BRRRR in Huntsville

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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
1y
Quote from @Eric Chase:
Quote from @Michael S.:

@Sadler Surratt - just curious, why did you ask Cosmo about looking into turnkey options in Huntsville? I see that REI nation has zero available for Huntsville, and my impression is that even turnkey operators can't make the numbers work here right now. I'm actually curious to hear what REI nation's impression of the Huntsville market is right now.

Following to read people’s thoughts. Not at all bashing REI Nation as I’m very happy with them. But as a data point on Huntsville: my Huntsville property with REI Nation turned over in May 2024 and stayed vacant for serval months. New resident in September for $95 lower rent.

@Michael S.

The Huntsville market is tough right now. We may find a handful of deals this year. We only found a handful last year. However, it depends on an investor's goals as to whether or not Huntsville is a market they should be looking at. Cash flow is a math problem. As we all know, the standard way BP says to calculate cash flow actually leads investors away form long-term opportunity and leaves a lot of investors on the sidelines because they don't understand IRR and the multi layered dynamics of investing long-term.

For me, I love Huntsville, and wish we could find more deals there.  There will be fluctuations on rents and much of it is property and timing dependent and not necessarily market dependent.  As a management company, we also have a duty to get a property occupied with a qualified resident as soon as possible and sometimes that means adjusting rents down for right now to generate revenue.  We can work on maximizing that revenue in the future.

I doubt an out of state investor is going to have success BRRRR in Huntsville right now, but then again, every investor gets to define success for themselves. I do think that an investor should acquire a long-term buy and hold property if they can find them right now because Huntsville is taking all of the right steps to continue to grow. They are investing in infrastructure, housing, public safety and taking the steps they need to take to attract more jobs. It is a small town, definitely a tertiary market right now, but that is where opportunity is going to be found.

I think LTR, in the right location, can provide enough revenue annually to cover all holding and leverage costs while the resident pays down the principle and the demand in the city sustains slow and steady appreciation.  That is a mouthful, but again, a patient investor with the right risk profile, can be successful in Huntsville.  In my book, that is a win over a 7-10 year hold.

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  • Sadler Surratt
    Specialist · Memphis, TN · Member since 2024 · 63 posts · 24 votes
    1y

    Hi @Cosmo DePinto

    Have you considered a fully turn-key option? 

    Best, 

    Sadler

    1Reply
  • Cosmo DePinto
    OP
    Investor · Long Island, NY · Member since 2021 · 39 posts · 24 votes
    1y

    Thanks for the reply. No I haven’t. 

    0Reply
  • River SavaPro Member
    Lender · USA · Member since 2022 · 1k+ posts · 1k+ votes
    1y

    Are you from Huntsville / do you have a team down there? If not, I can put you in touch with an investor friendly agent in the area who can help. 

    [email protected]
    3Reply
  • Cosmo DePinto
    OP
    Investor · Long Island, NY · Member since 2021 · 39 posts · 24 votes
    1y

    Hi. No I am out of state. Thank you. I’d appreciate that. 

    0Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 696 votes
    1y

    @Cosmo DePinto

    The BRRRR is alive and well. However, it is not what it used to be. "Perfect BRRRRs" are rare nowadays. That doesn't mean you shouldn't BRRRR. It is a complimentary strategy to pull some of your money back out and hedge your bet.

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  • River SavaPro Member
    Lender · USA · Member since 2022 · 1k+ posts · 1k+ votes
    1y
    Quote from @Cosmo DePinto:

    Hi. No I am out of state. Thank you. I’d appreciate that. 

     Reach out to @Steve Stinson and I also sent you a DM to connect

    [email protected]
    1Reply
  • Steve StinsonBusiness Member
    Real Estate Agent · Huntsville, AL · Member since 2021 · 93 posts · 83 votes
    1y

    Thanks, @River Sava , for the mention!

