Rental housing demand?

[harry chickpea]

Originally Posted by RocketDawg

The Huntsville area only has a 22 or so day supply of available housing for sale, and average time on market is 19 days, if I recall correctly. I would imagine Decatur is similar (should be in the same metro so data would be more readily available!). The OP mentioned that Decatur seems to be primarily blue-collar, which I think is true, and the vast majority at the Mazda/Toyota and associated suppliers are blue-collar, so it's a nice fit. As already mentioned, Decatur is closer to the plant than mid-Huntsville is, and most of Madison, while close, is quite expensive. So Decatur/Priceville should reap some huge benefits.

That is a good, solid assessment. However, there is a wild card that would keep me out of investing in rentals. We haven't seen full economic effects of Covid yet. The aftershocks may take a while. Will carbuying reduce to a point that M/T hiring will be delayed? Will bans on evictions send landlords into bankruptcy? This is a market if you have money you can afford to lose, but I wouldn't bet the farm.

[RocketDawg]

Originally Posted by harry chickpea

That is a good, solid assessment. However, there is a wild card that would keep me out of investing in rentals. We haven't seen full economic effects of Covid yet. The aftershocks may take a while. Will carbuying reduce to a point that M/T hiring will be delayed? Will bans on evictions send landlords into bankruptcy? This is a market if you have money you can afford to lose, but I wouldn't bet the farm.

Yes, all that's true. But one thing for certain - the workers at Mazda/Toyota and suppliers will have to physically be at work - you can't build a vehicle by teleworking. The management and engineering staff might be able to work from home, but not the assemblers.

I'll be optimistic regarding Covid aftereffects. With the vaccine right around the corner for some, and everybody within a few months, I think we'll see a huge resurgence. Most people are just sick and tired of working from home and need the socialization of an office environment, I think.

I also think that owning rental property will require a LOT of work and devotion. Face it - many tenants trash the place. It's probably not that bad with upper end apartments, but I don't think I'd want to put up with the headaches that inevitably will come with owning single-family rental houses.

[RocketDawg]

Originally Posted by RocketDawg

The Huntsville area only has a 22 or so day supply of available housing for sale, and average time on market is 19 days, if I recall correctly. I would imagine Decatur is similar (should be in the same metro so data would be more readily available!). The OP mentioned that Decatur seems to be primarily blue-collar, which I think is true, and the vast majority at the Mazda/Toyota and associated suppliers are blue-collar, so it's a nice fit. As already mentioned, Decatur is closer to the plant than mid-Huntsville is, and most of Madison, while close, is quite expensive. So Decatur/Priceville should reap some huge benefits.

To update those numbers from a November 23 article in the Huntsville Business Journal: There are only 832 listed for sale in October. Of that number, only 410 are single-family "used" houses, and the number of newly built houses is only 422 (was 509 last year in October), and 0 condos for sale compared to 21 a year ago. Houses just can't be built fast enough to handle the influx.

Average time on market for a home listed for sale is only 16 days. A house in my neighborhood very near to me was listed "For Sale by Owner" last week and already has a pending sale. I've also read that many, perhaps most, houses for sale will have a list of bidders and the owner often gets more than the asking price. That situation is not unheard of around the country, but it seems to be unique for Alabama.

[HB2HSV]

Yes real estate market is red hot right now for the Huntsville/ Madison market. A well-priced property last no more than 5~6 days on the market before it goes "pending". 3 yrs ago the average DOM was 4~5 months!

I am also seeing lots of houses being flipped right now. It was sold a month ago now back on the market with remodeled kitchen and new flooring but asking 75% MORE than the previously purchased price.

We're clearly in a bubble.

[jewel104]

I've had a townhouse for rent in SE HSV <1 mile from Gate 3 for the past 13 years and it stays rented for the most part. The last tenant fulfilled his 1 year lease through September but it has been vacant since. I think the property manager is having difficulty finding qualified tenants. It is a 3 BR 2.5 bath with lots of recent upgrades (French drain, landscaping, new HVAC, brand new carpet throughout, etc.) I think my property manager is asking 1000.00/month for rent and it is pet friendly.


