Thanks Derrick! Excuse any typo's as I put this together in between meetings and did not proof.
The B+ areas we have done well in are Maumelle (really that is A class), Sherwood and parts of North Little Rock. We really like the area near UALR and getting ready to buy a 12 plex next door to UALR and re-position it from C class tenants at $575 to B class tenants at $695 to $750. Another great B+ area that I really like Midtown North of 630. West LR is good too, but also would consider A class. You should be able to get at 1:1 rent ratios or very close in the B+ area and slightly under for A class. We have found (and most of the local landlords have not discovered yet), is that you can do a bang out job on the rehab and the house will rent quick and for the top end or over market rent. There was a recent report, I believe from Rent Trac, that named LR near the top one of the highest increases in rent. I would share that link from our site, but the BP police would poof this post.
The economy and employment are fine; actually the LR economy is pretty diverse to the extend Moody's named it the 2nd most diverse economy in the US, with Chicago being # 1. Government is a big sector, along with telecommunications, health care, military, manufacturing, etc. The yields can be 10 to 15% if you buy a home renovated well and positioned for success.
My business partner manages my properties and he also own 30 or so properties too. I believe he is an excellent property manager and you will not find anyone that works harder then him or knows more.
I am not a big fan of MF in Memphis unless you can get in the U of M area of Midtown (38104). I think LR is better for MF because several of the MF's fit a "C" class profile, but located in A and B class neighborhoods. A good example is a few deals we did on Sandford St. As you drive the area, it is certainly a B+ neighborhood, but located right in the middle of the neighborhood are several MF units that are affordable and cash flow well, even though they fit that C class profile. Typically in Memphis, MF's are C and D class units located in C and D class areas. That is a bad combo as tenants have no choice but to do business (shop & dine) in these areas which typically have limited options for anything they want or need to do. Having "C" class units in the middle of A&B areas gives tenants opportunity to do business in the same area where individual with higher income are doing business. In other words, instead of only fast food to choose from, they are sit down restaurants and better grocery chains too.
The one thing LR has over Memphis and any other market in the US is the landlord laws. The landlord laws are a real game changer for investing as you can have someone out in 2 weeks and the tenant rarely has any recourse. Here is an overview of the eviction process. Really, all within the same month, you can try to work with the tenant, if that does not work, get them out and have the house ready to market again and in a perfect world, have it rented. The tenants are well aware of how strict this policy is and it is huge in them doing whatever they can to get $ to stay in the house.
1. File a 3 day notice to pay rent or move. 2. If they don't respond you file a lawsuit. 3. Then you must serve the tenant with a summons and the complaint. 4. If they don't respond to the lawsuit within 5 days you can file for a Writ of Garnishment. 5. Then you deliver the writ to the sheriff's office to have it served on the defendant. He must serve it within 24 hours. 6. Finally you schedule to meet the sheriff or a deputy at the house to physically evict the defendant. That depends on their schedule but it doesn't take too long. 7. You also bring along a locksmith to change the locks. And, you tell the tenant he has 30 mins to get his belongings and get out. It's harsh but that's the law.
I am an active investor in LR and Memphis and a TK provider in both markets too.
Thanks Derrick! Excuse any typo's as I put this together in between meetings and did not proof.
The B+ areas we have done well in are Maumelle (really that is A class), Sherwood and parts of North Little Rock. We really like the area near UALR and getting ready to buy a 12 plex next door to UALR and re-position it from C class tenants at $575 to B class tenants at $695 to $750. Another great B+ area that I really like Midtown North of 630. West LR is good too, but also would consider A class. You should be able to get at 1:1 rent ratios or very close in the B+ area and slightly under for A class. We have found (and most of the local landlords have not discovered yet), is that you can do a bang out job on the rehab and the house will rent quick and for the top end or over market rent. There was a recent report, I believe from Rent Trac, that named LR near the top one of the highest increases in rent. I would share that link from our site, but the BP police would poof this post.
The economy and employment are fine; actually the LR economy is pretty diverse to the extend Moody's named it the 2nd most diverse economy in the US, with Chicago being # 1. Government is a big sector, along with telecommunications, health care, military, manufacturing, etc. The yields can be 10 to 15% if you buy a home renovated well and positioned for success.
My business partner manages my properties and he also own 30 or so properties too. I believe he is an excellent property manager and you will not find anyone that works harder then him or knows more.
