All Forum Posts by: Michael S.

@Mev D. - what are the general price points for those new builds?   

Appreciation may be quite limited on new builds in those areas with how high pricing is right now in North Alabama.  

"If it does not cash flow, do not buy it"

I would have lost out on a lot of money over the years if I absolutely followed that rule strictly with no deviation. 

Granted, we do 15 year amortization loans, so it is a lot harder to cash flow significant money for us.

In general, sure, you want positive cash flow. 

But there are zero absolutes in investing - everything must be looked at case by case.  

Your initial question asked how much Space Command would affect the market in general - the answer is less than 1% as we already have a severe housing shortage in Huntsville/Madison proper.  

Now, apartments specifically is a completely different question. The fact that too many higher end apartments have been built or are being built is a problem for those owners/syndications only, not for the market in general, regardless of Space Command. Most families here are not going to rent high end small apartments for 1600+ a month when they can get a quality SFH in a good neighborhood and schools for the same money. So I expect to see some syndicators/investors in trouble for overbuilt apartments depending on their financing. On the other hand, I think there is significant demand for MFH at less than 1100/month, so those owners will do well.

@Michael Behr - Less than 1% impact on Huntsville as far as long term potential.  The future of Huntsville was never attached to space command coming here.  Heck, we still don't have enough housing for all the FBI that's moved here already.  

Agree with @Gorden Lopes - you will not find the 1% rule for A/B properties in Huntsville/Madison right now unless you score a unicorn of a deal, or put up an enormous down payment to force cash flow.

Even C properties right now are not easily 1% rule applicable.  

A solid B property deal in Huntsville could net you up to 0.5% depending on the down payment amount in the best case scenario right now.  

However, the majority of A/B properties purchases with 20% down would be cash flow negative currently.

@Michael Behr

That listing has been active for 46 days now even after a 10% price reduction.

Given that there is a severe lack of LTR options available right now for investors to buy, the fact that it is still available after a price reduction of that magnitude is telling.  

You will likely be notably cash flow negative on this deal unless you plan to put a significant down payment on this house.  Even then, it will not be the easiest property to rent out given its location.  And I don't think it will rent for 1,500, which by your spreadsheet appears to be your estimate on rent amount.  ADUs is an interesting thought, but high risk in my opinion unless you already have the costs clearly mapped out.  

Just my two cents.  

I mean, it shouldn't be very hard for the city to act on this.  If the property isn't zoned correctly and is on AirBNB, citation and fine issued.  If the property is zoned correctly but not permitted with the city and on AirBNB, citation and fine issued.  My guess is the majority of STRs in Huntsville are not eligible based on zoning.  

@Dena Puliatti - is the City of Huntsville finally starting to crack down on STRs?  They've been threatening to do so for a while. . .I don't have any STRs, so I am simply curious what the latest is.  

New SFH acquisitions in Huntsville/Madison proper do not cash flow right now unless you go to C/D neighborhoods or you put at least 30% down on an A/B property to "force" cash flow which not necessarily ideal. I've never seen the market so tight here in the 6 years I've been doing this. We haven't written an offer in months outside of flip opportunities because the numbers simply do not work on LTRs right now here.

@Asa Ifill - this is not a criticism at all - but my concern would be the number of new construction MFHs in the Huntsville area is out pacing need/desire, and I think some of the building owners are going to be trouble quickly when they can't fill their vacancies.  So for me, it all depends on the price point you are targeting - if you are looking for $1100 or less a door, I think you'll do really well.  $1500+ a door could be very problematic.