OOS Investments: Why Huntsville, Alabama??

23 Replies

Hey BP! I hope I am not stepping on any toes by posting these articles... but living in this market makes you want to climb a mountain and scream about it. After several conversations with OOS investors and many affiliated brokerages it still amazes me that the secret is not out... Huntsville is one of the uncut gems of the southeast. It boasts one of the highest per capita incomes in the state paired with one of the largest growth percentages within 100 miles. There are projections that Huntsville, Al will out grow Birmingham, Al within 5-10 years. Take a look at these article from only 2 years apart and lets have a conversation!

   https://www.betterturnkey.com/...

https://learn.roofstock.com/bl...

Totally agree! I bought my first investment property in Hsv 3 years back and have never stopped wondering why is not everyone seeing what I am seeing here. Great job and population growth, very low crime rate, super low property taxes, very land lord friendly and the list just goes on!

I am just glad that I did not miss the boat here after missing the bitcoin boom, the 2012 real estate boom and many more! :)

Thanks for echoing what I have been thinking for so long!

@Kaul Christian Kappenman

I agree that Huntsville is a thriving market and growing very quickly. I expect Huntsville to surpass Birmingham quicker than the 5-10 year market, given the new jobs keep coming to the area. That being said, I feel that the secret is out. It is becoming increasingly difficult to find an investment property that makes sense. I'm blessed to be stationed here and learn the market firsthand. 

Sincerely

Josh 

The challenge for OOS investors is the same that us local investors are having - zero inventory.  Good deals are hard to find.  As such, I expect a lot of OOS investors to start looking elsewhere, as demand will continue to outpace supply for the near future.  

As @Gorden Lopes referenced, folks who started investing here in the last several years have likely already scored excellent appreciation. That said, the deal availability notably dropped off in 2020, and are virtually non-existent in 2021 thus far for buy/hold and BRRRR, even now in C class neighborhoods. Rent has not really kept pace with housing sale prices, and this is making the numbers tough on new acquisitions. There are still some deals for flips, but numbers are tight right now - last deal I reviewed last night was only a 5% COC assuming everything stayed in budget - we decided it was not worth the amount of capital at risk for that type of return.

@Joshua McMillion Agreed -- supply is incredibly tight here. Single family homes are usually going within a day of listing, multiple offers, over list price. I lucked into a multi-family deal that I am working on right now, but it was off market. Unless the property is dramatically over-priced or nearly falling down, it is tough to find good deals. I was looking more in Decatur / Athens / Cullman / Florence as it seemed there are more opportunities there now, with potential for Huntsville-like growth long term. 

@Kyle M.

I was open to Decatur but heard there were environmental issues given the city’s industrial history. My goal for this weekend is to scout out that area. It seems that Decatur and Athens are both on the path of progress.

Sincerely

Joshua

@Kyle M. @Joshua McMillion

I just don't see the growth potential for Decatur that others do.  I think you can find cash flow there, but I don't see the appreciation potential to go with it.  I think people will live in Meridianville/Harvest/Albertville/Athens before they'd move to Decatur.   I don't see rapid growth/appreciation in the Shoals either;  it's simply too far away to catch the momentum from Huntsville/Madison's growth.  

However, I do think Athens has a lot of potential, and has already started to show this with rising prices.  Cullman is an interesting location - it seems like it should be growing faster than it is, given its proximity to both Birmingham and Huntsville, but still has great potential.  

@Michael S.

Yeah, you could be right about Decatur, though they are widening 565, so I thought that could (potentially) drive more people to look down in Decatur (many already do commute between Decatur and Huntsville). 

I live in Meridianville and agree that Meridianville / Hazel Green / New Market / Toney are likely to attract people more than Decatur. But, having looked even in those areas over the past month, they are also getting harder and harder to find deals that make sense (unless you just want to bank on rapid appreciation vs cash flow). There are basically no multi-families and the single families are getting bid on both by investors and just regular folks looking for a primary residence. Also, the amount of new development going on in this area is incredible. Cotton fields are turning to neighborhoods are fast as they can dig them up. Some say that is only going to just help level out the supply issue, but I am slightly concerned that at some point we will have a glut of new homes, making the older homes less attractive. I know investors who are buying up new homes for the purpose of renting out as soon as they're built (they're also counting on decent appreciation just in the 9 months it takes to build).  

@Kyle M.

You just hit the nail on the head! I was going to pivot this conversation at some point on how to continue investing in Huntsville with a low risk, yet still cash flowing option. Simply buy new homes, by completion you generally have 10-20k in appreciation. With the right floor plans and location the properties still cash flow between 6-9%. Full disclosure... I work for a developer/builder. If anyone is interested in more information send me a PM and I can walk you through the details. Very perceptive Kyle. This is happening more you think!

@Kyle M. - I hear your concern about a potential excess of new housing;  I used to share it as well.  However, based on the numbers I've reviewed, we are so far behind on housing availability right now, that this won't be an issue for the foreseeable future.  As far as older houses go, it's all about location and condition.  Most older non-rehabbed homes in five points, for example, are worth less than the land they sit on.  No matter how much new build there is, location will always insulate the older properties;  and fully rehabbed older properties are in fierce demand right now.  