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  • Michael S.
    Huntsville, AL · Member since 2018 · 578 posts · 864 votes
    1y

    @Cosmo DePinto

    You've received several responses and pieces of advice, but no one has directly answered your question (until now):

    -Has anyone had an any recent success using BRRRR in Huntsville? 

    VERY unlikely unless you either source an off-market property yourself or you find a unicorn deal (our last semi-BRRRR was a B-neighborhood property we sourced from an out of town wholesaler in late 2023, but couldn't get all our capital back out on refi).

    -Or even cash flowing on a property RECENTLY ?

    Zero in 2024 in Huntsville - which is precisely why we bought zero LTRs in 2024 locally (bought one out of state, and bought a local flip property and one small local commercial property - slowest year since I started REI in 2017).

    2Reply
  • Cosmo DePinto
    OP
    Investor · Long Island, NY · Member since 2021 · 39 posts · 24 votes
    1y

    Thank you for your honest answer. That’s what I was looking for. I Appreciate it. 

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    1y

    just google Huntsville and overbuilt and you'll get your answer. 

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  • Dena Puliatti
    Property Manager · Huntsville, AL · Member since 2017 · 302 posts · 246 votes
    1y

    It is an appreciation play right now. With new programs opening here, there will definitely be an influx of new residents.

    1Reply
  • Lillian Pintaro
    Real Estate Agent · Member since 2024 · 46 posts · 13 votes
    1y

    I heard the rental rate wasn't doing that well in the Huntsville market, do to the new construction. Im in the birmingham market and have been for a while. The rental market here is really good and id love to share more info on that 

    1Reply
  • Cosmo DePinto
    OP
    Investor · Long Island, NY · Member since 2021 · 39 posts · 24 votes
    1y
    Quote from @Lillian Pintaro:

    I heard the rental rate wasn't doing that well in the Huntsville market, do to the new construction. Im in the birmingham market and have been for a while. The rental market here is really good and id love to share more info on that 

    Birmingham is one of the worst appreciation 

    markets in any major city in the US. 

    0Reply
  • Michael S.
    Huntsville, AL · Member since 2018 · 578 posts · 864 votes
    1y

    @Lillian Pintaro - you are correct for high end MFH here.  However, I believe @Cosmo DePinto is referring to SFHs, to which your statement would be incorrect.  

    Rental rates are fine for SFHs - I haven't had to drop my rates whatsoever with turnover, nor have I had a single tenant try to negotiate a lower rate.  In fact, I have still been increasing my monthly ask with turnover.

    I agree with what @Dena Puliatti said - it is not a cash flow play in Huntsville right now whatsoever, but more of a "break even" cash flow play for appreciation.

    Folks, there is a LOT of dysinformation on Bigger Pockets right now about the Huntsville and Madison areas in numerous BP threads right now - more than I have ever seen in the past.  Be cautious on what you take to be fact.  Part of it is because a lot of the long time investors and wholesalers in this market have vanished from BP - as in, haven't posted in months to years.  

    1Reply
  • Michael S.
    Huntsville, AL · Member since 2018 · 578 posts · 864 votes
    1y

    @Sadler Surratt - just curious, why did you ask Cosmo about looking into turnkey options in Huntsville? I see that REI nation has zero available for Huntsville, and my impression is that even turnkey operators can't make the numbers work here right now. I'm actually curious to hear what REI nation's impression of the Huntsville market is right now.

    0Reply
  • Eric Chase
    Rental Property Investor · Germany · Member since 2017 · 74 posts · 22 votes
    1y
    Quote from @Michael S.:

    @Sadler Surratt - just curious, why did you ask Cosmo about looking into turnkey options in Huntsville? I see that REI nation has zero available for Huntsville, and my impression is that even turnkey operators can't make the numbers work here right now. I'm actually curious to hear what REI nation's impression of the Huntsville market is right now.

