All Forum Posts by: Michael S.

It isn't a buyer's market in Huntsville AL right now...if anything, the seller's market is stronger now than it was 6 months ago.  I saw a property two weekends ago that was listed 24 hours earlier - and already had 3 offers on it.  Ended up with 10 offers on it, including several that waived inspection.  Perhaps the high end housing above 500k is slowing. . .but that's not my area of interest for investing.  Anything below $250k is moving faster than ever right now here.  

As someone who has experience in this realm (however, do not take this as legal advise by any means), the cleanest way to do this is form an LLC. You can clearly spell out, in the articles, who owns what share of the company, how proceeds from sales/revenue are distributed, and it eliminates the potential for someone trying to "switch the percentages" down the road so to speak, because it is a formal legal structure. From a bank standpoint, they will have a clear picture of who owns what and has what degree of liability; however, all of the investors will have to produce tax returns and documents to the bank to show they are credit worthy. If you have an investor with questionable credit, it could sink the whole LLC or potentially cause a very high interest rate.

I have a different viewpoint on this, and would not necessarily start with a turnkey.  You can read 700 blogs and books, and go to 200 seminars. . . but there is no replacement or substitute for what you will learn from the experience of buying/rehabbing/owning your own rental property.   A lot of people will argue the increased risk of losing money from inexperience in this endeavor - while this may be true, I am not clear how paying at or above retail on a property mitigates the loss of revenue from inexperience, as you absolutely can not put a price on experience.    

We recently got to experience the adventure that is buying a property with right of redemption.  All the reading and research in the world did not fully prepare us for this. . .but the actual experience of purchasing a property with it was a  valuable experience we will use going forward should this occur again on future property opportunities.  

Huntsville market is absolutely a sellers market right now, and it is not slowing down at all.  If anything, it is moving even faster now than it was 4 months ago.  Quality inventory is incredibly limited.  

Another consideration is that they simply aren't very interested in your business.  You are an out-of-state investor to start with - if you only have the one property with them with a $750/month rental, how important do you think they value your business?  Let's say they manage 7 properties for a local investor with a rental range of $900 to $1200/month per unit - the reality is that they may put minimal effort for your business, versus much more effort for someone who is a significant local customer at a notably higher price point.  

Obviously, this may not be the case, but I would not be surprised if this is the reality of your situation.  Now, if you have multiple properties under their management, I think that could change the situation quite a bit.  

Without knowing the specific location, I'd say C class is a reasonable classification.  However, it would definitely not be close to a B class location in Huntsville, if that helps.  It is not a location in the city that we have invested in.  

We don't have anything in 35811.  I am sure you could find properties there that would work for cash flow.  However, this is not an area where you will see accelerating appreciation, so make sure you are cash flow positive in this zip code.

I'd stay away from 35805 if you do not know Huntsville well or do not have a strong team here helping you.  There are pockets of 35805 that you can definitely find good properties and positive cash flow.  However, a few streets over and you may end up in a money pit with poor rental prospects.  

We don't have any properties in any of the zip codes you listed.   

That doesn't mean those zip codes are bad or not feasible areas for rentals whatsoever...just means I can't give you a fair answer to your questions.  For example, 35763 is the Hampton Cove area, which has a lot of nice houses and is a very popular place to live in the Huntsville area. . .but not sure how well rentals work in that area, as they are typically larger houses.   

Would strongly recommend using an LLC