@Kaul Christian Kappenman - we did this play in 2019 - bought a new construction close to downtown and immediately turned it into a rental.  Cash flow is very tight, but we knew this going in.  The location was totally the key and the reason we bought it - sure enough, the area has had a 15 to 20% appreciation based on the resale of 2 houses in the subdivision in the last 6 months. 

I live in Huntsville and I'm new to investing but have been digesting as much information as I can over the last few months and I have been actively looking for properties I can BRRRR. I am discouraged a little by the fact that there are just no deals to be found right now. I agree that the appreciation of homes in the right areas of Huntsville have been insane. We bought our home in 2016 as a new construction in the medical district and it has appreciated by 20%. And we bought a home that was the highest priced/sq ft in the neighborhood at the time. So maybe that is the strategy to go after right now. Just requires a lot more cash up front and having it held up for a few years.

@Brandon Hardiman

I saw the same thing as you when I was actively looking over the past month. Fortunately, after enough looking and talking to agents, I somewhat lucked into a deal that is right for BRRRR. But, it was off market. I think the strategy here is to actively pursue off market deals -- before I got my current deal, I was starting the grind of driving around, picking houses that looked like they may need help, pulling ownership records, and would have been mailing and/or calling to see if someone would sell. Just like any city, there are probably some owner/landlords that are older and maybe looking to just liquidate. And, if you find that person on the right day, you can make a deal that works for both. My own neighbor is thinking of selling his house, which is in need of repairs, just so he can move to an apartment and he doesn't need to worry about upkeep anymore. It did not fit what I was looking for, but is probably good for someone with more experience in rehabbing and who can quickly turn it around (good neighborhood, average size family home, etc).

We have been in the Huntsville market since 2018. Now its finally getting the press coverage as the top emerging market.

Although I agree that Hsv has seen great appreciation in last 3-4 years and "deals" are hard to find, I think there is still a lot of room left for growth in terms of rent appreciation and price as well. I have looked at other areas like Austin and Raleigh, NC and the numbers there are even more crazy plus the I was shocked to see the property taxes in places like Austin, freaking 5K property tax a year on a 230K OKish house. I would choose class B+ area of Hsv any day over class B- areas of Austin suburbs.

At least in Hsv, whoever is entering the market now, they can safely get 5-7% cash on cash plus a strong appreciation growth pretty safely, for many that is still a "Good" deal.


Have to agree with @Michael S. Decatur will have to be overhauled to bring good tenants and also, our community is growing faster than expected but the Huntsville/ Madison/ Harvest/ Limestone area is where any OOS investors focuses should be. 

Def is a competition between investors looking for deals and families that have the money/time to do minor live in renovations, I see it everyday- people offering 15+ over asking and then some because the market is so wild. 

Cash Investors loosing deals to families with preapproval. Because not only has the owners in HSV/ Madison learned how much their homes are worth- they'd rather see it go to a familes, etc. 

But they need a great agent to give them the pros and cons of financed and cash deals. 

Its primarily the owners decision and bidding so much over asking may not get the appraisal it needs, etc. you know what I mean?

Need to get in with a group of real estate investors to see the off market deals first. 

It has been working for our circle well, and most homes we have never get to the MLS because our circle of eager investors- plus they know who they'd be bidding against.

The past 6 months our market has been turned upside down. 

To invest in Huntsville, you have to put your best offer out with as few contingencies as you can allow.  Very competitive market.  Make sure your agent works with investors and knows how to swim in that pond. Some of the residential agents may not know or understand your game plan. 

@Dena Puliatti this is on point. We’ve had cash offers 15-20k over asking with escalation clauses on our flips. No appraisals and some with no inspections even. As far as wholesale deals we’ve had multiple offers on every property we did an email blast on in Huntsville for the last 12 months

Originally posted by @Joshua McMillion :

@Kaul Christian Kappenman

I agree that Huntsville is a thriving market and growing very quickly. I expect Huntsville to surpass Birmingham quicker than the 5-10 year market, given the new jobs keep coming to the area. That being said, I feel that the secret is out. It is becoming increasingly difficult to find an investment property that makes sense. I'm blessed to be stationed here and learn the market firsthand. 

Sincerely

Josh 

So the secret is out, but you’re not a broker trying to indirectly market your services. LOL 

@Jered Lui ,

I sent you a PM as well but there are a ton of local agents that specialize in OOS investors. Hopefully we can get connected, I will pass you along to people here that can help you acquire anything you are looking for, they can also help from a property management perspective. 

Best

@Jered Luiundefined

Yes and no. If I can help in anyway... I am here to connect people. If you are looking specifically for what I have to sell; we can have a conversation. If you are looking for something else... I know those people too. :)

And to be fair... there are a lot of OOS investors that do not know about Huntsville and its activity/benefits. I am here to be a knowledge base and help potential investors get their feet wet. 

I am also the agent that has the Exclusive Right to Sell Hyde Homes. If I get to do that along the way, I call it a "win-win".

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you