    Following to read people’s thoughts. Not at all bashing REI Nation as I’m very happy with them. But as a data point on Huntsville: my Huntsville property with REI Nation turned over in May 2024 and stayed vacant for serval months. New resident in September for $95 lower rent.
    1Reply
  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    1y
    Quote from @Eric Chase:
    Quote from @Michael S.:

    @Sadler Surratt - just curious, why did you ask Cosmo about looking into turnkey options in Huntsville? I see that REI nation has zero available for Huntsville, and my impression is that even turnkey operators can't make the numbers work here right now. I'm actually curious to hear what REI nation's impression of the Huntsville market is right now.

    Following to read people’s thoughts. Not at all bashing REI Nation as I’m very happy with them. But as a data point on Huntsville: my Huntsville property with REI Nation turned over in May 2024 and stayed vacant for serval months. New resident in September for $95 lower rent.

    @Michael S.

    The Huntsville market is tough right now. We may find a handful of deals this year. We only found a handful last year. However, it depends on an investor's goals as to whether or not Huntsville is a market they should be looking at. Cash flow is a math problem. As we all know, the standard way BP says to calculate cash flow actually leads investors away form long-term opportunity and leaves a lot of investors on the sidelines because they don't understand IRR and the multi layered dynamics of investing long-term.

    For me, I love Huntsville, and wish we could find more deals there.  There will be fluctuations on rents and much of it is property and timing dependent and not necessarily market dependent.  As a management company, we also have a duty to get a property occupied with a qualified resident as soon as possible and sometimes that means adjusting rents down for right now to generate revenue.  We can work on maximizing that revenue in the future.

    I doubt an out of state investor is going to have success BRRRR in Huntsville right now, but then again, every investor gets to define success for themselves. I do think that an investor should acquire a long-term buy and hold property if they can find them right now because Huntsville is taking all of the right steps to continue to grow. They are investing in infrastructure, housing, public safety and taking the steps they need to take to attract more jobs. It is a small town, definitely a tertiary market right now, but that is where opportunity is going to be found.

    I think LTR, in the right location, can provide enough revenue annually to cover all holding and leverage costs while the resident pays down the principle and the demand in the city sustains slow and steady appreciation.  That is a mouthful, but again, a patient investor with the right risk profile, can be successful in Huntsville.  In my book, that is a win over a 7-10 year hold.

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    REI Nation4.577 Reviews
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    4Reply
  • Eric Chase
    Rental Property Investor · Germany · Member since 2017 · 74 posts · 22 votes
    1y
    Quote from @Chris Clothier:
    Quote from @Eric Chase:
    Quote from @Michael S.:

    @Sadler Surratt - just curious, why did you ask Cosmo about looking into turnkey options in Huntsville? I see that REI nation has zero available for Huntsville, and my impression is that even turnkey operators can't make the numbers work here right now. I'm actually curious to hear what REI nation's impression of the Huntsville market is right now.

    Following to read people’s thoughts. Not at all bashing REI Nation as I’m very happy with them. But as a data point on Huntsville: my Huntsville property with REI Nation turned over in May 2024 and stayed vacant for serval months. New resident in September for $95 lower rent.

    The Huntsville market is tough right now. We may find a handful of deals this year. We only found a handful last year. However, it depends on an investor's goals as to whether or not Huntsville is a market they should be looking at. Cash flow is a math problem. As we all know, the standard way BP says to calculate cash flow actually leads investors away form long-term opportunity and leaves a lot of investors on the sidelines because they don't understand IRR and the multi layered dynamics of investing long-term.

    For me, I love Huntsville, and wish we could find more deals there.  There will be fluctuations on rents and much of it is property and timing dependent and not necessarily market dependent.  As a management company, we also have a duty to get a property occupied with a qualified resident as soon as possible and sometimes that means adjusting rents down for right now to generate revenue.  We can work on maximizing that revenue in the future.

