All Forum Posts by: Lindsay Davis

@Ian Henderson,

Northern California is going to be tough with $70,000 to $80,000 in equity, so looking out-of-state is probably a good call.

As for your questions:

1. Plenty of places in the Sunbelt would check all of your criteria. Full disclosure: I run a turnkey provider in Alabama—so I may be biased!—but markets that boast strong demographic fundamentals like Huntsville or Tuscaloosa can potentially offer an attractive entry price at present, cash flow (even if you buy a turnkey property), and rent growth over the long term.

2. My expertise is in single-family homes, so I’ll speak to that exclusively. With $70,000 to $80,000 to work with, you can easily afford at least 20% down in most Sunbelt markets, with plenty left over for working capital.

3. On the market level, look for supply and demand imbalances, with demand supported by healthy fundamentals (steady population and economic growth, evidence of development, etc.). On the deal level, heuristics like the 1% rule can be a good starting point.

4. One underrated tip would be to talk to agents or folks with local market knowledge. That’s because the right market is just the starting point. Choosing the wrong neighborhood, even in the right market, can break a deal, so you want to tread carefully. Specifically, shoot for more than generic advice and look for people or firms with expertise in the product type, tenant class, and zip code(s) you’re after.

Hi everyone!

Spartan Invest has a bunch of turnkey new construction and rehabbed properties in the Birmingham metro area.

We’re offering new construction properties from $219,000 to $290,000, and rehabbed properties starting at just $124,000.

Whether you’re buying a new construction or renovated home, we’re offering a one-year warranty on the whole structure—so you won’t pay a dime even if anything breaks in the first year. This is a great opportunity for investors who want to optimize cash flow while minimizing maintenance or capex costs.

Feel free to reach out anytime at (205) 205-4118 or [email protected]

@Angela Davis,

Birmingham’s definitely a good market, but there’s some nuance to that answer because the city’s submarkets vary widely.

For example, you would be hard pressed to find a cash-flowing deal in a neighborhood in southeast Birmingham like Homewood, Vestavia Hills, or Mountain Brook.

On the other hand, you may have more luck in B-grade areas in the western part of the city like Hueytown, Bessemer, Forestdale, and Adamsville—or even in towns within commuting distance like Jasper.

@Pratik Patel,

Lindsay from Spartan Invest here—thanks for the mention!

As for your questions:

1. If you’re looking strictly for passive income, both new construction (managed by a property manager) and turnkey could work. One advantage of new construction, though, is that you can usually expect few capex or maintenance costs in the first five or so years of ownership. On the other hand, renovated (but older) turnkey properties can typically be had for cheaper than comparable new builds.

2. Pros of new construction: potentially higher rents, lower initial maintenance/capex (so more consistent cash flow). Cons: pricier, may be located further away from downtown or outside of established neighborhoods. Pros of traditional turnkey: more affordable, potentially more well-located. Cons: potentially lower rents compared to comparable new build homes, “lumpier” cash flow. Toss-ups: long-term appreciation—this is going to depend more on market, submarket, and zip code, rather than the age of the property.

3. It depends on the component. Flooring (if you use luxury vinyl plank) is going to last for 20 to 30 years. A turnkey property’s roof and exterior siding is going to last for 15 to 20. Kitchen appliances, toilets, and AC units should last for 10 to 15 years. Water heaters will need to be replaced every 8 or so years. Maintain an appropriate capex reserve for these items, and you’ll be in a good position even if you need to shell out thousands of dollars on replacements.

Hope this helps!

@Raj Singh,

For all of our rental rehabs, we install luxury vinyl plank (LVP) with a two-millimeter wear surface. Affordability aside, one advantage of LVP is that you can replace small sections without having to tear the whole floor up. It’s easy to rip up and put down, which makes maintenance fairly easy and cost-effective.

As for other items like cabinets and bathtubs, you can potentially access lower prices if you buy from wholesale stores, though you’ll need to buy in bulk to make that happen. Some direct-to-consumer or discount vendors may also offer lower prices relative to big box stores, though inventory and actual pricing may be hit-or-miss.

@Andrew Pierce,

As @Seth McGathey and @Charles Clark said, getting your real estate license is helpful, but not necessary. I’ll add that it’s one of many ways you can gain an edge as an investor.

Being a contractor, homebuilder, handyman, structural engineer, appraiser, inspector, accountant, real estate attorney, or banker (as you are) can also give you a unique advantage. Basically, if you work in a role that is involved in one or more aspects of the rental business—be it development, construction, renovation, acquisition, leasing, property management, or financing—those skills can help you as an investor.

As for your question about a mastermind group, those are definitely helpful. As @Aaron Zimmerman mentioned, they don’t have to be big. I’ll also add that they don’t need to be paid or exclusive—no need to drop hundreds or thousands of dollars a year on a membership. Just find a group of real estate investors, get to know them, and start asking questions. Even BiggerPockets counts!

@Rohan Saxena,

It really depends on what sort of lifestyle you’re comfortable with (or willing to endure). After all, house hacking means you’ll be a landlord co-habitating with your tenants, so if you have other family members living with you, make sure they’re on board with a living arrangement like that. It’s a great way to save money, but it could come at the cost of your privacy.

Investing out-of-state has its pros and cons too. If you work with a turnkey provider (full disclosure: I operate one based in Birmingham), then you’ll be able to take advantage of a hands-off, passive approach to real estate investing.

Of course, these services cost money—typically 5% to 10% of monthly rents, plus upcharges for maintenance calls and leasing. But, if you’re prepared for these costs, the benefits of a done-for-you arrangement could be worth it. It really just depends on how much day-to-day work you’re comfortable with doing.

@Brayden Sodestrom,

Welcome to BiggerPockets—it’s awesome that you’re getting a head start at such a young age. At your stage in life, I’d recommend taking the time to familiarize yourself with a few target markets.

Know the areas you want to invest in like the back of your hand, develop a due diligence checklist, and go through the exercise of evaluating deals (even if you’re not looking to buy a property yet).

If you put in a bunch of reps before going through your first live deal, you’re far more likely to know what to look for—and what to avoid—when it comes time to buy.

@Sonya Dean,

Welcome to BiggerPockets!

I see that you’re in Atlanta—not too far from where I’m at. I’m active as an investor, broker, and turnkey operator in north Georgia, in addition to Alabama and Tennessee. Happy to serve as a resource if you have any questions!

@Marian Turcus,

The best way to start, in my experience, is to get your hands dirty. Evaluate deals conservatively, pick a growing market, and a state with landlord-friendly laws. Then, use that to identify a small, low-cost deal.

Make sure you’re clear upfront about your business plan and how you plan to make money: are you looking to force appreciation through renovations, increase cash flow through superior property management, or do a simple buy-and-hold.

Also be clear about how much time and money you’re willing to put in. You list house hacking and flipping—both are doable, but they’re very different approaches that demand different levels of investment and time.

Finally, be choosy about your market. If you’re moving to Colorado and want to invest there out of convenience, that may work out, but sometimes the markets that work best for your style or strategy aren’t where you live.