All Forum Posts by: Michael S.

Would look at Florence as a cash flow play only;  you may catch a little appreciation as well, but make sure any deals you pursue in Florence are absolutely solid in the cash flow numbers.  I agree with what @Dena Puliatti had to say above as well.  

Was the tenant actually living there and leasing out part of the house as an AirBNB, or was the tenant not living there at all and leasing out the whole house as an AirBNB?

I don't see how the tenant could invoke the CDC moratorium if you can prove the tenant was never actually living in the house, but was subleasing it the whole time.  But I'm not a lawyer whatsoever - probably worth having a sit down with legal to see what your options are. 

@Josiah Cooper- I have a very different opinion of Decatur than most everyone else, I guess.

I have never considered investing there whatsoever because I felt like there was minimal appreciation there, and we don't invest solely for cash flow.  

I have lived in north Alabama for over a decade - in all the years I've lived here, the only reason I've gone to Decatur was for the kids soccer games at the Jack Allen Soccer Complex (which is quite nice).  That's a red flag.  The other comment about the schools there by another poster above is also a red flag.

As for the comments about Decatur growing - I am not seeing the data for that.  

Here's the population growth over the past decade:

Athens 32.8%

Madison 23.5%

Huntsville 13.6%

Florence 3.6%

Decatur -2.2%  (yes, the population has decreased)

That trend, to me, is quite concerning.   

If I were in this situation, I would do the following:

1.  Get the lawn cut immediately

2.  Hire a Cleveland based attorney to address the situation and to work on a settlement to get the criminal charge dismissed

3.  List my Cleveland investment properties for sale immediately while the market is hot

@Michael Conte - yes, try your local banks first, as you have planned - by local, I mean banks only in your state, and basically have 2 to 8 branches maximum - these banks typically prioritize local investors, even if you don't have a relationship with them previously; regional banks, those that overlap several states in a region, are also usually good bets as well, but they usually prefer those with previous business relationships (aka previous loans that have shown a track record of paying on time) - but if you are willing to set up multiple lines with them (business checking for your LLC, for example), they might be willing to do a loan with you as well. Stay away from the national banks - our LLCs are way too small for them.

@Michael Conte - the cash out refinance loan through an LLC that you seek absolutely exists; we just closed one this month. So here's some thoughts:

1.  The banks we have used for the cash-out refinances are banks that we already have a long term (years) established track record with.  

2. The loan was issued to the LLC, not us individually; the SFH is owned by the LLC, not us individually

3.  It is a 5 year fixed rate at 4% with no points;  it has a balloon at the end which we will simply refinance when the 5 years is up (if we still own the property)

4. The loan is held and serviced by the bank itself;  it is NOT a federally back mortgage, and is highly unlikely to be sold to another institution 

5. Banks require a personal guarantee (if the LLC fails, the individual owners of the LLC still "guarantee" the loan)

6.  There is no seasoning period whatsoever

7.  I have no idea if your state has any restrictions on these types of loans for any reason

The key is you need to have a good business relationship with bank(s) to do this - good relationship does not necessarily mean wealth, but means you've done other business with them, and your personal financials make you a relatively safe bet.  

@Ed Lopez - yes, that is currently a very common and standard loan rate and term that banks will offer to an LLC; you may be able to get less than 4.5% if you shop around, and occasionally a bank with do a 7 year fixed rate rather than a 5 year.

I am unclear why you need to hold extra in reserves for redoing the loan in 5 years - you should have plenty of opportunities to refinance the loan before the 5 year balloon hits;  we do not hold any extra funds in reserve for the end of the loan term.  

@Ankit Garg - interesting feedback from the bank on this - I understand the HOA finances concern by the bank - I do not really understand their concern with the owner occupied number of condos though - I wonder if that is unique to the bank you talked with.

We have not gone the route of investing in condos, as the HOA fees can sometimes be prohibitive to making the numbers work.

@Kyle Swengel - as with any city, there are definitely pockets of the city that change block by block;  35810, 35816, and 35805 are like this.  35805 probably has everything from A to D class (majority is C class), because some of the zip is undergoing a massive change in neighborhood dynamics.  That does not mean to avoid these zips per say - but it means you really need to know the property specifics for these zip codes, and you need someone who knows the area to help you with it.  We have properties in all 3 of these zips, but we also know these areas well enough to pick out the safer blocks.  

The city of Huntsville has information on STR permitting on their website - but I would recommend you contact them directly before proceeding, as it seems the rules for STRs are changing quickly everywhere.

@Kyle Swengel - positives would be appreciation and rental demand.  Negatives would be severe lack of inventory and very tight numbers on deals, if the numbers even work.  If you can not do all cash with no contingencies, it will be hard to pick up any good deals right now.

STRs seem to do well here, but must be permitted with the city - the regulations on this seem to be changing as well, so I would definitely do your research first before buying an STR.