All Forum Posts by: Addison Watson

It's getting better as the city pushes east, but it really depends which side of Hwy 75 you are evaluating. Trussville (to the east) has newer developments that are making areas around Centerpoint nicer. To the west of 75, you've got the folks that couldn't afford post-gentrification being pushed into Centerpoint. It's not an absolute, but those are generally the dynamics you are looking at. 

It is certainly not the "worst" part of Birmingham—that is reserved for the area west of the city. Still looking at D+ or C- likely in Centerpoint.

Hey @Will Stewart, if you don't have the capital to take on a 20-25% down payment, I would first ask the Seller if they are open to Seller-financing. If that's a "no", start thinking about friends and family that you could work a debt deal with. I recommend debt on all STR deals if you are going to be the person managing and dealing with the issues that may arise. Your down payment will be between $70k and ~$87k, and if you can find mostly debt for a property that will return $35k to $40k annually, then you can pay off your friends/family within two years (give or take a few months, variable depending on your contribution). This whole premise assumes you are looking at more traditional financing 75% LTV from a standard lender.

You can be as creative as you want in these sorts of deals. I'm not sure about your familiarity with securities laws, but be aware that raising money from third parties may trigger some obligations and filings if you are looking at swapping equity for money. Spending money for an attorney will be worth while. 

I'd love to know what area of the city you are looking at for a STR. I've looked at a few in the loft district/Morris Ave recently.

@Hunter Terryn not only do those factors present a real opportunity to grow appreciation, unlike other growing Southern cities, Birmingham has the housing already in place to support a net influx of migration. So property prices aren't through the roof (yet) (see e.g., Nashville & Huntsville). The "desirable" OTM communities are all full, and those new inhabitants have to find somewhere to live. Keep an eye on Norwood as the next Avondale.

Good luck convincing the federal government to divert a river. Waters of the US (WOTUS) are strictly regulated by the fed and every environmental organization in America would love nothing more to sue in San Francisco courts to immediately get any plans blocked. Maybe a change in 2024 in Washington DC would open up the possibility of a friendly EPA, but it ain't happening now.

Population trends indicate that people are more interested in moving to states with warmer year-round climates. You see this most notably with explosions in Texas, Florida, and Arizona. The appreciation in the main markets of those states looks strong, however, your buy-in amount is likely too low. Consider other southern states with lower entry prices: Alabama and Mississippi for example. You'd be shocked at what you can buy for $200,000, plus, the lower taxes will be a large benefit in the future. The other obvious choice is a midwest city: Indy, Cleveland, Cinci, etc. 

You've got to be the one to do the leg work on a particular market. Not many investors will tell you which submarket of a market to look--it would only increase competition (assuming you are in the same asset class). Realtors will put you onto a certain submarket but it might not be investable. My best advice, find a place you are familiar with or have solid contacts. Explore that market and visit. You'll walk away with a great idea of where to invest in that market.

Depending on the complexity of the LLC set up you are looking for, you may also want to have an accountant involved. If you plan to do a single-member LLC then hiring a knowledgeable attorney to form the LLC should not be too expensive (under $500 in legal fees).

You may not even need a "local" attorney to help with the set up. Sometimes smaller town attorneys are not well-versed in Real Estate outside of standard RE closings. I'd also be absolutely shocked if a lender said they only lend to LLCs. Nonetheless, get an LLC formed and use it for all your dealings moving forward. Please don't use an automated service--they are helpful for some minor items but this is one you want to get absolutely right.

Find a market that you know (e.g., where you current live, where you went to college, or generally another market you have rented in). When starting out, it's not advisable to follow the crowd to Cleveland, Denver, or Tampa--unless you absolutely understand the market. I chose the town that I went to college in and because we understand that market so well we aren't worried about our investments.

Venmo is perfect for out-of-state investors like myself. Make sure that you are sending any rents received via Venmo directly to your business account and not your personal account. Otherwise you can break the limited liability benefit (if operating as a LLE).

Brandon, congrats on the first purchase! If you bought a condo on the Red Mountain (upscale Highland Park) or Homewood, you probably made a pretty timely purchase. My advice would be to avoid a personal line of credit if at all possible due to the rates and I'm not sure you'd qualify without a strong credit score (not accounting for any personal relationships you may already have in place). 

If you plan to live there for a year, my advice would be to (1) do a market comparison of other similar condos being rented and determine whether the $15,000 will be worth the potential higher rent or if the rental market is capped, (2) see if you can put some sweat equity into the condo first before spending that sum, and (3) take out a credit card and start building credit ASAP! Dave Ramsey is great for where you were, but not for where you are going! You need to build credit now by responsible use of a credit card. 

For the business expense piece, start saving all receipts for renovation purchases, etc. When you eventually move the condo to an LLC, you will be able to use deductions without messing up your standard deduction. CPAs are a great resource--I would recommend buying one lunch to discuss this informally. They generally won't charge anything if you buy them a $25 lunch.

Kara, while it may seem simple, you should tread carefully. Make sure that you hire an attorney that has done this before. Generally, the transactional attorney will rely on the realtors to get the miscellaneous items accomplished (e.g., inspection, appraisals, etc.) and if there are contingencies, you will have to keep a pulse on whether those have been met or not. Just know that if you hire an Alabama attorney to represent both you and the Buyer, the attorney will have to step away from the deal if anything goes wrong during the process. Then you are looking at additional costs for separate representation. A good attorney should be able to handle this no problem (pending any unforeseen developments).