All Forum Posts by: Michael S.

I was actually starting to wonder if Reafco had secretly bought Bigger Pockets...

@Flavia Vangelotti - I am not following how the numbers look great from checking out the website, at least for the AL property in Cullman.  

Purchase price of $320k for max of $2000 a month in rent?

Clearly I am missing something here, but that's what I saw on the website.  

It would only cash flow with a really large down payment.  

How can I sum up my view point on this topic succinctly and definitively?  

How about this... I don't care what Dave Ramsey says. 

@Alba Cheung - it's always a good time to buy SFHs in Huntsville/Madison proper...if the numbers work.  The problem is, the vast majority of the SFHs currently available, both on market and even off market, do not work when looking at the numbers if you want positive cash flow.   Here's some exceptions:

1.  C/D neighborhoods, although even C neighborhoods are now selling for over 150 square foot and still need rehab.

2.  More than a 30% down payment on a 30 year note.  Even then, A/B won't typically work.  

3. Off-market deals (although just because it's off market doesn't mean its a deal by any stretch - some wholesalers are now asking essentially MLS prices)

4. Unicorn deal (they exist - we found one this year)

I'd strongly advise staying away from new MFHs in this area - the supply is now exceeding demand.  Old MFHs in this area are few and far between, and still asking premium pricing in most instances.  

As a general rule of thumb, no one ever lends for less than the rate of a high yield savings account.  

@Samuel Coronado - appreciate the update.  Now that you've passed on the deal, can you disclose where the land was located?  I'm just curious - we've bought one piece of land since 2018, and not likely going to buy any more in the immediate future.  

Nice work.  We looked in Elkmont for a rehab once, but were not sure enough of the LTR market to move forward.  Let us know how the rental performs in a year - I'd be curious to know.  

@Courtney Olson - you listed a lot of different areas of North Alabama that all have different characteristics, so I'll throw in my two cents here on them.

Huntsville - it is tough to find deals right now that work. A/B class are going to be negative cash flow unless you can find an amazing off market deal and/or put over 30% down with a 30 year note. Even C/D class that cash flow decently are harder to find now.  Several years ago, you could find a rough house in 35810, 35811, 35816, or 35805 for less than 100 a square foot, rehab it, and rent it for cash flow. Now, houses in those zips that need work are 150+ per square foot on the MLS, and even that much through some of the wholesalers.

Guntersville - we have one rental there that has done reasonably well. Rental market there for LTRs is not robust however, so make sure you have vacancy money built in to your projections. Probably a better STR market there, assuming they haven't change the rules on them

Athens - growing area, probably still a solid play for both mild cash flow and decent appreciation at this time with the right deal; we don't invest there, so I don't know that specific market well, but our west Madison properties rent easily. 

Albertville - should be a reasonable cash flow play;  would not go there if appreciation is your goal.

Muscle Shoals - no idea on the market there, sorry

@Michael Ewers mentioned Hazel Green and Meridianville - they are growing areas, but I'd be VERY cautious with new construction, as I don't see those prices being sustainable there.  Finding an older house to rehab in those markets would be a better option in my opinion.  

Madison - strong appreciation play, but negative cash flow without a unicorn deal or major cash down.  Our rentals in Madison are robust but all purchased pre-2021.  Property taxes in Madison city properties are also now ridiculous compared to 5 years ago, and greatly affecting cash flow potential (or lack there of). 

Decatur - cash flow play;  appreciation has lagged Huntsville/Madison/Athens though;  we don't invest there

Good luck. 

@David Cherkowsky - first off, I can't argue with the idea of investing in your own market, as noted above by the other posts - that is obviously what I do.  

As for Huntsville, it is tough to find deals right now that work.  A/B class are going to be negative cash flow unless you can find an amazing off market deal and/or put over 30% down with a 30 year note.  Even C/D class that cash flow decently are harder to find now.  

Several years ago, you could find a rough house in 35810, 35811, 35816, or 35805 for less than 100 a square foot, rehab it, and rent it for cash flow. Now, houses in those zips that need work are 150+ per square foot on the MLS, and even through some of the wholesalers.

Duplexes/Tri/Quads are not common here, and typically in rough areas.  But I would not recommend MF right now - they have overbuilt new MF here in Huntsville, and vacancy rate in MF is becoming problematic. 

Hence, you may be better off staying local.

We have probably 10 investors for every deal in this area right now.  No joke.  

Good luck. 

@Sehyun Lim - here are some answers to why rental properties in the Huntsville market were on zillow for over 100 days:

1.  The holidays and winter season is always tougher to rent than spring/summer/fall, which is when the 100 days you referenced would have occurred

2.  The rental is priced over $1500/month and is either in a C/D neighborhood or the property is a dump

3.  The rental is priced over $2000/month, which move much slower in general here

FYI - you should definitely speak with folks in the market you choose who have knowledge and experience firsthand for that rental market.  Using zillow as your only data source for analyzing a rental market is analogous to buying a stock because you like its ticker symbol.