I am not a big fan of MF in Memphis unless you can get in the U of M area of Midtown (38104). I think LR is better for MF because several of the MF's fit a "C" class profile, but located in A and B class neighborhoods. A good example is a few deals we did on Sandford St. As you drive the area, it is certainly a B+ neighborhood, but located right in the middle of the neighborhood are several MF units that are affordable and cash flow well, even though they fit that C class profile. Typically in Memphis, MF's are C and D class units located in C and D class areas. That is a bad combo as tenants have no choice but to do business (shop & dine) in these areas which typically have limited options for anything they want or need to do. Having "C" class units in the middle of A&B areas gives tenants opportunity to do business in the same area where individual with higher income are doing business. In other words, instead of only fast food to choose from, they are sit down restaurants and better grocery chains too.
The one thing LR has over Memphis and any other market in the US is the landlord laws. The landlord laws are a real game changer for investing as you can have someone out in 2 weeks and the tenant rarely has any recourse. Here is an overview of the eviction process. Really, all within the same month, you can try to work with the tenant, if that does not work, get them out and have the house ready to market again and in a perfect world, have it rented. The tenants are well aware of how strict this policy is and it is huge in them doing whatever they can to get $ to stay in the house.
1. File a 3 day notice to pay rent or move. 2. If they don't respond you file a lawsuit. 3. Then you must serve the tenant with a summons and the complaint. 4. If they don't respond to the lawsuit within 5 days you can file for a Writ of Garnishment. 5. Then you deliver the writ to the sheriff's office to have it served on the defendant. He must serve it within 24 hours. 6. Finally you schedule to meet the sheriff or a deputy at the house to physically evict the defendant. That depends on their schedule but it doesn't take too long. 7. You also bring along a locksmith to change the locks. And, you tell the tenant he has 30 mins to get his belongings and get out. It's harsh but that's the law.
I am an active investor in LR and Memphis and a TK provider in both markets too.
@Alex Craig, Thanks for the excellent insight into the LR market. I'm from LR but just getting started, and your analysis contains several great nuggets of information. For example, one of the things on my to-do list has been to get a feel for typical yields in the area. Also, I had always viewed the Sanford rentals as a negative for the surrounding SFR's but had never considered it from the opposite point of view, that the surrounding SFR's are a positive to Sanford rentals.
Mark, send me a email anytime as I do not mind helping, after all, this is what the Bigger Pockets site is all about. Local investors in LR for the most part want to view LR as the same rental market from 15 year ago so much has changed from a National Level that impacts individual markets. We have 3 on Sanford and did several triplexes on Reservoir, just South of Cantrell. All are C class by definition, but the surrounding areas are fine.
Last quick tip, turn off the local news. Many local landlords are influenced by the actions of a few and their mindsets are stuck on negativity instead of real metrics of what is going on in the market. Jamie Hoffman is our property manager and Brian Teeter runs the operation in LR. Maybe you know the 2?
The best thing about Little Rock (and surrounding areas in central Arkansas) to me is that it is steady. We generally do not have the super highs or the super lows. If you buy a house in a decent area, it'll likely be worth about what you paid for it in inflation adjusted dollars 10 years later. But it's not hard to find good properties that cash flow without being in a war zone. I personally am not a fan of the turnkey model (here or anywhere else) as I think it has some serious flaws (not to be rehashed here). But some people love it. So if it suits you, LR is probably a good place for it.
Feel free to PM me Rent Trac link you refer to Alex.
LR looks interesting and I would consider it as an addition to the Memphis portfolio im intending to build. This could be a good option to own MF. The only challenge i have with MF, been out of state is managing the re-positioning and Management.
What sort of price rage they are going for say 5-10-15plex and what level of returns investors are achieving? I would assume more the SFH.
I just had a "Drive" on Sanford Drive (not Street) with google map its in an area called Sturbridge, not far from the LR Reserve Park. starts with SF and then mainly MF blocks.
@Hadar Orkibi I will PM you the article about rents up 11.4%. As for the re-positioning, if you are referring to the 12 plex we are getting ready to buy, we are going to do the necessary steps for the property to be re-positioned upon tenant vacancy. This includes replacing all older AC units, updating kitchens with new countertops, paint cabinets, updated light fixtures, including ceiling fans, updated vanities in the downstairs 1/2 bath and a few others odds and ends for the place to look updated. On the outside we are going to give the property a face lift. As for management, we manage close to 500 doors in Little Rock, which include MF. We already have 4 vacant units, which we are happy because we can go in and fix those up quickly and show that the complex can be re-positioned to a "B" class property.
Did you see what I was referring to with Sanford about driving through a nice area, specifically driving on Old Forge before you turn onto Sanford and across Sanford on Wellington Ct.? That immediate neighborhood is SF, but up and down Reservoir is mostly MF. To the South you have Rodney Parham which features stores including the Whole Food type grocery store, that are consistent with "A" and "B" class areas and to the North is Cantrell Dr which will take you quickly to Midtown and Hillcrest. In other words, C class property located close to nicer amenities.
The returns are going to be 12 to 14%, give or take a % or 2.
