Multifmaily Investors in Madsion / Huntsville

[Vernon Trice III]

Would like to get a discussion of those who invest in multfamily properties in Madsion / Huntsville AL. Wondering where they find deals, how they structure the deal, how they structure their business, and any other information they are willing to share. Appreicaite the widsom!

[Dave DeMarinis]

Hi Vernon - what size MF are you considering? Small MF is actually the only segment I don't like in Huntsville! The one exception would be if you can take a SFH and create a small MF - that is a strong segment.

Here are my issues with Huntsville Small MF.

1. Rent Compression - <$750 rents is really tough to retain income. The 50% rule totally breaks down as the rent isn't high enough for percentages to scale and help you. When SFH rents are readily available in the $900 range (3bed/1bath) 1 bed apartments will be in the $476 to $650 range. Those low rents don't support your costs.

2. Location - the Duplex to Fourplexes I see are not mixed in with SFH and are in the worst and most transient areas. I don't see anyway for a cycle of investment to happen to improve those areas and support the higher rents needed to retain a profit. (for a long time anyway)

3. Turnover - 1 and 2 bedrooms Apartments have higher turnover (specifics depend on market) than 3/1 SFH and low rents can't support even the cleaning and painting required for easy unit turns if they are happening every 18 months.

4. Utilities - the low rents don't support a return to install multiple meters or even a reasonable RUBS which further erodes the P&L with rents that can least afford it.

All that said - I would love to hear from someone having better success in Small MF in Huntsville or who sees it differently.