We're looking at a Multi-Family in Lubbock. Definitely a C-ish property. I read somewhere to stay East of Ave Q and this sits only a few blocks east of Ave Q. Current tenants seem to be slightly lower class and rents are at 400-475 for a one bedroom that hasn't been remodeled since it was built in the 70's.
My question is, what's the market like for non student occupied housing? Would it be reasonable to expect to be able to raise rent with remodeling the units or is 400-475 pretty close to market rate for the area the multifamily is in?
Also, any suggestions for commercial lenders in the area? Property managers? Contractors?
I'd be interested in meeting with someone around the Lubbock area.
You probably meant West of Q. Staying west of Q allows for higher quality tenants and rents, but the market is very competitive right now. You'd likely be able to increase rents for that property with renovations, but the higher quality tenants would be hard to come by. I'd start with Alliance FCU for financing. They have a great program if it fits their model. What are the numbers on the property? Would it cash flow at 400-475/unit based on current sales price? If not, it may be risky. If it does cash flow pre-reno, then it could be a good buy! Good luck!
Yeah duh sorry. How can I invest and can't even read a compass. Haha.
Anyway, at the current prices, the property would break even, which would actually cost money the second something broke. They have wood paneling walls and haven't been remodeled since they were built in the 70's. So there's definitely a need for remodel. Current rents are at 450-475 each unit.
I have been looking at the Lubbock market as well. I noticed another one-bed west of Ave Q with supposedly higher rents. My concern was the 1 bedroom since it was farther away from campus.
For non-student housing, there are a TON of options. We are closing on a 4 bedroom house west of the Loop of 4th street at the end of the month. Nice residential neighborhood. The previous owners had law students in it, so it's not out of question for students, but could very easily appeal to a family.
Here's the deal with Lubbock - it aint that big ;) (pardon the colloquialism). It's definitely bigger than it was when my wife and I were up there for school in the late 90's, but it's still VERY easy to get around. Most streets are laid out on a grid, and all the major ones running North/South are alphabetical one way and the East/West are numerical. Student housing doesn't have to be right around campus. To put is simply - it's EXTREMELY easy to get around in the city.
Another think to think about for Single Family properties is there is an ordinance that says no more than 3 non-related people can live in a house together. This isn't usually enforced unless the folks in that residence are getting out of hand and such. This is less of an issue if you are focusing on non-students, but something to consider as you size a property.
I would also agree - stay west of Q. I actually have a hard time even going East of University - with a couple of notable exceptions (SW corner of South Overton and the very west side of Heart of Lubbock. The area a lot of folks look at is Tech Terrace (just South of campus), but it's the most overpriced and competitive section in the city. I really like the Maxey park neighborhood just West of it, and there are several good areas as you move South down Indiana and Quaker. Look at the map view of some realtor/mls type sites and you should see all the names I'm mentioning here.
Also, through BP, I found a great realtor up there. He's been awesome as we have worked through this first deal, and the agency he's with does Property Management too. If you would like his contact, info, feel free to PM me. He's an investor himself, so he knows the areas to watch really well.
We love Lubbock! Yeah, we are biased because we are alumni of Tech, but it really is a great city, and I am super excited to begin investing there. I'm hoping we can follow this house up with another 3-5 over the next couple of years.
I use Centennial Bank for my commercial loans. Efficient bank that can get a loan approved if you're a good borrower. Highly recommend.