All Forum Posts by: Scott Anderson

A - parts of Madison, downtown Huntsville, Five Points area, Hampton Cove B - most of Madison, southeast Huntsville, Jones Valley, C- research park, north of highway 72 around Jordan Lane, Athens/Limestone County (may move to B with Toyota/Mazda investment), Hartselle (small but growing), Harvest (along Highway 53) D - north Huntsville (north of oakwood ave), Southwest Huntsville (Hood Road, Patton Road), Decatur, Michael Avenue in Madison F - Triana

I used LegalZoom because it was the end of the year and many local lawyers were busy. You can probably figure out how to form the LLC without a lawyer. LegalZoom was a fine experience but I was just setting up a basic 50/50 partnership with two member managers. Not sure of the cost competitiveness of LegalZoom compared to others but i had a good experience and was able to close on a deal shortly after the new year.

@Greg Spring I've used Iberia in Huntsville. Kristen Strickland is great. I've heard good things about Eva Bank (investor friendly/possible 85% LTV loans) as well. There are a lot of affordable housing options in close proximity to UAH. You shouldn't have too much trouble.

@Steve Weihe and @Jacob A. the Madison area is good but there is a lack of smaller multifamily properties. It is mostly a community of SFRs, larger apartment complexes, and some new commercial. I haven't looked at specifics but I would also guess the rent/own ratio isn't favorable to investors when you take out the large apartment complexes. I would also avoid Michael Avenue along Wall Triana as this is one of the only crime ridden parts of Madison. 

Other people here are much more educated on this but I’ll give it a shot. The whole point of house hacking is getting a very low downpayment. In order to qualify for those you have to “plan to live in the house for a year” and you have to purchase in your own name. If you’re planning on flipping, staying for a year goes against conventional wisdom.

Just looking at this off the cuff but those expense numbers look annual to me.

I use CoStar for work it is definitely the best option out there for finding sales and lease information but another site I’ve started perusing recently (free) is Crexi for active listings.

Sounds like this property is probably in a D area or is in bad shape. Make sure you’re considering the likely low rent growth, substantial vacancy and collection loss, and other issues that could arise. Make sure that your risk tolerance is in line with the risks associated with this property. If it is your first property, you may want to avoid the headaches associated with a D area property.

Something you need to be very careful of on this deal. Rebuilding the "down" units may not (likely not) be financially feasible. Basically for your deal to work, the seller is going to have to discount the rentable units (and charge $0 for down units) for you to take on the added risk/cost of the down units. I think you understand that with saying that you'll buy on in-place income capped at 12-15% assuming the cap rate should be more like 9-10%. I'd take a contractor along with you as @Scott Meitus is suggesting and then add a 15%-20% profit onto the construction costs and reasonable lease-up costs. So say the property is worth $35k per unit stabilized ($1,820,000 total) and construction costs are $2k for 8, $2.5k for 8, and $35k for the remaining 36 ($1,555,200 for costs + 20% profit). So your offer would be $264,800 or $16,550 per rentable unit. This doesn't account for lease-up costs which will vary based on what the absorption rates are in your market. 

I second @Annie Dickerson on her Andy Agee suggestion. Haven’t worked with him as an investor but dealt with him as an appraiser. He has close to a monopoly on the 20-100 unit apartment market in Huntsville. If you want to contact others just to see if someone else better fits your style, you can contact Robert Taylor (Independence Realty) who focuses on smaller stuff but has some 16-36 unit stuff sometimes, Len Johnson (Gateway) who used to work with Andy and handled a lot of his smaller (under 100 unit) stuff but recently went off on her own, and David Wilson with Berkadia, who handles larger properties.

Not sure why this post didn’t get more responses (or maybe it did and they aren’t here anymore??). Yes downtown Huntsville is revitalizing. It is a fairly small downtown and lacks the large supply of old vacant buildings that exists in Birmingham for example. Huntsville is the strongest market in Alabama with extremely stable economy. It has finally gotten on the radar for large multi family buyers over the last two years which has led to extreme cap rate compression (even over that shown by the market overall).