I have been here for 2 weeks now, I moved here from CO to work in the aerospace industry and I am still trying to learn the market. I was wondering what have been your experiences with the following here in Huntsville:
BRRR
College Housing near the UAH campus
Multifamily Properties, preferably 4-plexes
Live-In Flips
Thanks!
@Luke Ache - I saw you transitioned the discussion to a new thread, so I figured I'd answer your question here instead.
BRRRR is definitely still possible here - it's all about the numbers. They are possible in any neighborhood, including A neighborhoods; again, you have to know your numbers - rehab costs, comps, and ARV.
We have one property near UAH that rents great - it has positive cash flow but that's because we bought it in 2018. Tougher to cash flow that area now, as the SFHs go for around 140k to 150k PRIOR to rehab. IF you rent to college students, make sure the parents are on the lease. Otherwise, you will be losing money on capital expenses very quickly. Renting by bedroom will likely lead to positive cash flow even with the current cost basis of the properties there.
Huntsville is not a good location for 4-plex investing in general; there are very few of them relative to the number of investors, which pushes their acquisition costs to be quite high. In addition, many of them are in the rougher areas of Huntsville. Avoid the Golf Rd area unless you like capital expenditures.
Live-in Flips - do you mean house hacking? If so, this is an excellent way to invest; however, duplexes are not common here, and are typically in the somewhat rougher 35805 areas, so proceed with caution.
Hope this helps.
@Luke Ache - I saw you transitioned the discussion to a new thread, so I figured I'd answer your question here instead.
BRRRR is definitely still possible here - it's all about the numbers. They are possible in any neighborhood, including A neighborhoods; again, you have to know your numbers - rehab costs, comps, and ARV.
We have one property near UAH that rents great - it has positive cash flow but that's because we bought it in 2018. Tougher to cash flow that area now, as the SFHs go for around 140k to 150k PRIOR to rehab. IF you rent to college students, make sure the parents are on the lease. Otherwise, you will be losing money on capital expenses very quickly. Renting by bedroom will likely lead to positive cash flow even with the current cost basis of the properties there.
Huntsville is not a good location for 4-plex investing in general; there are very few of them relative to the number of investors, which pushes their acquisition costs to be quite high. In addition, many of them are in the rougher areas of Huntsville. Avoid the Golf Rd area unless you like capital expenditures.
Live-in Flips - do you mean house hacking? If so, this is an excellent way to invest; however, duplexes are not common here, and are typically in the somewhat rougher 35805 areas, so proceed with caution.
Hope this helps.
@Michael S. I really appreciate your response. It will save me some headaches but I am definitely an investor that thinks outside of the box, if somebody says something "can't be done"- I have to validate it for myself.
With that being said, there is a duplex for sale on 3600 McVay St SW- I don't know anything about the area but if I notice that something isnt moving for 90 days or longer- I would try to lowball so that I get at least 10% cash on cash return if there is room to negotiate down in this market- maybe there isnt?
Secondly, I would never pay $230K for this property because it is totally overpriced- public records show that it was last sold for $145K, a little over a year ago, so $230K is a ridiculous price- I think this would be a good example for our "Investing in Huntsville" discussion- I would like to understand why this may not work if I could negotiate the price down, hopefully- Is this a rough area? I will drive by there later today to see if for myself but your analysis of the HSV market is highly valued.
@Luke Ache - 35805 is a diverse zip code; it is mostly C class, with some B and D neighborhoods mixed in. The lowe mill area could create an A neighborhood pocket in the future - but that's at least 5 to 10 years from now. We have properties in this zip code, and are fairly familiar with it.
The property you referenced is in a D area of 35805 in my opinion. Feel free to see for yourself.
Any property in Huntsville or Madison proper on the MLS more than 90 days is either overpriced, has something seriously wrong with it, or has a bad location. You will not find diamonds in the rough on the MLS here that are listed for 90+ days.
That doesn't mean you can't find a deal on the MLS - we bought one off the MLS this year that still amazes me that we got for under list price back in May in 35801 - had only been listed for a week when we got it under contract. We figured we were in for a surprise when we closed on it and did the demo. But nope - just one that slipped through the cracks somehow on MLS, which is very rare, but happens.
@Michael S. Great insight again, I am very excited about learning more about this market. I ran into this listing today, if you have time or anybody else would like to chime in- 1196 Hurricane Rd, New Market, AL, 35761- From the pictures, it looks like the home is ready to be rented out and occupied. I was wondering if it would be realistic to buy a home like this, live in it for 2 years-do minor improvements and turn it around in 2024 for 30K more? Of course, we don't have crystal balls but I need to understand first what is realistic in this market and what isnt.
