Any Insight Into Huntsville, AL?

Question

Good Morning!

I’m a new investor looking to get started in the Huntsville, AL area. I’m from out of state in San Diego, but I have family in Tuscaloosa.

A family friend who I’m meeting with for coffee this weekend invests heavily in the area, and I wanted to know if anyone in the group could provide some insight into the market there. It seems to be growing and a great area for tech and thus jobs.

With University of Alabama Huntsville there as well and good schools it seems ideal.

Does anyone have thoughts?

I’m aiming to BRRRR and generate cash flow. Some multi-family units seem very attractive.

Thank you in advance!

MJ

Zachary C. · Answer

@Michael Jones,

The area is definitely growing; there is a lot of government related growth with the Redstone Arsenal here but now due to that growth other stuff is coming in that will likely make the market stronger and more balanced (less dependence sole on Gov positions, though they will remain very important). Facebook, Google, Toyota, Mazda, and Remington provide good examples.

As prices rise all investment methods require reassessment, including BRRRR, and sometimes it will just mean being more patient and/or adjusting various targets. Small MF has been pretty weak here in my opinion, mostly because it is an area that has expanded out and not up due to population density and geography. However, as the area has grown and focus is returning to interior areas and not solely focused on outward expansion MF growth is more promising. This is mostly seen in new builds or renovations on larger units, like the new high end units around the medical district and downtown.

If you have more specific questions or concerns don't hesitate to reach out.

Best,

Tim White · Answer

I concur with what @Zachary C. said.  The market is very dependent on Aerospace and Department of Defense Spending.  For this reason the area is very insulated although it has not been very balanced as those were the only industries in town.

There has not been much rent appreciation in the multifamily space as you can always drive 10 more minutes and get more space.  That is slowly changing here.  For single family homes there has been more of an uptick in rental rates.  Let me know if you have more questions.

-Tim

Zachary C. · Answer

Well flip, like BRRRR, depends on being able to get the properties at a low enough price that you can put in the needed work and then sell above to make whatever margin your strategy targets. As markets heat up it can be harder to find that lower price but great to unload at the higher price and then vice versa in the opposite market. All this applies to Flips more so because of the tight time lines necessitated by holding costs. If you can find a route to better purchase prices (off market strategies generally) then a market heating up, which is what I've been seeing (opinion), is a great time to flip. You have to be on top of you numbers (realistic/achievable) and on top of your process (moving through the stages efficiently). I would think flipping is best done in person due to the time line, but I thought the same thing about BRRRR because of the intensity on the front end and I still see out of state investors doing it successfully; so that's probably just a personal preference related to risk tolerances. Overall, if this a process/strategy you like and are comfortable with it can be a very good strategy and with the quick turns our market is making I don't see unloading being the friction point as long as all the earlier steps were done well.

Eric Harnden · Answer

Hey @Michael Jones! I'm from Cali too and happen to be here in Birmingham/Tuscaloosa on business. I've decided since I'm here to look around these and the Huntsville and Montgomery areas as well. I'd like to talk more about your plans.

Neel Patel · Answer

@Michael Jones

I myself am a new investor and agree, the multifamily properties look attractive. Zach and Tim hit it on the nail Huntsville metro area has been too focused on expanding outwards. Value add to larger complexes have seemed to attract many investors.

In my opinion the small multifamilily properties market rents have plateaued and it seems as investors are having a hard time increasing them. You'll be holding C+/B- properties and charging C-/C rents. What are your thoughts? (Everyone please give your opinion, would love to get some ideas flowing)

I'd like to discuss some properties with you and get your opinion.

Looking forward to talking soon,

Neel

Ruchir Kaul · Answer

@Michael Jones that's awesome, I'm also looking at Huntsville myself. Hoping to close in on the first rental in the next 3-4 months hopefully. Hows the search going, and whats your plans on financing for the BRRRR?

Gorden Lopes · Answer

@Herndon Davis

All my properties are buy and hold.

Herndon Davis · Answer

With the price of houses being so little there Im surprised there is even a robust rental market. And with all these thousands of people moving there for government and high tech; are they buying or renting when they get there and for how long?

Tim White · Answer

Hi @Herndon Davis,

It really depends on your preference. I personally do mostly buy and hold however there is generally enough equity on the deals to flip as well especially with the appreciation of late.

Herndon Davis · Answer

@Gorden Lopes were the properties you purchased Buy and Hold?

Any Insight Into Huntsville, AL?

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