All Forum Posts by: Scott Starkey

Hi!  I sorry to hear about this.  I’m an investor in Alabama, and my business partner is a lawyer.   What part of Alabama is the house located?   If it is within my area, I can help you.   Just message me.

I can post a termination notice for you; or at the very least, I can drive by the home to check on it; again, if it is within a reasonable drive.  Also, I have all the correct legalese language that is needed for the termination notice.   However, I will need the copy of the lease.

I’ll be in meeting all day today until around 3PM CST.   If I can be of any assistance, please let me know; so I can get more detailed information of the situation.     

Depending on the county, the eviction process can take anywhere from a few months to 6 months.  Plus, the court costs can be upwards of almost $800, with the filing fees for the eviction, the default judgement, etc.  

I know you probably don’t want to hear this, but if there is, indeed someone living in the house, you may want to save the time and hassle and offer “cash for keys”.  Offering $300 typically works for us when we first purchase a rental with an existing bad tenant.  

On a different note, if you are filing a Chapter 7, are you planning to “reaffirm” this rental house?   If not, you can let it all go and not pay any utilities.  If someone sues you, so what?  You will include the lawsuit in the Chapter 7, and it will go away.  

@Jordan Page, I have a couple of duplexes in Cleveland and an 8-unit apartment complex in Blountsville. Also, just yesterday, I closed on a house in Cleveland which I intend to BRRRR. It will be my first experience in using the BRRRR method (I'm really excited!).

Blount County, to me, is an outstanding place to invest.  Anytime I have a vacancy, once I put the place on the market, typically it is rented to a vetted, screened, and approved tenant within 3 days.  The longest I have had one on the market was 3 weeks.  this was becuase it was vacated the weekend after Thanksgiving.  So, obviously, between Thanksgiving and Christmas is an extremely hard time to find a good tenant.   

On the other end of the spectrum, I have put a place on the market, and it was rented within 1 day.  Again, the demand for rental properties in that area far exceed the supply.

I like the North Jefferson County area: Gardendale, Morris, Mount Olive, and a quiet (but outstanding place) Corner.  Rents in Corner are great because the demand for the school.  I also invest in Blount County.  Again, the demand WAYYY outpaces the supply.  So, it's a fairly safe bet; although the rents in Blount County will be lower than in Jefferson County.

@Allyssa McCleery, I am looking to pullout money for another project,

@David Hooper, Thanks for the info!  I will definitely use it!

@Jared Rine,  sorry for not explaining further.   

We purchased an 8 unit apartment complex and two duplexes (one duplex are 3/1’s and the other duplex are 1/1’s).  We purchased them in June 2018 for $250,000 for all 3.   At the time of purchase, the 3 properties appraised for $297,000.  

Since that time, we have put in approximately $50k in CAPEX; which includes:

1. installing new in-wall, electric heaters in all 12 units

2. rehabbing each of the 4 units of the duplexes (new flooring, new appliances, new fixtures, new toliets, painting/ renovating everything from the ceiling down, and new doors).   In one unit we had to tear out the flooring to the bones and replace rotted wood.

3. We installed a new metal roof on the 1/1 duplex.

4.  Installed new appliance for all units of the apartment

5.  Rehabbed 1 unit at the apartment     We installed new fixtures, painted from the ceiling down, refinished the flooring (hardwood), new toilet, and new doors.  

6.  At the apartments, we installed new support poles (6’ X 6’ X 20’) for the porches.  4 total.   

7.  Re-gravel-ed the driveways and installed new mailboxes in all 3.

When we purchased the places rents were; if fully occupied (they weren’t full) would have been $5,050/ gross month.   The owner pays for “water” for the apartments, trash for all 3 places.

One resident was the onsite manager who turned over apartments, performed showing, taking new applications, approving new tenants, handled all lawn care, collected rent, and performed minor maintenance.  In exchange, she lived rent free and was paid $200/month.

We have slowly increased the rents when we have turnover.   So, our gross monthly income is now $5,504/ month.   We still cover water for the apartments (average $550/ month; reduced from $600/ month due to new toliets), trash (average $205/ month).  We kept the onsite manager who handles lawn care and minor maintenance.  We handle all other issues: such as tenant screening, showings, apartment turnover, etc.   She is still lives rent free and still is paid $200/ month.  There are a few other monthly expenses. 

The demand for rental spaces is extremely high in this area.  Our average turnover time (including rehab) is 3 weeks.

