All Forum Posts by: Tal Simpson

I can’t believe you have 640 units and have never heard of Grant Cardone! Listen to a couple of his podcasts anytime you need a shot of motivation. He crushes it.

 If you shop around you should also be able to find a better deal on your quiet title action.  I would highly recommend you quiet title regardless.  @Denise Evans is an expert in this area so I would also get her opinion.

Definitely following this thread!

@Account Closed

I don't know Huntsville all that well but can speak to Birmingham - it's been a pretty hot market the last few years but is big and diverse enough that there are still plenty of opportunities for a great ROI while staying out of the rough parts of town. But you do need to either physically drive through any neighborhood you are considering or find a good local partner, because one block can be very different from the next.

Yeah tomatoes, tomotoes on the rent/price ratio method, both ways work!  We are going to have our property inspector go through every unit and all building structures, so we will hopefully have a good feel for the physical condition of the property.  Some other things to investigate relate to the current tenant base and property manager - fortunately the owner is also a principal in one of the top local real estate companies in town (and they manage it), and we know this neighborhood well.  I've also been out to see the property several times and have had no problem getting financials and updated rent rolls - so we think we've mitigated a lot of the risk by finding out as much as possible.  In Birmingham, that is a solid but not unheard of rent ratio for multifamily, especially for an off market deal.  Although, they are getting hard to find unless you can form relationships with brokers.

Good luck, I think Birmingham is a great market to look at.

At the risk of sounding obvious, it completely matters on the part of town.  I am in the middle of a multifamily deal in a solid Class B part of Birmingham, and the rent/price ratio we are looking at is in the 18-20% range.  By the way, I had to pull out my calculator to figure the ratio that way (I assume you did rent rate x 12 months / price per door).  I usually use the "1% rule" method by taking monthly rent rate divided by purchase price (per door) - so for my deal we are looking at $600/mo and $37.5k/door,  which would give us a 1.6% ratio under my method and a 19% ratio under your method, which is pretty good in a pretty hot Bham multifamily market.

@Robert Evans Brian Trippe (local investor) runs the AlaREIA and would be a great person to connect with.  http://www.alareia.com/  Also has a good podcast that focuses on Birmingham, which is on iTunes.

 I don't agree at all with OP's assessment.  I'll give you an example - I have a Class A rental house (Mountain Brook) that brings in $2800/mo (multi year lease) that I bought for $350k, and then I have about 15 or so Class C to C- rentals (Eastlake, Midfield, Fairfield, Tarrant, West End) that on average pull in $600-650/mo after picking them up for 25-28k each and put a little work into them.  Bham sounds similar to Indy - solid Class B houses that don't need much work will come in around the 100k up to 200k price range and pull in $900-1500 in rent per month.  Basically, you can hit the 1% rule in Bham Class B areas, the 2% rule in Class C/C- and below areas, and are lucky to get the 0.75% range in Class A areas.

@Jason Cory I could not disagree more with how you have made your divisions between class levels.  There's not a Class F area on your list, unless by "Ensley" you mean actual Ensley up by South Pratt instead of Ensley Highlands or other parts of west Bham inside I-20/59, and then I might buy the former as an F or D-.  I would add Trussville up with Hoover as an A to A-, but pretty much everything else on your list ranges from B+ to C- (generally).  Irondale a class C area?  Eastlake a Class F?  LOL.  That is not the way to get people interested in investing in Bham - you just put the most investor friendly areas on the D and F lists and I can see people in Cali now freaking out and hitting the sell button.