All Forum Posts by: Michael S.

@Jesse Webb - definitely network as much as possible to find off-market deals. MLS properties in Madison county with numbers that work are becoming unicorns unless you want to look at C/D neighborhoods; but even C neighborhood deals are now hard to come by.

@Lindsay Davis - I find 35803 and 35816 to be very different investment plays - sure, both can work (let's be honest - any zip in North Alabama seems to have potential right now).  But, for OOS investors, they are very different neighborhood classes.  

35803 is typically solid B neighborhoods, with some A neighborhoods as well.  Everything going for well over asking with multiple offers.

35816?  10% B neighborhoods, and the rest is C and D.  Still seeing properties in this zip code for sale at 50k to 100k routinely.  

@Peter McDonough - 2 years ago, I would have completely agreed with you.  But there are now pockets of 35810 that have really changed, and are closer to B neighborhoods than C/D neighborhoods.  A lot of money has come into parts of 35810 (similar to Lowe Mill but to a lesser scale) in the last year or so, and house prices and rents have notably gone up in response. 

That said, 35810 is not a zip code for the OOS investor who doesn't either have a good team on the ground or has visited the property itself.  4 blocks in this zip can be the difference between a B and a D neighborhood.  

@Xela Batchelder - if my property manager gave out my information to a tenant without my consent, they would be fired immediately.  Simple as that.  

@Brett Kingston - yeah, I knew my wife was not real keen on the whole real estate investing idea.  

So, I floated the idea to her in full detail...after the first investment property was already under contract.

@Cheyenne Nafe - of course;  as you know, absolutely everything in Madison county has appreciated, including even raw land.  

I never thought I'd see prices skyrocket in 35816 and 35810 a year ago like they have - but here we are.  

Saw a wholesale house a month ago that was missing the back half of the house (literally) - it went under contract in a week.

Saw a wholesale fire damaged house close for over asking.  

Not sure the market here can get any crazier, but who knows.

I agree - it is a great idea.

Unfortunately, the market here is oversaturated with investors and owner-occupied buyers, so inventory is minimal, and deals are scarce.  

If you spend enough time and effort, you can find a good off market deal here and there.  

If you want to scale quickly, or plan to primarily use the MLS, this is not the right market for you.

@Gorden Lopes

congrats on finding a great deal and completing a BRRRR with it; what zip code is the property located in? 35803?

@Gervon Thompson - you have received some excellent advice on here overall.  

I have had student loans for over a decade (and still do!), but I would have missed out on a ton of investing opportunities if I had focused solely on paying them down quicker, rather than paying them down gradually.  

When I finished school, I had private loans and Stafford (federal) loans.  The private loans were at 8% - I worked extra and spent minimal, and paid those off in 3 years.  The federal loans were consolidated and refinanced at less than 3% - I have made no more than monthly payments on them, and continue to do so.  Like others said, look at the simple math here - since my investments return > 3%, why would I want to utilize more money to pay off my student loans?

Also, re-read @Carrie Carlton post.  I think this is an excellent example to review.

@Andrew Brown - I can't comment on REI Nation, because I have never bought a turnkey deal. That said, they seem to have an excellent reputation on BP when you search through the forum here.

I think you tried to choose a very "safe" real estate investment for your first one. Your COC is marginal, but it sounds like you went for perhaps a B neighborhood property to lower your risk, which is wise for your first investment. Granted, I am totally guessing, as I don't know anything about the location you have chosen.

Now, if you want honest feedback, here's my thoughts:

-if I had student loans at 7%, the only real estate I'd be buying would be a house hack and/or an amazing "unicorn" deal (50% return on a flip, rental in an A+ neighborhood that's almost impossible to get a rental in, etc).  Otherwise, I'd get the debt paid down or first get it refinanced at a much lower rate.  I still have student debt but at a much much lower interest rate. 

-have I done deals with 6% COC? Absolutely. But only with a BRRRR, where I have minimal cash parked, or again, the rare rental opportunity in an A+ neighborhood where the appreciation is tremendous. Heck, I've done transient negative COC deals because the property was in an amazing location. 3 years later, it's positive COC (increases in rent) and appreciated 25%. But I would not do a 6% COC with 20%+ cash sunk and/or without a projected appreciation of higher than 5%/year.

-I think you will get a lot of value in your first investment - not monetarily, but in your education on real estate in general;   I learned a tremendous amount from our first investment.  Each investment you make, you will learn more nuances of real estate investing that will allow you to be more successful with each subsequent investment.  This education from experience is way more valuable than "guru" education, and better than reading 50 books before taking the plunge, as you have taken action and actually have a property in your possession that a tenant is paying down the note on.   Good luck with your journey.