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All Forum Posts by: James Lloyd

James Lloyd has started 2 posts and replied 7 times.

Post: Enterprise/Ft. Rucker First Meetup

James LloydPosted
  • Enterprise, AL
  • Posts 11
  • Votes 8

Hey Rob!

Thanks for creating and hosting an event. I'm eager to meet you all tomorrow!

@Jared Viernes Ha! Thanks, but I'm just a knuckle-dragging NCO for now. I do my best to stay out of the all the numbered shops. The fun meters are usually bouncing off "low" in there. 

I am headed to Rucker for flight training. I haven't tried LinkedIn yet, but I'll get right on that. I also have "Never Split the Difference" up next on the reading list right after J Scott's Estimating Rehab book. Right now I'm on this cycle of running into an information gap, finding books to fill the gaps, then continuing the research/analysis process. Its both challenging and rewarding.

You mentioned negotiating through what may be a poor performing realtor; is this a situation that is remedied by "advising and assisting" the realtor through the process? Or is it more effective to continue the search for a realtor better at negotiating? 

Also, are there any questions that I can ask a realtor that you think might be helpful in determining their negotiation abilities early on? If this is a spoiler for the information in the book, just let me know. I don't want to miss out on the "ah-ha!" moment of realization.

One of two properties I am running the preliminary numbers on. Comments welcome.

Daleville Four Plex -

The source of numbers are as follows:

-Asking Price - Realtor (149,000)

-ARV - Other rehabbed unit in the same complex tax appraises at 170,000. I split the difference. Is this appropriate?

-Rents - Rent Roll

-Taxes - County Website

-Insurance - USAA (looking into what may be a false report in my name, so that should be lower)

-Water - Is not separately metered, from the utility company for the whole building.

-Electricity - Separately metered

-Loan Details - VA loan website (0% down) though other options (FHA, and 20% down are available.)

-Purchase Closing Costs - VA website, I went high because of the funding fee.

-Garbage - Yet to be confirmed, so estimated.

-Repairs - Still reading J Scott's book, so hopefully its an over-estimation based upon a walk through of one unit and then planning DIY work. I admit, this is the biggest "?" of my expenses. CAPEX of roof, HVAC, structural, and getting a good walk through of the rest of the property is a top priority.

Other due outs: Comparison sales of quadplexes in the area from a realtor, lease details, and the parking lot needs work so an estimate of that.

[Links are available for 7 days]

So first up, it doesn’t work well at the list price of 149,000, but I do live for a reduced rent cost.

https://www.biggerpockets.com/calculators/shared/879167/49b2a617-3036-429f-873e-606da2f6693a

But at 90,000 I think it works for a house hack.

https://www.biggerpockets.com/calculators/shared/879167/207cbffa-979a-4fd6-9c1f-a85cffd1f7f5

Also…

-The seller will actually need to sell it for that much.

-I will basically live for free.

-When I move out it will still cash flow at $425 monthly rent for four units occupied. (Current rent)

-CoC ROI is basically nonexistent. Mostly due to the high estimated rehab cost coupled with rents staying low.

If rents go to $500 (as other units in this same complex do) It cash flows much better. ROI is greatly improved as well. Every dollar saved on repairs obviously makes everything better. Having rent ready units also means that I can do a "live-in-flip-n-move" on each unit as leases expire.

https://www.biggerpockets.com/calculators/shared/879167/bfd1e03a-a261-4cdd-ab49-ebddb0e9a4ce

Critiques? Comments? Advice? What am I missing?

BP I’m moving forward with my plan.

Recently I went down to the Enterprise, AL area to get an “eyes-on” what will be my future stomping ground. For context, I’ll be moving there for approximately a year to complete military training. I am also looking to start my real estate investment future with a “house-hack”. After an initial research phase (internet based) I decided to focus on multi-family properties, specifically quadplexes.

Here’s what I gathered from an area study:

This area (Enterprise, Daleville, Ozark: Coffee and Dale Counties) is anchored by aviation. Ft. Rucker is the largest employer in the area. This is supported by other aviation relation industries and then followed by poultry, automotive, and educational services. Make no mistake, outside of Dothan, AL (the nearest large city) this place runs on Rucker. That means a large part of the population is transient. Military members and family come into town for training (1 year) or a tour of duty (3 years) then rotate out or retire in place. The per capita income is ~24k and median household income is ~50k. Unemployment is sitting around 7-9% for most areas. So forth and so on… these are just facts without the context of actually being on the ground.

What I gathered from being on the ground:

-There seems to be a major gap in quality housing on the middle to lower end of housing. Interestingly enough, its also right below the military BAH (Basic Allowance for Housing) rate (less than $700).

-There is an overabundance of town homes/condos priced just at BAH rates for junior officers and warrant officers($700-1100), which is a large population on Ft. Rucker.

-There are fewer typical apartment complexes than I am used to seeing outside of military bases. This may because of the sheer number of town homes/condos. Rents are again, tied to BAH rates.

-The city of Enterprise is definitely the anchor of commercial options with its residential areas extending from the base gates as typical for military towns. Daleville seems to be the forgotten corner of base side living with some low income areas. Ozark is the northern, small town living area with not as many commercial/shopping/eating options as Enterprise.

