Little Rock Arkansas How Is It Going?

[Hadar Orkibi]

Hi Team, 

I would appreciate some feedback and insight about Little Rock Arkansas.

Which areas are good to invest in with good quality tenant demand? Say B+ areas. 

How is the local economy doing?

Employment?

What yields could be achieved there in reasonable Buy & Hold areas?

SFH Vs MF

Recommendations for good property management there?

Agents and TK providers?  

Im considering LR in addition to Memphis, Pros and Cons? 

Thanks In Advance! 

H.

[Alex Craig]

@Hadar Orkibi

Thanks Derrick! Excuse any typo's as I put this together in between meetings and did not proof.

The B+ areas we have done well in are Maumelle (really that is A class), Sherwood and parts of North Little Rock. We really like the area near UALR and getting ready to buy a 12 plex next door to UALR and re-position it from C class tenants at $575 to B class tenants at $695 to $750.  Another great B+ area that I really like Midtown North of 630.  West LR is good too, but also would consider A class.  You should be able to get at 1:1 rent ratios or very close in the B+ area and slightly under for A class.  We have found (and most of the local landlords have not discovered yet), is that you can do a bang out job on the rehab and the house will rent quick and for the top end or over market rent.  There was a recent report, I believe from Rent Trac, that named LR near the top one of the highest increases in rent.  I would share that link from our site, but the BP police would poof this post.

The economy and employment are fine; actually the LR economy is pretty diverse to the extend Moody's named it the 2nd most diverse economy in the US, with Chicago being # 1.  Government is a big sector, along with telecommunications, health care, military, manufacturing, etc. The yields can be 10 to 15% if you buy a home renovated well and positioned for success. 

My business partner manages my properties and he also own 30 or so properties too.  I believe he is an excellent property manager and you will not find anyone that works harder then him or knows more.

I am not a big fan of MF in Memphis unless you can get in the U of M area of Midtown (38104). I think LR is better for MF because several of the MF's fit a "C" class profile, but located in A and B class neighborhoods.  A good example is a few deals we did on Sandford St.  As you drive the area, it is certainly a B+ neighborhood, but located right in the middle of the neighborhood are several MF units that are affordable and cash flow well, even though they fit that C class profile.  Typically in Memphis, MF's are C and D class units located in C and D class areas.  That is a bad combo as tenants have no choice but to do business (shop & dine) in these areas which typically have limited options for anything they want or need to do.  Having "C" class units in the middle of A&B areas gives tenants opportunity to do business in the same area where individual with higher income are doing business. In other words, instead of only fast food to choose from, they are sit down restaurants and better grocery chains too.

The one thing LR has over Memphis and any other market in the US is the landlord laws.  The landlord laws are a real game changer for investing as you can have someone out in 2 weeks and the tenant rarely has any recourse. Here is an overview of the eviction process. Really, all within the same month, you can try to work with the tenant, if that does not work, get them out and have the house ready to market again and in a perfect world, have it rented.  The tenants are well aware of how strict this policy is and it is huge in them doing whatever they can to get $ to stay in the house.

1. File a 3 day notice to pay rent or move.
2. If they don't respond you file a lawsuit. 
3. Then you must serve the tenant with a summons and the complaint. 
4. If they don't respond to the lawsuit within 5 days you can file for a Writ of Garnishment.  
5. Then you deliver the writ to the sheriff's office to have it served on the defendant. He must serve it within 24 hours.
6. Finally you schedule to meet the sheriff or a deputy at the house to physically evict the defendant. That depends on their schedule but it doesn't take too long.
7. You also bring along a locksmith to change the locks. And, you tell the tenant he has 30 mins to get his belongings and get out. It's harsh but that's the law. 

I am an active investor in LR and Memphis and a TK provider in both markets too.