All Forum Posts by: Michael S.

We just turned a garage into a 4th bedroom in one of our rentals - however, it was all permitted with the city and everything was done to current code. It will take more time than you expect with getting everything permitted - but once it's done, the ROI can be significant depending on the area and added square footage amount.

If a tenant does decide to turn a property into an AirBNB illegally (assuming the lease clearly states no subletting or use of the property for a business), is there any other legal recourse besides simply evicting them?  I find it hard to believe that would stop them from doing it again.  Can you sue their arbitrage "business" for the entire value of the lease that they violated?  Are there any class action lawsuits against AirBNB in this regard, especially given how widespread this appears to be?

@Kyle M. - I hear your concern about a potential excess of new housing;  I used to share it as well.  However, based on the numbers I've reviewed, we are so far behind on housing availability right now, that this won't be an issue for the foreseeable future.  As far as older houses go, it's all about location and condition.  Most older non-rehabbed homes in five points, for example, are worth less than the land they sit on.  No matter how much new build there is, location will always insulate the older properties;  and fully rehabbed older properties are in fierce demand right now.  

@Kaul Christian Kappenman - we did this play in 2019 - bought a new construction close to downtown and immediately turned it into a rental.  Cash flow is very tight, but we knew this going in.  The location was totally the key and the reason we bought it - sure enough, the area has had a 15 to 20% appreciation based on the resale of 2 houses in the subdivision in the last 6 months. 

@Kyle M. @Joshua McMillion

I just don't see the growth potential for Decatur that others do.  I think you can find cash flow there, but I don't see the appreciation potential to go with it.  I think people will live in Meridianville/Harvest/Albertville/Athens before they'd move to Decatur.   I don't see rapid growth/appreciation in the Shoals either;  it's simply too far away to catch the momentum from Huntsville/Madison's growth.  

However, I do think Athens has a lot of potential, and has already started to show this with rising prices.  Cullman is an interesting location - it seems like it should be growing faster than it is, given its proximity to both Birmingham and Huntsville, but still has great potential.  

The challenge for OOS investors is the same that us local investors are having - zero inventory.  Good deals are hard to find.  As such, I expect a lot of OOS investors to start looking elsewhere, as demand will continue to outpace supply for the near future.  

As @Gorden Lopes referenced, folks who started investing here in the last several years have likely already scored excellent appreciation. That said, the deal availability notably dropped off in 2020, and are virtually non-existent in 2021 thus far for buy/hold and BRRRR, even now in C class neighborhoods. Rent has not really kept pace with housing sale prices, and this is making the numbers tough on new acquisitions. There are still some deals for flips, but numbers are tight right now - last deal I reviewed last night was only a 5% COC assuming everything stayed in budget - we decided it was not worth the amount of capital at risk for that type of return.

@Frank A Castro - thank you for your service.  

I honestly suspect the VA loan itself is simply the problem with your offers; perhaps your agent can ask sellers in advance of seeing/offering on properties whether they would accept a VA loan offer or not. Could you do traditional financing instead if it meant securing the deal?

@Kaul Christian Kappenman  @Caroline Davis

Those statistics for Madison County are incredible.  Thanks for the feedback. 

@Caroline Davis - I was told by another local REI that there were less than 500 (!) properties for sale in North Alabama at one point last month - could that possibly be true??? I know we've been consistently less than 1000, but only 500 would be a real housing shortage crisis here.

Here in Huntsville, AL it is actually illegal to sell a house with unpermitted work for one year after the work was performed.  

How often does this get routinely enforced?  Almost never to my knowledge.

How quickly would you lose a liability case if you sold a unpermitted flip here that caused a fire or personal injury?  Instantly.  

Just comes down to whether you are willing to gamble on the local risk of liability.  

Huntsville AL market will appreciate at least 15% in 2021 - seriously.  There is zero inventory here other than overpriced properties or properties that are fair market value but are more than 30 minutes outside of Huntsville/Madision proper.