Alabama investors.... help appreciated!!!!

Birmingham, Alabama
General Real Estate Investing
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Alabama investors.... help appreciated!!!!

Gavin Oftedahl
Member since 2024 · 1 post · 1 vote

My wife and I are about to be in a position where we have to move.  We currently live in a small town near Dothan, AL and own a farm with a few acres there.  My wife is in medical school and I am high income W2.  She is about to enter year 3 and 4 of medical school where she does clinical rotations and this is the reason that we may be moving.  The options that we have to choose from and rank are in a preference order are: Alexander City, Anniston, Gadsen, Boaz, Guntersville, Montgomery, and Sylacauga.  

I am looking to get local advice of strategies that work in these areas. I have experience in RE investing as I own both LTR and STR. I would like to buy a property for us to live in for 2 years for years 3/4 medical school. My preference would be a STR if able as I can offset my W2 income massively, however I would be open to a good LTR as well. The problem is with LTRs is we have to want to live in the home for two years... I am sure many urban homes would fit the criteria, but my wife and I really enjoy life out in the countryside much more. She is willing to drive up to about 45 minutes from these cities.

From the research I have done the only potential STR markets that I can sort of see is Lake Martin and Lake Wedowee. Based upon airdna data the revenue potential looks okay on Martin, but not great. The purchase price of homes on Martin is elevated and honestly too high for what the revenue these homes bring in is. Lake Wedowee the purchase price is lower but the revenue is much lower than Martin.... basically I am not getting too excited about either of these markets.

We could search for a place on some land out in the country... but then I am not sure what our exit strategy would be after two years.

I have thought about other strategies such as buying a house with land on it and subdividing into other lots or even adding ADUs to do a glamping style STR.

I am not sure... we are kind of at the mercy of where medical school says we have to live for 2 years and I am trying to make the smartest investing decision as possible with it.

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  • Lindsay DavisBusiness Member
    Real Estate Broker · Birmingham, AL · Member since 2019 · 326 posts · 203 votes
    8mo

    @Gavin Oftedahl,

    Could you explain what you mean by, “the problem is with LTRs is we have to want to live in the home for two years…”?

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  • Hunter TerrynPro Member
    Birmingham, AL · Member since 2021 · 79 posts · 68 votes
    8mo

    @Gavin Oftedahl - love the thought behind the strategy and sounds like you've taken it a few steps further with some market analysis. Nice work!

    My wife is actually at UAB now, finishing up her fellowship. Finally... the end is in sight!! Tell your wife to hang in there. 

    We bought our first home in Sarasota, FL for this exact reason. She was attending FSU Med, and did rotations at the Sarasota campus. We thought "perfect! we'll live there two years, then have a strong pipeline of med school renters to lease every other year". Good in theory, but we never really got to test because we ended up placing a mutual friend (employed at the hospital nonetheless but not a med student) in the home, who lived there over the last 4 years with different roommates. It worked out great but we never really tapped into the med school renter pipeline.

    When considering STR or LTR, I think it's most important to pick a market where those strategies make sense and there's sufficient demand. Doesn't sound like you're limiting yourself anyway, but don't rely solely on the fact that other med students could rent it out. Look for other strong demand drivers in the market. 

    Worst case, if the city isn't a good fit for STR or LTR... dare I say... RENT! And deploy your cash in a market like Birmingham or Huntsville where the rental demand is stronger. Even if you consider a 3% vs. 20% down payment, when you add up closing costs and other fees on a home you would be more attracted to live in, you might be better off paying the 20% on a lower-cost rental and getting that rolling.

    Alternatively, look for a good fix and flip opportunity. If you're ok with living in some dust for a couple years, could be a good equity play. 

    Hope that helps, and good luck in this next phase.. Very Exciting!

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  • Michael S.
    Huntsville, AL · Member since 2018 · 577 posts · 864 votes
    8mo

    @Gavin Oftedahl - we currently have one rental in Guntersville, although we are going to sell it this spring as we have too much equity in it. We thought about making it an STR, but instead we are simply going to keep our focus on our rentals in the Huntsville/Madison market. I think the Guntersville market has potential for investors who are interested in making it their niche market, but it was not easy to find LTR renters compared to Huntsville/Madsion. I suspect Boaz would similar to Guntersville, in that there is likely a limited LTR tenant population available. I would not consider Gadsden whatsoever personally. I suspect Montgomery may be your best bet, as you should have a sizeable LTR tenant population there. Good luck.

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