Multifamily in Huntsville

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Dena Puliatti
Property Manager · Huntsville, AL · Member since 2017 · 302 posts · 246 votes
1y

Look into SFHs in neighboring subdivisions around Huntsville and Madison. Harvest is a good market and desirable for renters. We have tons of new apartment complexes, so renting out apartments in quads is taking longer since they offer less amenities. Some of the new build SFHs are very affordable with in-house lender rates.

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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    1y

    Greg,

    One of the problems with Huntsville other than inventory is its suffering from a sale price dilemma.  Home prices have decreased over the last 18 months so there is lack of good options and values still above normal.  Reason that is bad is 2-4 units were the first to go sky high in 2020 to 2022 and now rents do not match the market if your getting financing.

    No point having a mortgage of over $2850.00 on a $420K home if the rents on a Duplex are only $1250 to $1350 a door.  You can find some 2 units under or around $250K but they have been sitting on the market for over 150 days which tells you its not a great deal if it were an investor woud have already purchased it 4 month ago.  

    If you find a Duplex or greater for under $250K and with rents common to the market at or above $1200 a door then you have some cash flow.  The problem is at $250K what are you getting each side sqft, bed/bath count etc.  

    You can easily look at states like Indiana or Ohio and find a duplex for $200K or under and cash flow the same per door.  Same tax situation and more likely higher potential to appreciate faster.

    [email protected]727-637-4289
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  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    1y

    I looked into MFU in Huntsville but couldn't find anything. There was two issues:

    1. Whenever you see reports of a "hot market," you are already too late. Keep in mind these cities become hot because of past data, not future. All it does is creates more competition.

    2. Most of the MFU are grouped together. When you have all the properties identical to each other, how do you compete? One way: price. When that happens, it becomes a race to the bottom.

    I'm not saying don't invest there, but be extra cautious and maybe look for something that makes it unique.

    0Reply
  • Michael S.
    Huntsville, AL · Member since 2018 · 578 posts · 864 votes
    1y

    @Greg Gallucci - would not recommend looking in Huntsville for MFH right now.  Overbuilt on the high end MFH.  Low end MFH is overpriced for the current rent amounts.  Would look elsewhere.  

    1Reply
  • Greg Gallucci
    OP
    Member since 2023 · 13 posts · 6 votes
    1y

    Thanks for the insight all. It has certainly been a challenge finding cash flowing properties in area where the demographic are favorable. 

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    1y
    Quote from @Greg Gallucci:

    I'm starting to look into the Huntsville market. What is the multifamily market like there?


     I think I answer this question once a month. google Huntsville Alabama and overbuilt and you'll get your answers 

    [email protected]786-494-6766
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  • Dena Puliatti
    Property Manager · Huntsville, AL · Member since 2017 · 302 posts · 246 votes
    1y

    Look into SFHs in neighboring subdivisions around Huntsville and Madison. Harvest is a good market and desirable for renters. We have tons of new apartment complexes, so renting out apartments in quads is taking longer since they offer less amenities. Some of the new build SFHs are very affordable with in-house lender rates.

    2Reply
  • Lee Bailey
    Member since 2020 · 27 posts · 1 vote
    1y

    I have 2 10 Unit Multifamily buildings in Birmingham Al available for sale. One is 90% occupied and the other is 100% occupied.

    0Reply
  • Sean Allen Fenn
    Member since 2024 · 20 posts · 8 votes
    1y

    We’re looking at a compelling value-add multifamily deal there. 

    Property Overview

    - 105-unit apartment complex built in 1977

    - Mix of 1-bed/1-bath and 2-bed/2-bath units

    - Location? Ask me privately.

    Financial Highlights

    - Gross Potential Rent: $98,061 per month ($1,176,732 annually)

    - Total Income (5/1/2023-4/30/2024): $1,357,459.80

    - Net Operating Income: $896,896.09

    - Existing assumable loan: $6.7M at 5.38% fixed rate until 2029

    Value-Add Opportunity

    - Partially renovated property with potential for further upgrades

    - Current loss-to-lease suggests room for rent growth

    - Opportunity to implement operational efficiencies

    Market Dynamics

    - Huntsville's population grew 9.4% between 2020 and 2023

    - Strong job growth, particularly in aerospace and defense sectors

    - Significant multifamily supply growth (15.9% inventory expansion in past year)

    Investment Strategy

    - Assume existing favorable financing

    - Implement value-add renovations to drive rent growth

    - Capitalize on Huntsville's robust economic expansion

    - Target hold period: 3-5 years to align with loan maturity

    Risks and Considerations

    - High market-wide vacancy rate (17%) due to recent supply growth

    - Potential for market softening due to rapid inventory expansion

    - Property age may require significant capital expenditures

    This opportunity offers a blend of stable cash flow from the existing operations and upside potential through strategic improvements, all underpinned by Huntsville’s strong economic fundamentals.

    0Reply
  • Sean Allen Fenn
    Member since 2024 · 20 posts · 8 votes
    1y
    Quote from @Sean Allen Fenn:

    We’re looking at a compelling value-add multifamily deal there. 

    Property Overview

    - 105-unit apartment complex built in 1977

    - Mix of 1-bed/1-bath and 2-bed/2-bath units

    - Location? Ask me privately.

    Financial Highlights

    - Gross Potential Rent: $98,061 per month ($1,176,732 annually)

    - Total Income (5/1/2023-4/30/2024): $1,357,459.80

    - Net Operating Income: $896,896.09

    - Existing assumable loan: $6.7M at 5.38% fixed rate until 2029

    Value-Add Opportunity

    - Partially renovated property with potential for further upgrades

    - Current loss-to-lease suggests room for rent growth

    - Opportunity to implement operational efficiencies

    Market Dynamics

    - Huntsville's population grew 9.4% between 2020 and 2023

    - Strong job growth, particularly in aerospace and defense sectors

    - Significant multifamily supply growth (15.9% inventory expansion in past year)

    Investment Strategy

    - Assume existing favorable financing

    - Implement value-add renovations to drive rent growth

    - Capitalize on Huntsville's robust economic expansion

    - Target hold period: 3-5 years to align with loan maturity

    Risks and Considerations

    - High market-wide vacancy rate (17%) due to recent supply growth

    - Potential for market softening due to rapid inventory expansion

    - Property age may require significant capital expenditures

    This opportunity offers a blend of stable cash flow from the existing operations and upside potential through strategic improvements, all underpinned by Huntsville’s strong economic fundamentals.

    ⓘ This is not an offer, solicitation of an offer, to buy or sell securities. Past performance is not an indication of future results. Investing involves risk and may result in partial or total loss. Prospective investors should carefully consider investment objectives, risks, charges and expenses, and should consult with a tax or legal adviser before making any investment decision.

    0Reply
  • Ian Stuart
    Lender · Seattle, WA · Member since 2017 · 118 posts · 161 votes
    1y

    Huntsville was the market to be buying in ~5 years ago. That said from what I hear it's very oversupplied now. Best of luck. 

    0Reply
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