All Forum Posts by: Lindsay Davis

@Blake Doersch,

Sounds like you’ve given a lot of thought to real estate investing, which is a good start. Also sounds like you’re considering a lot of different strategies, each of which have vastly different capital and time commitment requirements.

My recommendation would be to sit down and establish a “buy box.” This is a tool investors use to identify the type of deals they’re after based on their qualitative (location, property class, vintage, use/function, etc.) and quantitative (financial) characteristics.

For example, how much capital do you have for each deal? What markets are you willing to buy in? What sort of tenants are you looking to take on (e.g. Section 8, cash-paying, short-term/vacation renters, etc.)?

@Weston Rutkowski,

You have an awesome background. Congrats on getting started and welcome to BiggerPockets!

I saw in one of your replies that you were open to cash flow markets. Full disclosure: I operate a turnkey provider in Alabama and, from my observation, plenty of areas in the state are positioned well for cash flow, including Birmingham, Montgomery, and Tuscaloosa.

One thing I would like to point out is that short-term rentals are time-consuming and, unless you have a customer service and on-demand cleaning team built up, it’s fairly difficult to scale. Cash flow can also be more volatile as well, since you might make a lot during peak season but barely break even in other months.

If you have a good amount of capital to deploy and are interested in scaling, a traditional long-term rental approach with single-family homes—either self-managed or managed by a turnkey provider—could be a more suitable alternative.

@Victor N.,

Insuring for the full replacement cost would be best, in my opinion, since this is your first deal. If you’re willing to be a little more aggressive, then maybe you can opt for actual cash value. The former still seems like the better of the two approaches since you’re buying a new construction home.

@Nicholas Marchionda,

If you do everything right in terms of marketing, pricing, curb appeal, and customer service, you can generally expect to have your property leased in about two to six weeks.

For marketing, make sure that your listing is active, visible, and cross-listed on all the major real estate marketplaces: Zillow, Realtor.com, Apartments.com, Zumper, and Trulia. Throw in Craigslist in there too, if you want—though be aware of scammers.

In terms of pricing, make sure your asking rent is competitive with comparable listings. You don’t want to lowball yourself, but a listing that’s priced too aggressively will likely sit on the market with little interest. As for curb appeal, make your rental attractive to look at and tour. Take professional photos, pay for physical or virtual staging, and freshen up your lawn and exterior.

Above all, don’t forget to respond promptly and courteously to everyone who reaches out to you. Any of them could be your next tenant!

@Tammy Lewis,

@Kerlous Tadres has some good recommendations. I’d personally say, though, that sub-$200,000 deals in Huntsville proper are probably behind us. However, if you’re willing to consider nearby areas—including places like Arab (30 miles south of downtown Huntsville) and Cullman, located 55 miles south of downtown Huntsville—you can find deals that are well below $200,000.

Another bonus: Cullman’s growing a lot at the moment, so that could be a potential tailwind for rents growing froward.

@Oswaldo Zamora,

If you’re willing to do some digging, a good number of deals in certain Sunbelt markets with generally favorable rent-to-price ratios will meet the 1% rule. Tuscaloosa and Birmingham, both in Alabama, could be worth checking out here.

The state’s low property tax rate also means that you’ll have an easier time producing cash flow, too, which is ultimately what matters. Finally, Birmingham and Tuscaloosa vary widely from zip code to zip code, so you’ll need to be selective when evaluating deals. Let me know if you have any specific questions about these markets!

@Frank Martinez,

@Melissa Justice highlighted Birmingham as a potential market to start out if you’re willing to look out of state. I’d like to mention that there are plenty of other affordable cities in Alabama worth considering as well. In particular, Tuscaloosa—the site of The University of Alabama’s flagship campus—comes to mind here.

As a general rule of thumb, you want to go after growing markets with affordable barriers to entry in landlord-friendly states; you’ll have an easier time finding deals that pencil out within your budget.

@Justin Hayes,

Congrats on getting started. Since you’re just starting out, I’d personally recommend avoiding the more exotic stuff. A tried-and-true single-family investment strategy is probably your best bet.

If you're capital constrained, see if you can work some overtime to save up $10,000 to $20,000, then re-evaluate. If you're willing to owner-occupy for a year, that amount of capital, paired with an FHA loan, could be enough to get started. There are a bunch of affordable deals out in the suburbs of Huntsville—think areas like Meridianville to the north or Athens and Decatur to the west. Best of luck!

@Michael Dallas,

It’s great that you’re thinking about these factors early. If you choose to relocate, the good news is that you won’t have to move too far. Tennessee has a bunch of lower-crime and fast-growing cities—places like Chattanooga, Knoxville, Murfreesboro, and Clarksville come to mind.

Besides, moving isn’t an irreversible decision. If you move to a different market and don’t feel like it’s serving you well, you can always move back home.

@Chaim Mal,

Local brokers or property managers who have deep expertise in the markets they operate in can add some color to the situation on the ground.

Before asking around for information, I’d recommend thinking about your buying criteria. For example, what’s your budget per unit (or per property)? Are you after appreciation or cash flow? What’s your investment strategy?

If you come prepared with a list of specifics about what you’re after, you’ll be able to get more granular and actionable information that you can use to narrow down the markets, submarkets, and zip codes to buy in.