Of course, I am very hesitant to get into the market right away because I just got here and I want to understand it better and see where prices go in the next 1-2 years- I spoke with a realtor, she told me to take advantage of the homestead exemption but I would like to get a better picture of what this market may do in the next two years before getting into it- This year, I think it would be worth starting my first LLC here in Alabama, learn as much as I can about the market and work on my credit before jumping in.
@Luke Ache Anything on the MLS is not going to cash flow much or will be negative. I have been tracking the Huntsville market for a year now and its been hard finding anything on the MLS. I am looking for my first property and I don't think I will find it here. Might have to look farther away to see if it will cash flow.
Hi @Luke Ache, welcome to the area! My wife and I have done 2 live-in-flips in the area and we are about to sell the last of the two. As long as you buy at a decent price and are somewhat handy it can be a good strategy.
One thing I am noticing is local investors looking for deals outside of Huntsville. There is less competition and deals are easier to find.
Feel free to send me a DM sometime to chat about investing and the market.
Thanks guys. I went for a drive for dollars this morning and that neighborhood near the Arsenal is very bad- You can tell you are only going to attract very low quality tenants so unless you know multi family properties in some nice neighborhoods, it seems like they are mostly in low income areas.
I think a BRRRR deal in Madison may be a good way to start, the cheapest home in Madison listed on Realtor was definitely below average- I found 3 homes for sale on Whisperwood Lane with potential but those may be the lowest quality of homes and neighborhood I am willing to go for.
Definitely not interested in being a slumlord but if you know zip codes in HSV that would compare to Madison, please let me know- I am thinking appreciation in Madison should be robust in the next 5 years.
I found nothing decent for under 250K- it looks like here in Huntsville, the focus should be on quick appreciation- cash flow may not be realistic in most instances with the current market prices.
@Luke Ache Welcome to Huntsville! There are good opportunities here, but this is more of an appreciation market that a cash flow market. That being said, the rental market is booming. Much better to have someone in your property covering your expenses and making a little income while you watch it appreciate. Quads, if you are aggressive enough to get them, are appreciating rapidly, even in some of the C class neighborhoods. While 12 month leases are the norm, there are more quads recently that are accommodating short term clients with a much higher yield. Of course, management fees will be higher on short term rentals because they are labor intensive.
Need to build there
@Alex Talcott I have not investigated that possibility but coming from Colorado, I would say, almost every type of service here is 20%-30% less expensive than in Denver. The Lexus dealership in Huntsville is a good example-they charged me 30% less for the same exact service I was going to get done in Lakewood, CO.
The challenge may be to find reliable, "quality" contractors here, I am still learning the market but one thing that blew my mind is the amount of distressed properties you will find just outside of Huntsville, Paint Rock, AL is a good example, a lot of distressed and dilapidated trailers- I can see that area becoming a "suburb" of Huntsville in the near future since it is only 22 minutes from Huntsville- Gurley is another area that is in the middle of a "transformation"-anything off Highway 72 between Huntsville and Scottsboro may have potential
@Dena Puliatti Thanks for the helpful insight. It will help me narrow down on investment strategies that may work best in this market. The market here is unique and completely different from metro Denver- I would not hesitate to buy a place in the 200K-250K range with potential since it seems like the prices here are slightly inflated but still within a realistic range.
In Denver, it was impossible to find anything that was not overinflated. I lived in a small town in the mountains called Central City, CO- the population was 530 and the average home price there right now is 400K, absolutely insane!
@Luke Ache - I think you will likely have trouble finding tenants for houses in Gurley or Paint Rock.
@Luke Ache - I think you will likely have trouble finding tenants for houses in Gurley or Paint Rock.
Michael: I totally understand what you are saying, that is why I am very hesitant to make any investments until I understand this market better. If I were to make an investment today without all the knowledge, my gut feeling is that Madison, 35758 would be the safest best, the most attractive area with the most potential so far from all the areas I have been to, I may be wrong though haha.
I went to New Market also and I can see some potential there too but there is still a lot of agricultural properties mixed in with residential- saw a few abandoned homes in the middle of a residential area which is a bit strange coming from the West- there are some nice homes on Hurricane Rd between New Market and Maysville
@Luke Ache - 35758 has mostly A neighborhoods, with some B areas scattered in it. It will be hard to cash flow well in that zip code at current property prices. But appreciation there will continue to be strong, and rental amounts should continue to progressively rise.
I think New Market has a lot of potential as well. It's a much better option than Paint Rock or Gurley in my opinion.