My experience buying a turnkey cash flowing (kinda) turnkey rental outside Huntsville

[Elan Adler]

It’s 2024, and you hear it all the time now: “You can’t buy turnkey, cash-flowing properties anymore.” With the COVID-era surge in home prices, rapid increases in mortgage rates, and rents not keeping pace, it really has gotten harder to make these deals work. That said, I wanted to share my story about how I found an out-of-state property, got it rented, and set it on autopilot.

Background

I’m in my late 20s, living in a very high cost of living city and working in tech. Out-of-state investing makes the most sense for me—it’s impossible to cash flow anywhere near me, and moving wouldn’t make sense because I wouldn’t be able to earn the same wages or find the same kind of jobs.

Before this purchase, I already owned two properties: a long-term rental outside Houston, Texas, and a short-term rental in the Sierras in California. Since I work pretty hard at my day job and don’t have much renovation experience, I wanted something simple—a rental I could put a tenant in and at least break even. I wasn’t looking to add value or find something off-market because the time and effort just didn’t seem worth it compared to focusing on my career. If you want to think about it as a math problem, it’s all about where you put your time to maximize returns while also factoring in what you enjoy doing.

Picking the Market

I’m the kind of person who gets analysis paralysis. I hear about all these different markets and get excited, but I knew I needed to pick one. Ideally, I’d stick with a single market, but the numbers in Houston didn’t make sense anymore, and I didn’t want to buy another short-term rental. So, I went hunting.

Huntsville, Alabama, caught my attention because it’s a highly educated city with growing industries and a stable, diverse economy, as well as a really high quality of life compared to the surrounding areas. It seemed like a long-term play with less price or industry volatility. There were honestly about five markets I liked, but at some point, you just have to “send it” and commit.

Picking the Agent

This is one part of the process I wish I could redo. I didn’t know anyone in Alabama, so I called a few agents I found online and ended up picking one from BiggerPockets. He seemed like a big-time agent who works with a lot of long-term investors. But after working with him, I realized he was very systematic and mostly cared about closing deals without much care for the client's long term needs.

Here’s an example: I had a $10K escrow with the seller—$5K due upfront and $5K after the inspection. I paid the first $5K but started having second thoughts because of high vacancy rates in the area. When I asked my agent about options to back out, he didn’t really offer any advice. Instead, he just told me, “Tough luck.” He wasn’t interested in brainstorming solutions, like using the inspection as an out. It felt super dismissive, and it became clear he just wanted me to sign the papers.

If I were to do this again, I’d reach out to more agents and have more conversations to find someone who is more empathetic. 

The Property and The Numbers

The property I ended up buying is in Athens, Alabama, about 40 minutes from Huntsville. Ideally, I would’ve bought closer to Huntsville or Madison, but the rent-to-price ratios just didn’t work for cash flow in those areas.

This property is a 2,100-square-foot, 4-bedroom, 2-bath new build in a really good school district, which is what sold me on it. Huntsville is growing, and families are always going to prioritize good schools. Since it’s a new build, I was able to negotiate some great perks, like a 5.875% interest rate, no closing costs, a fridge, blinds, and even a backyard firepit.

Pros:

• Good school district
• Low interest rate
• Minimal CapEx and repairs (because it's a new build)
• Low insurance
• High-quality tenants (due to the school district and being a new build)

Cons:

• Lots of new builds in the area, which could drive down prices and increase vacancies

The Numbers:

• Price: $290K
• Interest Rate: 5.875%
• Down Payment: 25%
• Monthly Mortgage + Insurance + Taxes + HOA: $1,480 (I got really low insurance since it’s a new build and Alabama’s property taxes are low)
• Property Management: 10%
• Rent: $1,800 (this is under market because I wanted to rent it quickly—most units in the area were sitting vacant for 100+ days. Mine rented in less than 15 days.)

All in all, that gives me $140 a month for vacancy, CapEx, and repairs. Now I know what you all are thinking -- that place is not going to cash flow! Well the bet I'm making here is that CapEx and repairs will be very low the first few years (honestly event he first decade), and once all the construction ends I will be able to increase my rent closer to market rent at $2k which will give me a better cushion. This will put me at cash flow neutral and I'll let appreciation and long term rent appreciation do it's work. So far I've owned the place for 4 months and have not had any issues with my tenant yet.

Am I Happy With My Purchase?

I know this is going to be anticlimactic, but to be honest I am unsure how I feel about my purchase and don't know if I would do it again. The process went smoothly, and I’m happy I got a tenant so fast, but the high supply of new builds in the area makes me nervous. There’s a lot of construction, which could hurt both prices and vacancy rates. That said, the construction is slowing, and I believe Huntsville’s population growth will make this a good investment over 10+ years. The area’s affordability and Huntsville’s overall growth leave me optimistic, but time will tell.

For my next investment, I’m thinking about buying a single-family home or duplex in the Midwest—Cincinnati is at the top of my list. I want to diversify since I’ve already bought in the Gulf Coast and California. The Midwest offers good cash flow potential, and Cincinnati stands out for its diverse economy and solid quality of life in an affordable market.

I just wanted to share my experience to show that turnkey deals are still possible. Hopefully, this is a useful example of what’s achievable with out-of-state investing, even with no local connections.