All Forum Posts by: Lindsay Davis

Hi everyone!

With 30-year mortgage rates nearing 7%, it can be difficult to cash flow.

That's why Spartan Invest is offering a 5.5% interest rate and a discounted DSCR program for buyers of turnkey properties across Alabama, Tennessee, and Georgia.

This is a great opportunity for investors who want to insulate themselves from high interest rates, minimize their mortgage payments, and maximize their cash flow.

Give us a holler anytime at (205) 205-4118 or [email protected]

@Patrick Cunningham,

$35,000 is definitely going to be tough to work with in Anchorage, especially considering the fact that you’ll probably need to come up with some extra cash beyond the down payment for carrying cost reserves and cosmetic repairs.

You mentioned Birmingham as a market you’re considering. I’m based in the city and can say that a down payment for a single-family home, plus reserves for repairs and carrying costs, is definitely within reach at $35,000.

As for your other questions:

1. Single-family or duplex? Either is fine, but at your budget, a SFH may be more attainable. You can always sell and reinvest in a duplex later, or use the cash flow from your first SFH to cover a duplex purchase in the future.

2. Pursue flips leveraging my construction skills? This would be interesting given your background, but it’ll be very tough to do flips out-of-state if you’re not there personally. One option, though, would be to temporarily relocate to the market during the rehab period. Another would be to invest in something more passive, like a turkey rental.

3. Use renovation loans or foreclosure strategies? You could consider seeking financing through the FHA's 203(k) program or through private lenders if you don't have the money to fund your rehab out-of-pocket. But I'd offer the same word of caution here: attempting this remotely when your project is in an out-of-state market (and with debt hanging over your head) is going to be an uphill battle. As for foreclosures, I'd stay away. You'll often have to come up with the full amount of the winning bid at close, and even then, you may not be getting much of a discount at all.

@James McGovern,

A securities-backed line of credit (SBLOC), which is what I believe you’re referring to, can be an alternative to hard money. You’ll probably get lower interest rates on an SBLOC, but the major risk here is that you’ll be collateralizing your stock portfolio.

If your deal goes south, you could lose your equity interest in your property, and some (or all) of your stock portfolio. Just some food for thought.

@Ian Henderson,

Northern California is going to be tough with $70,000 to $80,000 in equity, so looking out-of-state is probably a good call.

As for your questions:

1. Plenty of places in the Sunbelt would check all of your criteria. Full disclosure: I run a turnkey provider in Alabama—so I may be biased!—but markets that boast strong demographic fundamentals like Huntsville or Tuscaloosa can potentially offer an attractive entry price at present, cash flow (even if you buy a turnkey property), and rent growth over the long term.

2. My expertise is in single-family homes, so I’ll speak to that exclusively. With $70,000 to $80,000 to work with, you can easily afford at least 20% down in most Sunbelt markets, with plenty left over for working capital.

3. On the market level, look for supply and demand imbalances, with demand supported by healthy fundamentals (steady population and economic growth, evidence of development, etc.). On the deal level, heuristics like the 1% rule can be a good starting point.

4. One underrated tip would be to talk to agents or folks with local market knowledge. That’s because the right market is just the starting point. Choosing the wrong neighborhood, even in the right market, can break a deal, so you want to tread carefully. Specifically, shoot for more than generic advice and look for people or firms with expertise in the product type, tenant class, and zip code(s) you’re after.

Hi everyone!

Spartan Invest has a bunch of turnkey new construction and rehabbed properties in the Birmingham metro area.

We’re offering new construction properties from $219,000 to $290,000, and rehabbed properties starting at just $124,000.

Whether you’re buying a new construction or renovated home, we’re offering a one-year warranty on the whole structure—so you won’t pay a dime even if anything breaks in the first year. This is a great opportunity for investors who want to optimize cash flow while minimizing maintenance or capex costs.

