All Forum Posts by: Michael S.

@Allen Scoging - the vast majority of properties we have bought have positive cash flow.  

However, if you know your market well, negative cash flow can be tolerable to some extent - for example, when you get a killer deal in an A+ neighborhood.  We bought a house in 2018 that was a great price for the A+ neighborhood it was located in.  We had a negative cash flow of 75 / month the first lease year, but we knew it was an area that was too good of a deal to pass up, and we were forecasting the rent would catch up too.   Sure, there is risk here. . .but risk is inherent with any investment.   

Fast forward to 2021 - it is now positive $100/month cash flow.  That's nice.  The house has appreciated 25% since we bought it.  Now that's a much bigger deal than the tiny cash flow variance.  

So cash flow is definitely important...but it's not the only variable to analyze;  make sure to look at all the variables. 

Also, to be honest, we do our cash flow analysis based on a 15 year amortization, not 30 years.  

same goal as last year - locate and close as many good SFH deals as possible

@Brennan Crick One of the keys to our investing is having a great relationship with a local/regional bank. Granted, we are doing commercial loans via our LLC, so the rate is slightly higher as such compared to an individual loan; but way cheaper than a hard money loan. I would strongly recommend taking the time to meet with local banks in your area - be prepared with your personal financials, as well as a concise but thorough presentation of your business model and plan.

@Tyler Evans - always better to miss a deal then be stuck with a bad one.  You have to be able to review those leases to see if this property is a feasible option for you.  

There will always be other deals;  even in our crazy real estate market here in Huntsville, deals still show up at random times and in random places.  

Only if you are overleveraged or do not have adequate cash reserves for your growing number of properties.

Here's a scenario - you have 2 properties that are vacant for 2 months;  during that 2 months, you have to replace 2 HVAC units unexpectedly.  Can you handle these financial hits ok and move forward?  If the answer is yes, then I think your pace of acquisition is fine.  If this scenario would have you maxing out your credit cards or scrambling for cash, you need to slow down and build your reserves/financial fallback position further.  

Before you think this scenario is not realistic, it happened to us in 2020 - we had 2 vacancies for 2 months for different reasons, and 2 HVACs completely went out and were not salvageable on other properties during that time period.  These were all SFHs for reference.  We were fine, because we had adequate reserves available during this period.   

Anyone here have experience with long term rentals in Guntersville, AL?  Tough to rent?  Easy to rent?  Would be very interested to hear your experiences in this market.  

Also, if anyone has experience with the local property managers in Guntersville as well, please let me know.

Thanks!

I think all three locations are great options...assuming the numbers work on the deal

That said, Huntsville is oversaturated with investors right now.  When wholesale fire damaged properties in marginal neighborhoods are receiving multiple offers and going for over asking...

Looks like Madison and Limestone county are not participating in this change unfortunately

Would absolutely recommend an independent appraiser so that both of you feel comfortable with the deal, and the friendship does not get adversely affected.  I'd recommend you split the cost - if one of you feels strongly that the appraisal is too high/low, then that individual should have the option to get a second appraisal at their cost.  

@Jayna Stevens - Have you considered partnering with someone else local - it helps for financial flexibility, having someone else to help search for deals, and I have found real estate investing to be kind of fun when working as a team.  Just a thought.