I have a breakdown of when we purchased the property versus now:

Year 0 (at the time of purchase)

Purchase Price $ 250,000.00

Down Payment (15% of purchase price) $ 37,500.00

Financed Amount $ 212,500.00

Income                                                      Total Yearly Operating Expenses

Apartments* Rent* B/B                          Management $ 200.00

Apartment #2 $ 500.00 2/1                    Garbage $ 205.00

Apartment #3 $ 450.00 2/1                    Water $ 7,200.00

Apartment #4 $ 450.00 2/1                    Repair $ 5,000.00

Apartment #5 $ 500.00 2/1                   Vacancy $ 500.00

Apartment #6 $ 500.00 2/1                   Insurance $ 4,611.00

Apartment #7 $ 500.00 2/1                   Taxes $ 2,281.00

Apartment #8 $ 450.00 2/1               Total Yearly Operating Expenses $ 19,997.00

Cleveland - Duplexes                         Monthly Mortgage Payment (assumed 9% rate) $ 1,930.00

Duplex #1 $ 500.00 3/1                     Yearly Mortgage Payment $ 23,160.00

Duplex #2 $ 500.00 3/1                      Total Yearly Operating Expenses $ 43,157.00

Duplex #3 $ 350.00 1/1

Duplex #4 $ 350.00 1/1

Gross Monthly Income $ 5,050.00

Gross Yearly Income $ 60,600.00

Gross Rate Multiplier (GRM) - 4.13

CAP Rate - 16.24%

CAPEX First Year $50,000

NOW      

Total Gross Monthly Rent  - $5,504.00    

Gross Yearly Income $ 66,048.00

All Expenses stayed the same except we lowered the water bill to $6,600/ year.

We currently owe $210,000.00

I hope this helps!

Thanks!

Scott

We also raised rents to market rates. (Sorry for not adding that).

Hi,

My company specializes in purchasing deferred maintenance, poorly managed rental properties with below market rents. We purchased an 8 unit apartment complex with 2 duplexes (total 12 doors) under the same commercial mortgage. We have infused a lot of CAPEX into the properties, rehabbed them, one by one, place vetted, good tenants in them. We did this in a fairly short time span.

We are looking to refinance the properties. Any help or suggestions on how to approach lenders or how to put together a nice package (what should I put in the package, etc.) to send to potential lenders.

Any suggestions on commercial (apartments) lenders in Alabama?

Thanks for any and all advice!

Hi Jarod!

I’m a fairly new investor in the Birmingham market.   I currently have 20 doors in the surrounding Birmingham metro area.  There are a lot of nuances to the market (as with any market).   My strategy is to find deals outside the metro area.   The best places for B and C class properties is in the northern part of the county where B’ham sits.   These areas are stable and have an upside potential.    The more expensive parts of the area is south of town.   In my opinion, the population of the south part of town grew too fast, and the state hasn’t not been able to keep up with the migration of people so fast.  The south part of town grew exponentially during the past 15+ years, and there isn’t then infrastructure in place to handle the traffic.   Commute times from that part of the surrounding metro part of the  city is comparible to large metro areas. 

My opinion is folks will start moving the the north part of town (not in Birmingham city proper) such as Gardendale, Fultondale, Morris, Mount Olive, Kimberly, and Warrior.    

I have properties in two  neighboring counties.   Both multi-family properties stay full.   The demand for affordable housing vastly outweighs the supply.   

If you are looking for A class properties, which I don’t recommend, they are in Avondale, the south side of B’ham, Homewood, and Hoover.    Again, my thoughts are that these areas will slowly start seeing a large reduction in population growth.   

Lastly, if you are looking extremely long term.  The freeway that “loops around in a circle” around larger metro areas in halfway completed in the B’ham area.   The southern half has been completed for many, many years.   There is strong talk in the state legislature to finish the loop.  

However, it’s an ongoing local joke that most believe the loop will never be completed.   My opinion is that it will be completed and the northern part of town will experience exponential growth.  This “loop” conservatively will take approximately 20 or more years to complete. 

Still, regardless of the loop, north Jefferson county, Blount County, and Cullman County are great locations to find deals.

Please PM me if you would like more information.  

Hi Matthew!

Congratulations on your decision.   I’m a fairly new investor too (My company has fairly recently acquired  2- eight units apartment complexes, 2 duplexes, and a handful of SFHs). 

 I, like you, got the “MHP itch”.   So, I currently have two MHPs under contract.  The parks are within 1/2 mile of each other.  They are located on the outskirts of Huntsville, Alabama.   

I listened to the two BP podcasts with Jefferson Lilly.  I also listened to every podcast that Jefferson Lilly has produced.  These podcasts have a wealth of outstanding information.   The name of the podcast is “Mobile Home Park Investing”.   I also ordered the Mobile Home Park University’s 30 days of Due Diligence”.    This manual also has a ton of outstanding information.  Furthermore, the two guys that run Mobile Home University sometimes have podcasts (they recently interviewed a former MLB player about his MHP investing experience).   

If you are looking to partner in this endeavor, my partner and I are looking for an additional partner in the MHPs if you interested, please send me a message.  

Scott Starkey

Greg,

The Avondale area is probably the most up and coming section of the Birmingham metro area.