All Forum Posts by: Rhett Kelton

At least in Murfreesboro, it all depends on what sort of ROI you are looking for. I live and invest in here, and while there are certainly properties for sale that will cash flow, lots of them prices aren't good enough for me. It seems like some of of these investors here are counting on appreciation.

I agree with Mark above- there are other things here that would concern me more than tornado's.  Including earthquakes and hurricanes :)

They do not affect my investing decision making at all.  While we will have them in the greater Middle Tennessee area every couple years, as long as you have the insurance, you should be fine. I do know that I did not have to buy a separate tornado policy for my own home, and that any damage is covered by my homeowners policy.   

If I were in your shoes, I wouldn't worry about potential tornadoes here.  Your syndication GP should have the right amounts of insurance, although you might want to follow up with him if it is still a concern.  

@David S.

I live in Murfreesboro. This market is about 30 to 45 minutes from downtown Nashville - and lots of people from here commute to there. While the rents here aren't quite as steep as in Nashville - there are very few rentals available. Any new apartments being built still can't keep up with the demand.

I would highly recommend Murfreesboro as a place to invest. There are also local economies - university(MTSU), Nissan plant, big medical center, that can limit a downturn.

The quick move-in definitely can make an impact.  I would just be careful on the end.  I know students with parents that cosign can be pretty good tenants.

Where is your house?

If you want to do it, just make sure you get a definite move-out date and what you expect to have left in what condition.  Also, does your potential July tenant have pets as well?

@Jamie Jones

I know from personal experience that it is the vacancy that will kill you. Anyway you can minimize that is key.

@Jamie Jones

One of the biggest issues I see is if the extra rent - $800 total? would cover the extra couple weeks of vacancy. And you would have to have it cleaned and so you would have some vacancy since there are dogs. Probably doesn't cover the period of time that it might be vacant. Although in my experience, you can rent things really fast in Murfreesboro, especially if you allow pets.

If I am raising money from investors, do I need a lawyer and securities broker?  I am planning on setting up an LLC for a new-build project, and I have talked to one lawyer who was thinking I would need to get a securities broker or a lawyer well versed in securities law.  
All investors are sophisticated with at 50k minimum investment, and since I have personal relationships with all of them, and I won't be advertising this publicly, they won't need to be accredited (that is my understanding).  While I am planning on using a lawyer to set up the LLC, they will do that for less than $1,000, but I was told that involving a lawyer with securities experience would cost $10,000+.  (That number came from another lawyer- so I don't know how accurate it actually is).  But the biggest cost I can see would be having to get a securities broker involved.

This has been a fantastic thread so far.  2 things I would love to get answers/opinions on.

1.  While I fully agree with you about getting the long term financing option, but your plan is to exit in year 3-5, what do you tell your investors to anticipate or plan on?
2. Instead of a value-add situation, would this idea work with a new build?  I am planning on building about a 12,000 sqft multi-use building with my CapEx costs would hopefully not becoming a factor until year 10+.  Although I  am calculating CapEx reserves from the beginning)
3. Also, would this make a difference, for value-add or new build, if the property is an opportunity zone, where it seems like the biggest benefit is to keep the property for 10 years?

Welcome to BiggerPockets. I live and invest in Murfreesboro - and I know there are certainly plenty of opportunities here. I personally agree with Mark. For your first real estate, I think it is best to be closer to home if you can and learn a market.  It is  still amazing to me how quickly you can learn about a market  and the prices you should pay/not pay if you pay attention for a couple months.

I think it would be harder for a first-time investor to invest in downtown Nashville. There is a lot of outside money that is coming there, and a lot of experienced investors that are still looking for deals there, especially for multi-family. There are plenty of deals out there in Rutherford county, just depending on your desires. Also, you might be interested in looking in Manchester. I know it is a little farther out from Nashville, but I think the price point for entry is a lot lower. That is just my personal opinion though.