All Forum Posts by: Lindsay Davis

Good information in this post, though I’d be cautious about characterizing the arrival of a single employer or agency—no matter how large—as an inflection point.

The more nuanced truth is that Huntsville has seen strong job growth for many years thanks to the constant influx of new employers (or incumbents expanding), including the FBI, Under Armor, Parsons, Fifth/Third, Glaukos, SpaceFactory, Total Quality Logistics (TQL), and so on.

The point is that Huntsville’s growth seems like a secular, broad-based trend more than anything else, and so market performance is likely to be influenced by that rather than the arrival of U.S. Space Command alone.

@Michael Maznio,

Marketplaces like Zillow are a good starting point, but just keep in mind that those are asking rents. If you’re in a high-supply market where tenants have the upper hand, actual (contracted) rents could be lower than what you see on listings.

Local leasing agents and property managers may have comps they can give you, though you’ll probably need to spot check for relevance.

In any case, welcome to BiggerPockets and best of luck in your career as a commercial real estate agent!

@Amaya Volz,

That’s a good next step, though I’d also recommend hashing out your “buy box” at the same time.

This is essentially a list of criteria that a property should meet before you consider buying it. For example, factors may include location (markets, submarkets, zip codes, school districts, etc.), type of property (single family, multifamily, etc.), property characteristics (number of bedrooms/bathrooms, square footage, etc.), and financial criteria (purchase price range, down payment size, rent potential, cash flow potential, etc.)

This can give you a better picture of what you’re after, which can help you seek out the deals that work for your investment strategy and disqualify the ones that don’t.

@Arun Maheshwari,

To my knowledge, there isn't a dedicated site for seller-financed deals. Your best bet would be to check MLS-listed deals on marketplaces like Zillow or Redfin. Give the listing descriptions there a read—sellers who are open to doing seller financing may sometimes say so in the listing.

But even if there’s nothing said about seller financing, it never hurts to ask. Oftentimes, sellers aren’t aware that that’s an option or don’t realize that it can be a selling point for their property.

Keep in mind that you’re trying to do a deal, so everything is negotiable! Even if the seller says they aren’t interested in offering seller financing, they may be open to it for the right buyer. At the end of the day, the worst they can say is no.

@April Graham,

Welcome to BiggerPockets!

I own and operate a turnkey provider that’s active in Birmingham (and throughout Alabama, southern Tennessee, and northern Georgia as well). I’ve been in the industry since 2010, so let me know if I can answer any questions or serve as a resource!

@Nicolás Eduardo Larach León,

Like @Dan H. and @Stuart Udis said, the 1% rule is more of a flawed heuristic than a hard-and-fast rule. It can be helpful as a screening tool, but I would caution against making buying decisions off of this single metric alone.

To answer your question directly, though, you can definitely still get properties that meet the 1% rule, especially in Sunbelt markets that lean towards cash flow. For example, cities like Montgomery and Birmingham come to mind here.

Of course, there are other tactics, too. Buying off-market (or at a discount to list price on the MLS) can improve your rent-to-price ratio, as can a rehab project that brings a unit's rent up to market.

@Ernesto Galindo-Doucette,

My opinion is that considering your total returns (i.e. the sum of cash flow and appreciation) makes the most sense.

The reason is that there’s typically a tradeoff between cash flow and appreciation. Markets that yield higher cash flow generally tend to appreciate less, and vice versa.

Depending on your need for current income, tax bracket, and other factors, you may prefer one over the other. In the grand scheme of things, though, both represent a possible source of return, so the most profitable real estate investment is the one in which the sum of cash flow and appreciation is highest.

@Kyle Lam,

To expand on @Benjamin Louie's Huntsville recommendation, several towns in the metro area (but outside the city proper itself) may also be worth a closer look.

For example, you have areas like Decatur (25 miles southwest from downtown Huntsville), Athens (30 miles west of downtown), and Meridianville (10 miles north of downtown).

Homes in these suburbs are roughly 20% to 30% cheaper than in Huntsville proper, but you can potentially benefit from the same demographic and economic tailwinds as you would by buying in Huntsville itself. Just some food for thought.

@Sean Kaczmarczyk,

You’re in an interesting position. On one hand—as you mentioned yourself—the barrier to entry in the Denver metro area is high, and cash flow is difficult to come by.

On the other hand—to answer your second question about in-state vs. out-of-state—there’s definitely qualitative benefits to investing in your own backyard. For example, you’re more familiar with the market and can be present on-site if you ever need to manage a labor-intensive renovation or repair job.

That said, out-of-state investing is definitely doable, provided you get the approach right. You basically have two options:

1) Assemble a team yourself. You’ll need “boots on the ground,” including a network of local real estate agents, contractors, lenders, property managers, and legal and accounting professionals. Naturally, this is going to require a lot of effort and coordination on your end.

2) Opt for a turnkey rental. If you don’t want to deal with the hassle of managing a team remotely, you could be better served by a “done-for-you” approach to out-of-state investing. A turnkey rental is essentially a property that’s ready to go: it’s been fully renovated, has a property manager in place, and is ready to lease (or, in some cases, even has a tenant in place). This approach means you have the potential to cash flow from day one.

As for market research, I have some in-house reports on markets in Alabama, if that’s something you’re interested in. BiggerPockets doesn’t allow advertising or direct links on its public forums, but I’d be happy to send them over if you reach out!

Very good point—definitely worth keeping DSCR lenders in mind as well. You can also combine the two approaches and see if local banks offer DSCR loans!

And, as an aside, I’d avoid the online-only lenders that advertise a quick and easy underwriting process. You’ll (generally) end up paying for convenience in the form of higher interest rates or closing costs.