Yes I could see that, especially at the start of Sanford Ave, nice front yards and houses and nice cars (one had a Corvette). Sanford looked like a cul-de-sac, and it looks like the closer to Old Forge you get the better it is. Old Forge looks Good too, we call it "leafy suburb" the north side and Ct have nice houses there. looks like good pocket around that junction of Sanford and Old Froge. Lundington also looks OK.
Its Exciting to see, im wagging my tail here. Im sure to visit LR when coming to Memphis.
In regard to the MFH, Whats the typical vacancy rate there/ demand once they are done up to standard?
Hi @Alex Craig, I just notice that the http://littlerockturnkey.com/ website is redirecting to your Memphis site, are you still operating in LR with the same people etc as mentioned above or its a glitch ?
On another note, when buying MFH, Say 3 or 4 Plex do you use a Price/per sq ft for buying and higher number for evaluating after repositioning? Ie. buy rehab at under say $40sqf and target value at $60sq ft.
I just made up the numbers from what i can see for the question above, and not sure if it reflects reality.
How far off are the Tax assessment value at the Pulaski county from real property values i?
@Hadar Orkibi absolutely still operating in Little Rock. I shut down the www.LittleRockTurnkey.com site because their is no reason to have 2 sites since we are one company. Market and property information can all be found on the same site. We are also working on some new logos and so forth to better communicate we are 1 company operating in 2 markets.
We have bought several MFH in Little Rock (rarely recommend Memphis for MF) and each time it has been to re-position. We target properties we feel are under rented for the area and are not managed well with the property needing updates. Our goal is to take ownership, update the building, weed out the bad tenants (which because of the Arkansas landlords laws can be done in 2 weeks) and put the property in a position of long term success through our business model, which always includes turning it into a lower rent complex to higher rents consistent with a better tenant pool. Our acquisition price for MF is less based on price per sq ft as it is for targeting a cap rate. For example, we are acquiring a 12 plex right now. At its current rental rate, it is grossing after taxes, insurance and 7% mgmt, 18% cash on cash. However, because the building is not in good shape and the owner is not fixing anything, the complex is currently a revolving door of tenants and the only tenants that will move in are those who are probably denied everywhere else. Really, I would be surprised if there is any screening. We put the property under contract 30 days ago and already 4 have moved out and we presume more will soon. We are going to get rid of all the tenants behind on rent, fix up the place really nice and raise rents to $695. Our goal is just like anything else in real estate, provide great management, a nice place to live and screen well. The end result should be more consistent returns because the tenants like living there, not have to live there. I have always said, your tenant will look like your property. Provide a crummy property and a crummy tenant will live there because that is who will apply there. Make it nice and you will attract tenants who want to live there and have choices of where to live.
Lastly, the Pulaski county assessor is low. Sometimes really low, other times, a little low. If you search our site, all of our values have been verified through 3rd party lender appraisals. Every area has a range of comps and the lender appraisers have been good about using the best comps in the area because of the retail condition that we bring our properties.
Thanks @Alex Craig im happy to hear that. it makes sense to run one website and concentrate the SEO and traffic to there. saying that that LR domain is good so keep it!
I will PM you if thats Okay, I maybe coming over earlier then I planed to...
Hello everyone my name is Lakeitha Henry and I stay in LR area and I really want to start doing real estate but not sure what step should I take to get started any suggestions?? I was thinking about paying for one of those webinar classes. Is it worth it can you guys give me advice on how I can start besides real estate school. Thanks
A good starting point would be to pursue the following 4 options:
1. Jin the local REIA.
2. listen to the BP podcast from 1- 227 (latest one)
3. Read or listen to Gary Keller's The Millionaire Real Estate Investor. and other recommended books. Check out @Scott Trench 's new book.
4. Form relationships with like minded people in your area.
Once you complete the above you will have better understanding of RE investing and tools to start from more solid ground.
Any question please free to ask here or PM Me. please note you can search the forum for questions you have and often you will receive multiple answers.
I done it myself.... also visited the place before confirming the contract.
The seller was an investor as well and he was very good to deal with, gave me some good contacts etc. the PM im using is the one Alex Craig uses for the TK they provide.
@Hadar Orkibi I'm not exactly sure what REIA MEANS can you tell me sorry I'm new to all this and how can I find people that are willing to help and talk with me about Real estate and what's podcast and how can I get to it on here?
Yes, our CARREIA meetings are a wealth of information. We'd love to have you. We meet the second Thursday of every month at the Crown Plaza hotel, 6:45pm. Plan to stay late.
@Alex Craig, any recommendations for a good real estate agent in Little Rock area? I am looking to invest in the area and would love someone who has experience working with investors. I would also need to hire a Property Manager.