    I doubt an out of state investor is going to have success BRRRR in Huntsville right now, but then again, every investor gets to define success for themselves. I do think that an investor should acquire a long-term buy and hold property if they can find them right now because Huntsville is taking all of the right steps to continue to grow. They are investing in infrastructure, housing, public safety and taking the steps they need to take to attract more jobs. It is a small town, definitely a tertiary market right now, but that is where opportunity is going to be found.

    I think LTR, in the right location, can provide enough revenue annually to cover all holding and leverage costs while the resident pays down the principle and the demand in the city sustains slow and steady appreciation.  That is a mouthful, but again, a patient investor with the right risk profile, can be successful in Huntsville.  In my book, that is a win over a 7-10 year hold.

    Chris, thanks for the candid, thoughtful, and lightning fast reply! Cheers!

    1Reply
  • Michael S.
    Huntsville, AL · Member since 2018 · 578 posts · 864 votes
    1y
    Quote from @Eric Chase:
    Quote from @Michael S.:

    @Sadler Surratt - just curious, why did you ask Cosmo about looking into turnkey options in Huntsville? I see that REI nation has zero available for Huntsville, and my impression is that even turnkey operators can't make the numbers work here right now. I'm actually curious to hear what REI nation's impression of the Huntsville market is right now.

    Following to read people’s thoughts. Not at all bashing REI Nation as I’m very happy with them. But as a data point on Huntsville: my Huntsville property with REI Nation turned over in May 2024 and stayed vacant for serval months. New resident in September for $95 lower rent.

    Perhaps you misinterpreted my post - I was not bashing REI Nation either - instead, as I posted, I was genuinely curious to hear their perspective on the Huntsville market since they have done turnkey properties here in the past.

    As I have noted in another thread, the number of individuals who post on BP about the Huntsville market that have zero experience investing or managing properties here has accelerated recently for unclear reasons. Since REI Nation has had real experience here, I was genuinely curious to hear their thoughts.

    1Reply
  • Michael S.
    Huntsville, AL · Member since 2018 · 578 posts · 864 votes
    1y

    @Chris Clothier - thank you for taking the time to provide your thoughts.  They parallel many of my posts on BP.  Others who do not know the market here keep pushing the vibe that Huntsville is all sunshine and roses for investing at present.  For those who invest here, it has been tough sledding since 2023, and much more challenging since the onset of 2024.   Right now, you have to be able to source off market properties or be willing to force cash flow with large down payments.  I am even good with cash flow neutral - have been since I started - and still can't find deals that work in that regard.  Best wishes. 

    1Reply
  • Eric Chase
    Rental Property Investor · Germany · Member since 2017 · 74 posts · 22 votes
    1y
    Quote from @Michael S.:
    Quote from @Eric Chase:
    Quote from @Michael S.:

    @Sadler Surratt - just curious, why did you ask Cosmo about looking into turnkey options in Huntsville? I see that REI nation has zero available for Huntsville, and my impression is that even turnkey operators can't make the numbers work here right now. I'm actually curious to hear what REI nation's impression of the Huntsville market is right now.

    Following to read people’s thoughts. Not at all bashing REI Nation as I’m very happy with them. But as a data point on Huntsville: my Huntsville property with REI Nation turned over in May 2024 and stayed vacant for serval months. New resident in September for $95 lower rent.

    Perhaps you misinterpreted my post - I was not bashing REI Nation either - instead, as I posted, I was genuinely curious to hear their perspective on the Huntsville market since they have done turnkey properties here in the past.

    As I have noted in another thread, the number of individuals who post on BP about the Huntsville market that have zero experience investing or managing properties here has accelerated recently for unclear reasons. Since REI Nation has had real experience here, I was genuinely curious to hear their thoughts.

    No, sir! I wasn’t writing anything towards you or your post at all. I was also genuinely interested in what’s been going on in Huntsville lately! Cheers, my friend!
    1Reply
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