-Ft. Rucker has 3, 24-hour gates. They exit into Enterprise, Daleville, and Ozark. As usual, most businesses and residential areas are found along these corridors. The corridors extend to the townhouse/apartment/commercial side (Rucker Blvd-Enterprise), the low income-forgotten side (North Daleville), and the rural area, small town of Ozark. Two other gates open during what are typical business hours and exit to high end housing areas (Faulkner) and rural areas (Newton). Traffic patterns are typical for military bases.

-On post housing has gone through a major facelift and most are well updated. Though there is a waiting list, its not nearly as long as other places and there is availability. With the required early hours of training it is very desirable to stay on post.

Here’s why I decided to focus on quadplexes specifically:

There are too many choices for military folks to live comfortably in their own dwellings. The rental market prices are not high enough to force people into renting individual rooms to make it work financially, as rents are generally tied to BAH rates. SFH prices are relatively low as well and there are many for sale or for rent.

For the sake of simple explanation I will now separate ‘military’ from ‘locals’, as in non-military affiliated renters.

For locals looking for sub-BAH rate housing there are many choices but, man….many aren't well kept. I'm referring to the quadplexes in the area, and they are not that many of them. (Duplexes are a rarity.) They seem to be a relic of the ‘old days' as town homes and apartment complexes are the preferred new build. You get your own place, a garage, a lawn, higher rents, and HOA's with those. No thanks. Pass. Back to quadplexes.

Most rent for $400-550. The really neglected ones go for less than $400. And it was the neglect that really jumped out at me. There are only a few renovated, clean, well-kept quadplex communities in the area. Let’s say they are in B class neighborhoods. Yet, there are many that are not well kept, these are the C to D neighborhoods. I want in on the C neighborhoods because the building structures are basically the same as the B class and I believe there is room for improvement that could fetch near the top end of this particular market rent, $550, without breaking the bank.

Needed improvements I gather from talking to local property managers and residents:

Customer service: Currently not good across nearly all properties. Being an owner-occupied property, prompt response and service could be a real advantage.

Deferred maintenance: Currently slow response to fix repairs, if at all. Owner-occupied advantage as well with on-site DIY fixes and initial renovations should catch up on major deferred maintenance.

General upkeep: Litter, trash-pickup, etc. Most I believe is a fault of poor tenants and inactive property management. General care for property, good tenant screening, and such will hopefully improve personal pride in folks' living space which will in turn attract better tenants.

Value to the tenant: Many of these properties have not been updated in decades and it shows. For the ones that have new roofs, some interior/exterior work, and updated appliances; the difference in the quality of neighborhoods is palatable. I think there is a high demand for this kind of mid-priced, good value housing. Its hard to find vacancies in these improved properties while there are many in the distressed properties.

So my focus is to find one of these quadplexes:

-In a B-/C class neighborhood

-That is somewhat distressed

-Owned by an absentee landlord

-Managed by a property management company that maybe isn’t the best

-That can fetch current or slightly below market rent as it stands.

-That has the potential to raise rents later with improved value to the tenant.

My next post will list some that I found that meet this criteria. All thoughts on my research and desired course of action are most welcomed.

@Brent Smith thanks for the info, it sounds like tough times. I'm committed to figuring it all out, so it'll be a good challenge. I'm in the area now looking around and starting the relationship building. Multiple folks have already said the same things you have. Especially about the plethora of investors. Its a different environment than I'm used to for sure. Then again, I'm new at this and everything is different from what I'm used to. How did you find success down here among the challenges and do you have any recommendations for realtors? Or do you have a few minutes to spare some local knowledge over a coffee?

Bigger Pockets,

I'm moving to Alabama and I am investing in the area. I'm specifically looking to house hack a duplex/triplex/fourplex in the Enterprise/Dothan area and then branch out from there. For the past few months I've been in the education phase and will continue to do so, but it is time to move a step forward. In running deals through the calculators on BP I've begun to notice a few of the same realtors, some of the same types of housing, and areas of interest that I need some ground truth on. While I know there is plenty of opportunity in the Montgomery, Birmingham, and Mobile areas, I'm not there yet. I need a local base of operations first to learn the ropes and get the basics down. 

Does anyone have any leads on investor friendly realtors in the Enterprise/Dothan and surrounding areas?

Contractors, insurance brokers, repairmen, property management, and lenders as well?

I start my cold-calling, cold-emailing next week, and would like to have something to crosscheck if possible.

I'll also be headed that way for the Thanksgiving break to put eyes where only Google maps has been to get a feel for the neighborhoods and folks in the area. I'd like to meet a few folks face to face if they are around during the holidays, but I know that may be a stretch. If there are in any investors in the area, I've got a free coffee and/or beer waiting for you if you have the time for a meet up.

Cheers,

James

@Barry Gentry welcome to BP! I'm headed to Enterprise/Dothan area this winter. I'm also heavy into the education and looking for property to house hack once I arrive. I just found http://www.alareia.com as a really good source of Alabama specific information and they also hold monthly association meetings. I'll be attending those once I arrive to check them out. I know some of the bigger cities (Mobile, Montgomery, Birmingham) have their own investor groups and I'd like to check them out as well. I haven't had much luck connecting with Enterprise/Dothan area folks on BP yet, but I'll find out where they're hiding. Good luck and stay in touch!