All Forum Posts by: Cody Mitchell

Hey Mat, I don't specifically shoot for Section 8, but some solid places (C plus or B minus areas with good demand and good price to rent ratios) that I like for single family rentals in the Birmingham area are Adamsville (35005), Forestdale (35214), and Hueytown (35023 or 35061). Hope this helps!

In what part of Birmingham is the deal located? I know on the SFH side in the Birmingham area there can be a lot of variance in the metrics you listed. Also, calling some of the PM's down in that area could probably give you a good idea of what you're looking at. I hope the deal works out!

Hey Lance, my wife and I have done two deals in the Birmingham area. My father in law also invests there so we have a little bit of experience, but obviously not a whole lot. To answer your questions;

1. Yes those numbers are possible, but are going to be very very difficult to find in a decent area in Birmingham. If you had some good wholesaler contacts would be the best way, but a deal like you're describing is going to be grabbed up quickly. 

2. Overall, I'm not sure what your goals are but I basically avoid the west end side of Birmingham (Fairfield and that area) and downtown as well. Those areas see a lot of crime and while the prices may make them look like good deals, there is a reason for that.

Feel free to shoot me a message if you have any other questions, and good luck!

Personally I use rentometer to give me a decent estimate on the rental amount for LTR's. Rentometer will get you close, but it's not going to be perfect. Once you find something that looks to be a good deal based on rentometer numbers I would reach out to other investors or property managers if you're concerned about what it will rent for. For STR's I look to use air dna but again this is not perfect.

Once you have what it will rent for, it's pretty simple to look at what your payment will be based on the price of the property, interest rate, taxes and insurance. For tax amounts you can look at your county's appraisal district website. For insurance prices you could simply talk to an insurance agent to get a quote. From there all you have to do is account for maintenance, capital expenditures, and vacancy. Subtract all of those things from your rental amount and you'll have how much the property will cashflow. BP has rental property calculators that will also help walk you through this process pretty simply. Hope this helps!

Usually putting less down and holding onto the cash is better in my opinion, but it depends on your circumstances and goals. Is your goal to use leverage to reach FI or to own paid off properties? If you're wanting to try to retire early I would say put less money down. Like you mentioned you can also refinance later. 

That being said, when looking at properties if you intend to use the property as a rental within the next few years you should also pay attention to what it will rent for. If you need to put 20% down in order for it to cashflow that is also something to consider (although I would avoid such properties if possible). Hope this helps!

I think you and your friend could partner together, you bringing the money and him bringing income verification through his W-2. Like others have mentioned though, have a partnership agreement in place as well as well defined roles. I would consult a RE attorney to help y'all navigate this. Know how's going to manage the property, how decisions will be made if there is a disagreement, how equity will be split, etc. I would also make sure for any property you buy you have a plan in place as well as at least 2 solid exit strategies if you needed to get out. 

It really depends on what your goals are and what your risk tolerance is. If your goal is to use real estate to reach FI, then leveraging the equity in your paid off rental would be great. Also having a lien on the property will actually help prevent lawsuits as others have mentioned. 

I, personally, would consider doing a cash out refinance in your situation and use that money to purchase as many cashflowing rentals as I could while still maintaining enough reserves. It's important to note that you don't have to pay taxes when doing a cash out refi, which is a huge bonus. While making sure the units cashflow after all expenses (including Cap X, vacancy, maintenance, etc) is very important, in my opinion real money is made in real estate usually with long term appreciation. Which is why I think it makes more sense to use these funds to buy more rentals. 

None of that matters though if it makes you personally uncomfortable having liens on multiple properties. If that's the case just continue saving up for the next down payment. It's so awesome that you have been able to pay off a property completely, and I think whichever direction you go you will continue to be successful. 

I wouldn't focus too heavily on ROI for a househack. If you're starting out and your stated goal is to live for free, or cheaper, than you would normally live then strive for that. ROI doesn't calculate how much money you're saving from not paying rent/mortgage. I would be cautious though and make sure you get something in a good area that will cashflow once you're out of it. Buying in a warzone may look good on paper but you'll have a harder time renting it out, more damage, etc, and buying something that won't cashflow once you're out of it doesn't help you towards your goals. Make sure to factor in capital expenditures, vacancy, maintenance, and property management (if you aren't going to manage it yourself) in when running your numbers. Good luck!

Hey Noah, 

like others have mentioned househacking is one of the best ways to get started without a lot of cash. As also has been mentioned, unless you have a two year work history that shows income as a realtor you will also have difficulty obtaining financing. If you have a W-2 where you're also making some money that will help with financing though. The Bryan-College Station market is pretty difficult to find a multifamily that cashflows in, there just simply aren't very many on the market and the better ones get grabbed up quickly.

In your situation though, I think buying a SFH with at least 3 bedrooms in Bryan and either renting out the rooms or air bnbing one would be a good option for you. You may not live for free but you would likely reduce your living expenses and have an asset that is appreciating. Another option to look into to get some cashflow without owning a property is rental arbitrage. I will caution you though, buying real estate without having enough funds to cover if something happens could be something that sets you back a long time. No and low money down is great to get into a property but I would make sure that I have the funds to cover if it is vacant for a while, or if you have to replace a roof or HVAC.

I'm not a realtor but I've lived in the BCS area for most of my life and know the area well. I am also an investor. If you have any questions or I can help at all feel free to reach out! Good luck on your journey!

 Thank you for the explanation and the tip! I will check out Zoho for sure.