Like RocketDawg said, "I also think that owning rental property will require a LOT of work and devotion. Face it - many tenants trash the place. It's probably not that bad with upper end apartments, but I don't think I'd want to put up with the headaches that inevitably will come with owning single-family rental houses."


I cannot agree more with RocketDawg, if you manage the property yourself be prepared for the most agonizing endless headache of your life fielding endless calls claiming everything from black mold disease, to lies about employment, clogged toilets, and housing felons with drug arrests and domestic violence arrests in other states who break their lease and, yes, trash your place and leave behind tons of crap for you to dispose of.
Also, your property taxes on your rental will double since you do not live there.

[HB2HSV]

Jewel, I agreed with the headache of managing rental properties.

That's why I use professional property management firms

It's a little expense but money well-spent, IMO. Being a long distance owner I will have little choice but I would still want to use a PM firm if I was close by. On my property at SoCal, I am 1.5 hours away and I would not want to be bothered with midnight tenant calls and overseeing the maintenance & repairs.

I can also relate to tenants lying. My property was recently rented. They had 12 applications with each paying a fee for background check, knowing full well that any derogatory history will be flushed out but they all still applied. Only 1 out of 12 passed the background check. Go figure.

[HB2HSV]

Update - I am happy to report that I purchased two properties to-date.

The market is HOT. I found I had to move fast otherwise the house would have taken other offers before I can react.

I am happy to be a property owner in Huntsville-Madison area again!

[recycled]

Originally Posted by HB2HSV

Update - I am happy to report that I purchased two properties to-date.

The market is HOT. I found I had to move fast otherwise the house would have taken other offers before I can react.

I glance at the Alabama threads, as I lived there for several years in the late 1990s. This topic caught my attention, but I am surprised how fast you bought two houses in AL. Did you visit the properties and perform on site inspections, or were the purchases done from far away? Hope this works out OK for you, but I am way too timid to attempt rental property ownership from far away or even if I was right nearby.

[HB2HSV]

Originally Posted by recycled

I glance at the Alabama threads, as I lived there for several years in the late 1990s. This topic caught my attention, but I am surprised how fast you bought two houses in AL. Did you visit the properties and perform on site inspections, or were the purchases done from far away? Hope this works out OK for you, but I am way too timid to attempt rental property ownership from far away or even if I was right nearby.

Good question. I understand your reluctance and concerns.

I would have the same reluctance and concerns if I had not lived there recently close to 10 years. For example, I would have a great reluctance in acquiring properties in the Florida panhandle, or the greater Atlanta area. I know the general Huntsville area and have a good idea on locations, crimes, and the local demand. In addition, I mitigated these concerns by the following:

1) Have a good Relator whom you can trust. I knew my Relator for close to 10 years and she listed our house for sale when we moved away. At the time, the DOM average was 2 ~ 6 month but she sold our house in less than 3 days for a higher than anticipated selling price no less. A big part of it was she advised us on what to fix up prior to listing on the market. Little things like repainting a room, front door, etc. to give a better first impression. It worked. So having a trust-relationship is key to this long distance purchase. In buying decisions, she was overly cautious to a fault. She pointed out every concerns she's had to me so I feel very comfortable being fully informed on the risks.

2) I purchased the homes sight unseen. But I had the Realtor visit the property and do a real-time video conference with us, so we were able to see the conditions of the house and understand the layout.

3) We will have a home inspection on the property. This will flush out potential problems and depending on the severity, we can request the seller to fix prior to we proceed with escrow.

4) In the case of older homes, we requested and the seller agreed to purchase a one-year home warranty.

5) A reliable property management firm. I phone interviewed a few PM firms including asking their criteria for screening tenants, handling maintenance & repairs, and fee structures. I received a copy of their Lease Agreement for review, plus owner's management agreement. I look for established management processes they have. A good PM firm also can provide historical rent data for a given neighborhood so I was able to get a realistic monthly rental income for a perspective property. I also rely on my Realtor's recommendation in selecting the PM firm.

At the end, there are still risks in investing rental properties long distance but I feel that I properly manage the risks by taking the steps above. I have had a prior experience being a long distance landlord so I am more willing to take on the risks.