Have you ever been given the advice to invest in your backyard?
Then you look around your metro area and think, whoa. It is WAY too expensive to invest here, or, there’s just too much competition here, or, it’s impossible to get any cashflow here.
I’ve been there. But that didn’t stop me.
Let me explain how I personally got over the challenges of investing locally, branched out to invest out of state, and why I love investing in Huntsville, Alabama.
I live in the San Francisco Bay Area, home to some of the fastest growing areas in the country, and also home to some of the fiercest bidding wars you’ll ever see. There’s lots of money being infused into the market here from overseas, there are tons of tech jobs drawing people to the area, and there’s only so much room to house them all.
When we first moved here, we started investing in real estate locally, but we quickly realized that we didn’t have the capital needed to keep buying properties here. Plus, with prices shooting through the roof, our potential for cash flow was looking dimmer by the day.
That’s when I started to look out of state.
What I realized was, real estate is local. It’s hyperlocal. What you see happening in Washington, DC, is not the same as what you see happening in Dallas or Salt Lake City. Even within single city, different things are happening in different neighborhoods.
Each market is in a different phase of the real estate cycle, and there are ways to make money and have an impact at each stage of that cycle.
During my research, I identified a few top markets I thought would meet our goals of investing in cash-flowing multifamily assets with potential for adding value and for appreciation.
One of the top markets I’d identified as an emerging market was Huntsville, Alabama.
Huntsville first popped up on my radar because it was ranked as one of the top cities for growth in tech jobs. Wait a second, I thought. Tech? In Huntsville? I didn’t even know there was a tech industry in Huntsville.
As it turns out, Huntsville has one of the highest per capita concentrations of PhDs and engineers in the country, in part because the aerospace industry is there (NASA, Boeing, and others). Huntsville’s nickname is the Rocket City because of its history developing the first rockets back in the 1950s and ’60s during the height of the Space Race.
In fact, the Redstone Arsenal, where those first rockets were built, is still the largest employer in the area. Speaking of the Redstone Arsenal, it’s one of my favorite features of the Huntsville market. It serves multiple purposes. It’s a source of economic diversity and job growth, yes, but it also provides something most other southern and midwestern cities don’t have. A barrier to physical growth.
Going back to the San Francisco Bay Area for a second, the physical barrier of the Pacific Ocean is a huge part of why prices have rocketed. It’s the basic law of supply and demand. There are only so many places to build, and tons of people who want to live in the area.
If you look on a map, the Redstone Arsenal is a huge part of the metro area, and very close to downtown Huntsville. As the city continues to grow, I predict that this barrier to growth will play a pivotal role in real estate prices in the area.
Map of Huntsville, Alabama, with Redstone Arsenal and downtown highlightedMap of Huntsville, Alabama, with Redstone Arsenal and downtown highlighted
That brings me to another reason I love Huntsville, which is that it’s still very affordable. This meant that we could invest at lower price points than here in the Bay Area, and that we would have potential for appreciation as more people and jobs continue to pour into the area.
Currently, Huntsville is the fastest growing metro area in the state of Alabama, and it’s poised to become the largest city in Alabama in a matter of years. This growth is fueled by strong job growth.
Toyota/Mazda will be opening a $1.6 billion plant in the area within the next few years, the FBI is bringing four thousand jobs to the Redstone Arsenal, and there are countless other public and private initiatives to bring more jobs to the area. This is in part because the Huntsville Chamber of Commerce is one of the best in the country and is very proactive (in fact, they were named best chamber in the country).
Because of all this, Huntsville was recently named by U.S. News and World Report as the seventh best place to live in America.
Huntsville is named seventh best place to live in AmericaHuntsville is named seventh best place to live in America
Add to all that the fact that Alabama is a landlord-friendly state and that it has the forty-ninth out of fiftieth lowest property taxes in the country.
Kathy Fettke of the Real Wealth Network agrees, listing Huntsville as one of her top ten markets for rental properties.
It seemed, to me, that Huntsville could be an emerging market, because of these factors:
Armed with all that data and research, we began investing in Huntsville. We’ve now acquired several properties there and plan to continue expanding. We’re seeing great cashflow, adding value to the communities we’re investing in, and hopeful that, as jobs and the population in Huntsville continue to grow, prices will appreciate as well.