All Forum Posts by: James Allen

@Lauren Hogan - I love the investing in the Knoxville market from out of state mainly because I find it right now to be one of the best markets to get a combination of cash flow and appreciation. Lot's of gentrification taking place and millions of dollars being invested into redevelopments of the Downtown North and South Waterfront projects. Rent Growth is doing well, in fact recently ranked #1 in the nation according to Moody Analytics Prelim 2019 Q4 Report. 110 million dollar Airport Renovation and job growth of almost 4% in the last 12 months according to Bureau of Labor Statistics. In addition to that, with the current uncertainty of the market, Knoxville was ranked #5 most recession proof city to invest in based on of how consistent employment has been during the ups and downs of the US Economy in the past. 

@Rob Hakes - It sounds like the area could be the problem as far as the problem tenants are concerned. I would take some time to educate yourself further to where you feel comfortable finding your own deals with an agent rather than relying on a turnkey company. I would never recommend relying on a turnkey company to tell you if the area is good. You really need to determine that for yourself by taking the time to fly out and visit the area and drive all the streets. And when you have a team in place (Agent, manager, lender, contractor, etc) You have the ability to ask all of them their opinions too as an extra layer of mitigating risk. 

I think reading more books and paying for a flight will produce the best ROI you can get.

@Zachary Bellinghausen - No problem. I don't generally invest in central florida, I'm pretty honed in on Knoxville, TN at the moment. Although I did do one deal about 18 months in Ocala, FL but that was a one off. Glad to hear you're not moving forward on this one. That's a good call on your part. 

@Zachary Bellinghausen - From a quick look, you need to add water/sewer and lawn maintenance to your expenses. I also looked at some of the recent postings and it seems they have advertised to a lot of section 8 tenants and in their marketing promise they "Can Get You Automatically Approved" which is a red flag. Section 8 is not necessarily a bad thing but I'd definitely look at their rent roll and a 12 month operating statement. But more importantly than all that, it seems that the area is really not great. A quick look on zillow looking at their units show many of their tenants staying less than a year along with high turnover. Median household income in that particular subsection is just over $19k which is REALLY LOW! I would run from a deal like that. If you choose to pursue this, I think you need to factor in evictions into your numbers and a higher vacancy rate. 

@Jacob Ashley - In general this is unrealistic to expect all of those at the same time. Are there exceptions to this? Of course. You may be able to accomplish this for a couple or few years in the right market/neighborhoods at the right time which even that is a hard feat. But if you're looking to target markets that consistently over a 20-30 year period average 2-3% appreciation after inflation, well that's like a total of 4-5% annual appreciation which puts you in markets like Los Angeles, New York, Portland, Seattle, Denver, etc. 

Finding a legit cash on cash return of 12%+ would be a really hard feat in any of these markets. I guess it's possible to find that diamond in the rough off market with a very desperate seller but nothing that you can build a real strategy around. 

@Danny Matthews - I love the Knoxville market! It's been the market I've focused on investing in these past couple of years. It has seen some nice appreciation and I was fortunate to get good cash flow with that since I bought over the past couple years. With that said, there is still a lot of opportunity in my opinion but deals are getting harder to come by. Also cash flow isn't as strong as it was a couple of years ago but still decent in my opinion. Overall I still think the market has great upside especially over the short term. 

There's some areas that are seeing some great gentrification which provides some opportunity for value add plays (Rehab+Rent or Flips). But that isn't really close by the areas you're talking about. For what you're looking for, you're going to want to be closer to the west Knoxville area to be close to the good schools. You might be able to find some of the houses at the top of your budget ($150k-$160k) but if they're zoned for the best schools (8/10 or 9/10), the lowest you're likely going to find on the market will be more like $180k-190k (Pretty rare) with most being 200k and above. 

Hey guys,

I'm looking to remodel these two bathrooms and I'm interested to get feedback of what you would do with it. It's in an A Class area and I'm going for a more modern look. It's a 3 bed 2 bath house with 10/10 schools so families is really the long term target. My goal with this is to stand out as one of the better rentals to lower vacancy, improve tenant quality and maximize the amount of rent I get. Also doesn't hurt that I'll increase my equity by doing this as well. 

Like Ned said, You could refinance if you want to rent it out for the year. For future homes, you dont need to live in the state to buy as investment property. i would just change lenders and pick someone who is more familiar with financing investment properties. 20% Down is enough to finance a single family and 25% for small multi 2-4 unit. Just buy as an investment property and not as a second home and you'll be good to go.

@Seth Atwell - The problem is that you purchased the property with the intention of it being a second home. You can rent it out a bit but it has a lot of restrictions and limits on it and year round long term tenants is a big no. Secondary homes come with it's own required down payment (10% min) and financing terms compared to an investment property. The good news is you can always argue you had a change of heart but I would wait at least a year or maybe even two years to start renting it out full time to make sure you don't get into legal trouble. If you do it earlier than that, you could be accused of mortgage fraud which is a felony. 

@Todd Wheatley - I would run, especially if this is your first OOS Deal! Like others have said, there are much easier ways to make money on OOS deals. This is one of the worst and potentially most expensive issues to deal with on a property. For perspective, I've done multiple OOS rehabs and I still wouldn't touch a house with major foundation issues.