All Forum Posts by: Brian Levredge

You also want to make sure they can afford the increase.  Does you no good to increase if they can’t. Verify income and make your decision.

As someone who owns/manages properties in those areas you mentioned it often boils down to several things.  First the program is only as good as the Housing Authority that manages it.  In Chattanooga, that means not so hot.  While it's true Section 8 residents (it's harder and harder to find landlords willing to accept the vouchers) often stay longer than non Section 8 you have to understand the lease is between the resident and  landlord, and the Housing Authority can change the terms (cancel) with 30 days written notice.  That leaves you holding the bag.  

While we don't deal with the Housing Authority programs in N Georgia the other thing you have to look at is the market rent.  There are some zips in Chatt where the market rent for Section 8 is about $100 less per month than what you could get on the open market.  Conversely, there are some zips where the rent is also way higher.  It boils down the number of vouchers located within a certain zip code that in part determines this.  

@Sarah Wahlstedt, the market has remained strong so probably harder to find a good deal as it would be in most other sub markets here.  East Ridge would be another to look at.  Solid rental market and a developer just announced a 125MM mixed used project with a small soccer stadium as the anchor.

@Crystal Strait, there are a number of FB pages you can join up on to see deals.  Just go to FB and search 'Chattanooga real estate investing' and you'll pull up about half a dozen pages.  You'll see wholesalers putting their deals out there and can get on their lists.  Hope that helps. 

What type of multi family are you looking to buy, 2-4 units or larger?  Chattanooga has become much attractive to out of town investors due in part to the fact that other markets (Nashville, ATL, etc) have gotten much more expensive.  I'd also add that even here in Chatt lots of new inventory has or will come online and that's adding to a supply that continues to expand and that is having trouble with absorption in the first place.  It will create some type of ripple effect in the future.  Smaller multi's are probably a safer bet since there are far more of them and the risk is lower due to easier cost of entry, etc.  

Something else to keep in mind is that there are two types of process service: Money judgement and post for possession.  The former requires a private process server be utilized.  The latter is handled by the sheriff.  Private service is almost always faster but if they can't serve the tenant you'll have to go through the sheriff, which can take weeks to get done.  If you have a low likelihood of collecting any monetary damages you'll need to consider this all on a time basis.  In Hamilton County (Chattanooga) the whole eviction process takes 6-8 weeks generally, beginning to end.  And you'll need to have four people present at the set out to remove the belongings from the unit.  

I strongly disagree with the cash for keys approach instead of eviction.  While I understand the logic and expense rationale behind it, what those landlords are doing is allowing someone to go back out and potentially take advantage of another landlord because the defaulting tenant will have no record of eviction/collection on their record.  I'm not criticizing those who practice that method.  To each their own, but wouldn't you as a landlord want to know something like that?  

@Christy Holt with you being out of state you may have to make the trip out for the eviction hearing if the tenant demands a trial, which is their right.  Since you've already served the non renewal notice you may have to wait the thirty days before evicting.   TN has a 30 day cure period unless specific notice is waived (something you want to make sure you have in your written lease) since the tenant has already defaulted (even without a written lease) by paying late, you could most likely terminate the lease 14 days after a second default.  So if she's late again it's important you serve a second notice terminating the lease for non performance.  

I've lived out here six plus years now.  The market has definitely heated up across all segments.  Since we're about halfway between Nashville and Atlanta we've got a fair amount of out of town investors coming in which is also driving prices.  That said it's still a healthy market but for those investors looking for two to three year ago prices (and I include myself there) we're going to need to readjust expectations. 

@Jack Smith, Hixson does pretty well for our owners we manage for as does East Brainerd.  Prices are higher but there's less headaches.  Depends on what you're looking for.  

My answers:

1. WHERE YOU'RE GOING.  First, that's a solid goal.  Anything five units and above is going to be considered commercial financing. That's going to be 20% down.  If you're looking to keep your down payment in the range you suggested you'll need to stick to 1-4 units for your initial purchase. 

2. WHERE YOU'RE AT. Again, solid first steps taken. REI is a networking business. That means going to REI meetings, meeting up with investors for lunch, coffee, etc. Many deals, especially commercial, are done off market. So if your personality fits it then getting out there and networking will suit you well although you may find it takes longer than expected to build momentum.

3. WHAT YOU'VE DONE THUS FAR.   I've been investing in Chattanooga for roughly ten years at this point.  It is a great market.  It's also, as you note, more competitive and supply of Class A multi family downtown is high.  I would also add that triplexes and quads are far less common than duplexes here.  Those are more static in price generally and can still be had at a deal.  If you adjust your parameters and look at other areas besides downtown you can avoid paying a premium which you will downtown.  Also be careful what areas close to downtown you are looking at.  Certain areas still have a long ways to go.