I'm located in Jacksonville Florida, and I have one property here, one in Virginia, and I have chosen to expand into Huntsville AL.
I went back and forth with a local realtor/property manager for a while, and after I felt he was acting in a professional and trustworthy manner, I checked him out online and here on BP too.
But in that search for people in Huntsville I also came across a wholesaler who also was willing to talk with me for a while on the phone and answer a few questions. I ended up on his buyers list, frankly not expecting too much. I was an out of state buyer, with no track record in the area to prove I can close or that I was willing to close.
Fast forward a few months, and I get the normal email from him with two houses in them. One was a 3/2 1100 sqft that was in an ok looking area based on the research I'd done. Problem was, I'd already committed alot of my own capital to another project. But this was interesting enough to take a little gamble on. I was able to raise some capital from a family member with pretty favorable terms for both of us, 5% interest to be paid at the end of 6 months along with a return of all their money. This enabled me to buy the property with cash, allowed for at 10k of repairs, and make sure all my normal bills would still get paid.
I'm buying the house for a little more than 56k, repairs seem to be around 5k, per the PM the rent in the area should be between 800-850, and online comps seem to be around 70-80k. My plan is to refinance to a normal 30yr mortgage after about 4months so that I got a few months of rent coming in w/no loan to carry which helps out in the beginning.
It's an ok deal overall, but I'll need to do better to hit the numbers required to get to my goal. The point of doing this property is to start to create the local reputation, in hopes of getting higher on the buyers list.
Looking at huntsville myself. Any chance you would be willing to share wholesaler info?
@Carter Melvin I'm pursuing properties with an almost identical strategy and identical numbers, too. I'd be happy to share any of my contacts and market info with you, and perhaps we can compare notes and experiences. I only just started looking into Huntsville, myself. I'm glad it appears that you've found a good property there!
@Bruno Demir I'm not terribly opposed to sharing, but let me get this deal and maybe one other closed first. I'd hate to be the one spreading around someone who may not work out. It has happened to me before discussing property managers in another state.
@Carter Melvin I am in investor in the Huntsville Market where I primarily do buy and holds. The numbers that you mention look great and I hope that deal works out for you. Let me know if there is anything that I can do to assist you. I can share information about the property and neighborhood if you PM me the address.
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So, update on this thread. A few things have worked out very differently, though not disastrously so far.
It took a bit longer than expected to find a tenant, and the rent the house commanded came in at the lower range of my expectations. It ended up renting for $795. Not bad considering what I put into it, but still lower than the $800-850 the wholesaler set the expectation for. It also took two months to find the tenant. I have also run into repairs that I feel should have been caught before a tenant was placed, but the house is a little old too, so not terribly unexpected. Nothing that blows the deal out of the water completely. And given that there is no debt service, the repairs are easier to stomach.
I started working on the refi about a month ago - and today I got the appraisal back. It was 25K lower than I would have expected. I look at the report and I can't find anything totally unreasonable in there as far as comps. So instead of a cashout-refi, maybe I'm looking at a HELOC on the property. I only just found this out today so, I'm in the process of figuring out next steps.
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