Feel free to reach out anytime at (205) 205-4118 or [email protected]

@Angela Davis,

Birmingham’s definitely a good market, but there’s some nuance to that answer because the city’s submarkets vary widely.

For example, you would be hard pressed to find a cash-flowing deal in a neighborhood in southeast Birmingham like Homewood, Vestavia Hills, or Mountain Brook.

On the other hand, you may have more luck in B-grade areas in the western part of the city like Hueytown, Bessemer, Forestdale, and Adamsville—or even in towns within commuting distance like Jasper.

@Pratik Patel,

Lindsay from Spartan Invest here—thanks for the mention!

As for your questions:

1. If you’re looking strictly for passive income, both new construction (managed by a property manager) and turnkey could work. One advantage of new construction, though, is that you can usually expect few capex or maintenance costs in the first five or so years of ownership. On the other hand, renovated (but older) turnkey properties can typically be had for cheaper than comparable new builds.

2. Pros of new construction: potentially higher rents, lower initial maintenance/capex (so more consistent cash flow). Cons: pricier, may be located further away from downtown or outside of established neighborhoods. Pros of traditional turnkey: more affordable, potentially more well-located. Cons: potentially lower rents compared to comparable new build homes, “lumpier” cash flow. Toss-ups: long-term appreciation—this is going to depend more on market, submarket, and zip code, rather than the age of the property.

3. It depends on the component. Flooring (if you use luxury vinyl plank) is going to last for 20 to 30 years. A turnkey property’s roof and exterior siding is going to last for 15 to 20. Kitchen appliances, toilets, and AC units should last for 10 to 15 years. Water heaters will need to be replaced every 8 or so years. Maintain an appropriate capex reserve for these items, and you’ll be in a good position even if you need to shell out thousands of dollars on replacements.

Hope this helps!

@Raj Singh,

For all of our rental rehabs, we install luxury vinyl plank (LVP) with a two-millimeter wear surface. Affordability aside, one advantage of LVP is that you can replace small sections without having to tear the whole floor up. It’s easy to rip up and put down, which makes maintenance fairly easy and cost-effective.

As for other items like cabinets and bathtubs, you can potentially access lower prices if you buy from wholesale stores, though you’ll need to buy in bulk to make that happen. Some direct-to-consumer or discount vendors may also offer lower prices relative to big box stores, though inventory and actual pricing may be hit-or-miss.

@Andrew Pierce,

As @Seth McGathey and @Charles Clark said, getting your real estate license is helpful, but not necessary. I’ll add that it’s one of many ways you can gain an edge as an investor.

Being a contractor, homebuilder, handyman, structural engineer, appraiser, inspector, accountant, real estate attorney, or banker (as you are) can also give you a unique advantage. Basically, if you work in a role that is involved in one or more aspects of the rental business—be it development, construction, renovation, acquisition, leasing, property management, or financing—those skills can help you as an investor.

As for your question about a mastermind group, those are definitely helpful. As @Aaron Zimmerman mentioned, they don’t have to be big. I’ll also add that they don’t need to be paid or exclusive—no need to drop hundreds or thousands of dollars a year on a membership. Just find a group of real estate investors, get to know them, and start asking questions. Even BiggerPockets counts!

@Rohan Saxena,

It really depends on what sort of lifestyle you’re comfortable with (or willing to endure). After all, house hacking means you’ll be a landlord co-habitating with your tenants, so if you have other family members living with you, make sure they’re on board with a living arrangement like that. It’s a great way to save money, but it could come at the cost of your privacy.

Investing out-of-state has its pros and cons too. If you work with a turnkey provider (full disclosure: I operate one based in Birmingham), then you’ll be able to take advantage of a hands-off, passive approach to real estate investing.

Of course, these services cost money—typically 5% to 10% of monthly rents, plus upcharges for maintenance calls and leasing. But, if you’re prepared for these costs, the benefits of a done-for-you arrangement could be worth it. It really just depends on how much day-to-day work you’re comfortable with doing.