am not sure on what class area I will go with at this time. I will be putting down 25%. thank you for the reply and looking forward to your thoughts. 

[Taz Zettergren]

@Zane K. I have a few clients who have properties in Huntsville and they've been pleased, it hits the goals you're looking to achieve. Other great areas to include would be Memphis, Little Rock, OKC and Tulsa. Feel free to reach out if you have any questions about these areas. Best of luck on the search! 

[Lindsay Davis]

@Zane K.,

To piggyback off what @Michael S. said, you’ll find it pretty difficult to find a decent property in Huntsville proper on a $250,000 budget.

Don’t worry, though—in nearby suburbs, your budget will work fine. Meridianville (10 north of downtown Huntsville), Decatur (25 miles southwest of town), or Athens (30 miles west of town) will have plenty of B/B+ properties under $250,000.

Given that cash flow is your primary goal, these areas outside of Huntsville may be a better fit for you anyway—rent-to-price ratios are definitely more favorable outside the city limits than within them.

Still, Meridianville, Athens, and Decatur remain close enough to Huntsville to share in the area’s growth which, in my opinion, bodes well for long-term appreciation.