Real Estate Wanderlust

[Aaron Nelson]

Greetings! I'm from a relatively small place in far Northern California called Redding. Been doing some things successfully here with real estate for 12 years, but finally waking up to the fact that geographic limitations are not what they used to be. Recently acquired a 22-unit REO apartment in Decatur, Alabama and it has whet my appetite to find more out of area deals where the numbers are exceptionally better than what I'm used to seeing here. I've listened to the BP podcasts and figured it was time to stop hiding out and start making new connections and finding opportunities- in places far and near.... looking forward to it

[Aaron Nelson]

Hello, all! Thanks for the interest and feedback here. I had gone to an apartment investing lab with someone named Darrin 'Mike' Ballard in 2010 when I started to become interested in multi-family. I didn't carve out the time for it back then to actually do anything since I have been doing about 25 residential flips a year and business has been really good. The past 12 months I've noticed a shift taking place in my market with more competition, higher prices, and tighter margins with flips. So I decided to turn my attention more toward some good multi-family markets in the Southeast U.S. I looked at some of the places Mike Ballard owned his apartments such as Huntsville, Birmingham, Macon, Columbia, Greenville, etc... and for some reason I liked the Huntsville area. The median income is relatively high, low unemployment, affordable houses, and just a nice clean city. Turns out when I mentioned to some of my colleagues back in Redding that I had been to Alabama that one of them had a best friend whose mom had moved to Huntsville and she had started a property management company. I found that a very interesting connection and pursued a phone call with her. After several phone conversations about what I was looking to find she mentioned that she was managing as asset for a bank that had just taken back a property through foreclosure. It was in Decatur just outside of Huntsville and she thought the bank would want to make a deal. It actually took a lot of persistence and follow-up to make it all happen, but after the property getting listed with an apartment brokerage and having to deal with multiple offers, the bank finally accepted my offer about 6 months after it all began. Here are the numbers for you @Minh L:

Built in 1990, 2 buildings, one is a 12-unit and the other is a 10- unit. About 60% occupied when acquired. They are all 1bed/1bath units and about 690 square feet. Some deferred maintenance but overall decent condition. Newer roofs on both buildings. I'd say they are B- to C+ units and area. I bought the package for $325,000, which ends up being about $14k per door. I've been rehabbing the down units slowly and have gotten 2 of the vacancies filled since my acquisition in May. The immediate area has occupancy of 94% so my goal is to have 90% occupancy and all the units rehabbed before the end of the year. My all in cost will be around $375,000 and the gross monthly rents will be about $9,000. With expenses the NOI will be about $60,000 annually, which should make it worth closer to $600,000 since stabilized units in the area are trading at a 10% CAP rate. I actually utilized a private investor who I've known and used a lot for funding flips. He funded the entire purchase of $325,000 at 10% interest with an 18-month balloon. I'm using my own money for the rehab and should be able to refi him out within 12 months from now with a conventional loan.

@Ricky A. the agent I used for the purchase is based out of Birmingham. They deal with properties all over the region. I don't really have or know of a local agent in Decatur yet, but I'll probably look at finding one since I like the dynamics there and have had a good experience so far. Yes, it would probably be worthwhile to view properties there especially since you have connections and family in town...