All Forum Posts by: Richie Thomas

@Mark Cruse I was hoping to make this a pure cash-flow play, and have any appreciation just be gravy on top. Unfortunately I'll probably end up banking on some appreciation as well, since my early guess is that the cash-flow, while positive, is too thin to completely cover a large, unexpected CapEx expenditure. Honestly, I mostly look at this as a win because a) I was able to get in the game, and b) I learned a lot from this first purchase. Hopefully I'm wrong about the cash flow being too thin, but that's TBD. Thanks for your kind words!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $277,000
Cash invested: approximately $70,000

4BR/2BA single-family long-term rental in Madison Alabama.

What made you interested in investing in this type of deal?

This was my first real estate deal. I became interested in real estate after listening to the BiggerPockets podcasts for several years.  After analyzing multiple markets, I zeroed in on Alabama in general because it has the 2nd-lowest real estate taxes in the country (after Hawaii), as well as its landlord-friendly eviction laws.  I became interested in Huntsville in particular because of its diverse employment base (Facebook data center, Toyota plant, Redstone Arsenal, and the multitude of aerospace/defense contractors).

How did you find this deal and how did you negotiate it?

Sourced via MLS. Found my realtor here on BP, she negotiated on my behalf. She is also my property manager, since I am an out-of-state investor.

How did you finance this deal?

Realtor introduced me to a local lender who ended up being the lowest interest rate (out of 10+ lenders I price-compared).

How did you add value to the deal?

I provided 25% of the total capital required, and 100% of the cash-to-close. In addition, I initially found the property via my MLS research and provided the due diligence necessary to determine the property's investment potential.

What was the outcome?

After minimal cosmetic rehab (about $4.5k in paint etc.), the PM was able to find a credit-worthy tenant with an excellent rental history, and signed a 12-month lease at $1,750/month.

Lessons learned? Challenges?

The monthly rent was a bit less than I had budgeted for. My lesson is that it's a bad idea to rely on your realtor to tell you if a certain monthly rent is realistic. It's like asking your barber if you need a haircut. Nevertheless, the deal does still cash-flow positively, largely because I made sure to include a margin of safety in my cash-flow projections.

There is no good or bad time, only good or bad deals.  Analyze each property on its merits and decide accordingly.

OK so I'm gonna sound like an idiot here, but apparently the agent at my bank who helped me with the initial transfer, initiated a *regular* bank transfer, NOT a *wire* transfer.

Yesterday was the closing day on my first property (in Huntsville, AL).  I wired the cash to close from my bank (USAA) to the account that the closing attorneys provided.  The attorney's assistant said she was a little concerned that the transfer didn't show up on her side, but said it can sometimes take a few hours to go through.  Then today, the partner at the attorney's office called me saying it still hasn't gone through, which has me stressing out.

The closers said they could get by with something called a federal reserve confirmation number, which is apparently issued to a bank whenever they confirm a money transfer from their side.  But every customer service rep and executive resolution specialist I talk to at USAA says they've never heard of that confirmation number.

The closing attorney partner is saying they will do all they can to save the deal, but the seller is trying to close on their purchase at the same time and those lenders will start to put pressure on him, probably by tomorrow (which would be 48 hours after I initiated the transfer).  At this point, I'm freaking out and at a loss for how to pry the federal reserve # from my bank.

Has this happened to anyone before?  Any help would be sorely appreciated!

Hey y'all, trying to gauge how appraisals are coming in these days, compared to closing prices.  In a red-hot market like Huntsville/Madison, I imagine appraised prices typically come in lower than actual closing prices, right?  If so, how far behind are appraisals lagging, compared with current market conditions?

Curious about both pre-existing homes and new construction, i.e. whether or not appraisals more closely match closing prices for new construction.

@Michael S. a follow-up question for you- what's your take on the Athens / 35613 area?  I'm seeing some new builds happening there and I'm wondering how much appreciation upside people are forecasting in that area.  Is it similar to Hazel Green / Meridianville in terms of how far & how rural it is?

Hey gang, big update from my end- just had my offer accepted on a 4-BR SFH in Madison proper! It was an MLS listing and it did go over asking price, but honestly not as much as I was led to believe it might. My realtor said it's common for listings to go $30-50k over list price, I got the property for $18k over asking. Not a brand-new build but age-wise it's not even a teenager yet. :-)

@Michael S.I took your advice to heart when deciding whether to purchase in Hazel Green.  And (hopefully) this property will be less sensitive to market corrections, as you mentioned.  Maybe I'll look again at Hazel Green in the future since it seemed like a lot of people felt there was upside there, but you asked some tough-but-fair questions that I'm also curious to hear the answers to.  All in all, I feel like Madison is a good fit for me to get my foot in the door, build my local team, and get to know the local market better.

@Matthew McDermott thanks again.  I hadn't considered Decatur up to this point, but I will.  I went to Big Bob Gibson's BBQ last time I was in town.  Investing in Decatur would give me an excuse to go back!

@Vatsal Patel hey thanks for posting.  Yeah I noticed the school ratings as well, and I was pleasantly surprised!