All Forum Posts by: Michael S.

Great dialogue - we don't get too many lively discussions for the Huntsville area threads - ha ha.

So I see a lot of posts in favor of Hazel Green - everyone has their own REI strategy, which is what makes REI a unique adventure for each of us.

That said, who here actually owns rental units in Hazel Green?  Rather than speculative talk, I'm curious to hear about actual performance.  What are you getting for rent?  What size house?   I'm curious to hear some real data.  I think it's great that people are doing well in this location.  

@Matthew McDermott - approximately what percent of your properties under management are actually in Hazel Green proper?    Is demand for Hazel Green actually higher than Harvest, Owens Cross Roads, or New Market?  I'm curious to know what you're seeing from the tenant request side.

@Vatsal Patel - welcome. Good luck on your REI journey. I am not sure where you are located, but finding deals in Huntsville/Madison is a major challenge right now; you may be better off looking local if you are out of state. As @Peter McDonough said, "decent" is about as good as it gets right now for deals.  Maybe things will improve this spring with more inventory...if there is more inventory, that is.  Best wishes.  

@Richie Thomas - just curious, have you ever stepped foot in Hazel Green?  I ask because it is not Huntsville/Madison whatsoever;  it is quite rural.  Yes, it has grown in the past decade, but growth is relative.   I figure before you put money down, you want some honest feedback.  

Commute - for Huntsville proper, the straight ride down 431 is fairly easy and not too congested.  However, anyone commuting to west Huntsville/Madison/Toyota plant is not going to live in Hazel Green, as it will be a long commute in rush hour.  Now, compared to San Francisco, it's incredibly easy;  but comparatively in North Alabama, it is not.  

New builds - IF, and I stress the word IF, there is ever a correction in North Alabama real estate, Hazel Green and Meridianville will not be able to support the current entry price point of new construction there, and could be underwater;  just my opinion of course.  That said, I honestly don't see a correction coming;  but stranger things have happened.

Rent - it could be challenging to rent anything in Hazel Green for over 1600/month, when you can get a solid 4 bedroom in Madison or Huntsville for 1600 to 2000 right now.

On the positive side, a new build truly should have minimal cap ex for the first 5 to 10 years (depending on which builder you are using of course...)

Best of luck in your decision - I would be curious to see if you can find any local investors who are actively buying new builds in Hazel Green right now.  If they are not, that's a red flag.     

Personally, I think the actual cash flow "amount" on a BRRRR is less important, especially if you truly were able to recycle your entire 20% down payment.

Example: Our recent BRRRR included new LVP, new cabinets, new roof and new appliances. The HVAC is young, and should be good for a minimum of 5 to 10 years; it was professionally serviced and evaluated. Electrical and plumbing was professionally inspected and repaired where needed. We recaptured 98% of our total investment on a cash out refinance. The house is cash flow neutral (zero) on a commercial loan that is on a 15 year ammortization. I'd do this deal again as many times as possible. Our likely capital expenses are minimum for a while given the rehab we performed, the house has already appreciated, and rent will likely escalate.

Or I could buy a turnkey, have 20% capital sunk in the purchase, not be sure on the quality of the rehab (since we didn't oversee it), and make hopefully $200/month in cash flow?   No thanks.  

@Thane Goetz 

My recommendations:

1. Network with local wholesalers and consider attending the local REIA meetings to meet local investors.

2.  Network some more.   There are several real estate agents on BP who are investor friendly in the Huntsville market.

3.  Try to get your finances in order to buy all-cash;  finance offers are losing out to lower amount cash offers routinely in this market presently.

4.  Network some more.  

5.  Don't worry about property management until you actually have a property under contract.  There are several good ones in town, and they will be much more interested in talking to you when you have a property.  

6.  Did I mention networking?

Good luck!

@Raj Mukherjee - right now, the challenge is actually finding a deal.  

I do not know anything about the Greenville market.  

But finding deals in Huntsville/Madison right now is virtually impossible unless you have numerous and strong connections for off-market properties.  

If you were planning to primarily use the MLS in Huntsville/Madison, you're probably best to look elsewhere. In the years I've been doing REI here, I've never seen the market so lacking of decent buying opportunities.

@Scott Winter - your best chance to get a cash out refinance with zero seasoning is to work with banks who you have a long standing relationship with, and a track record for paying all your previous loans with them consistently and on time.  

I have never ever had any seasoning period with my cash out refinance loans because of this with my local lenders here.  As such, this has allowed us to do several BRRRRs without any financial hurdles at the end.  Good luck.  

@Theresa Harris and @Tim Sharkey To clarify - it does appear to be NEW in the Huntsville/Madison area, as Mr Stinson validated with his comment above. I am aware that this may be very common for other areas of the country, as you have seen in your markets. But I have never previously paid close attention to HOA covenants for local SFH opportunities here in Madison county, and wanted to make other investors in this area aware to watch out for it.

@Nicole Heasley Beitenman - I think it can be case by case. We have a couple SFHs in HOA neighborhoods, and the HOAs have previously been a non-factor - if anything, they are keeping the neighborhoods looking nice, and the tenants for those properties have been great about paying rent and not causing problems thus far. But obviously I may be in for a rude awakening if the local HOAs here start limiting the number of LTRs, or start getting aggressive board members in the future. To be determined.

@Logan Carver - this was my post to another investor starting out in Huntsville below - I would worry less about building your "team" right now, and focus on your financing situation and just getting a property under contract.  If you find an opportunity, they are likely not going to be interested in selling to you if your financing and/or cash is not immediately ready, as there is a ton of cash buyers here right now who can close in under a week.

Case in point - we found a wholesale property we liked 2 weeks ago - we offered $15k over ask (yes, 15k over ask on wholesale - that's how crazy things are here) because we were going to finance it, as our liquid cash is currently tied up with other rehabs. They sold it for $7k LESS than our offer to a cash buyer who could close in less than a week.

Good luck on your REI journey.

@Christian Herrera - inventory is very, very tight here right now. Networking with the local REI groups likely would be a good starting point. That said, I'd make sure you have your financials ready in advance - already have your lending ready to go and/or have your cash reserves ready to go. If you find an opportunity, they are likely not going to be interested in selling to you if your financing and/or cash is not immediately ready, as there is a ton of cash buyers here right now who can close in under a week.

Case in point - we found a wholesale property we liked 2 weeks ago - we offered $15k over ask (yes, 15k over ask on wholesale - that's how crazy things are here) because we were going to finance it, as our liquid cash is currently tied up with other rehabs.  They sold it for $7k LESS than our offer to a cash buyer who could close in less than a week.  

Good luck on your REI journey.