I am in Fort Hood Texas and I was looking around to buy and hold a duplex as an owner occupant in Killeen, Harker Heights, or Copperas Cove. I am going to use my VA loan so I won't have to put anything down and I was going to make sure not to look for anything over 95,000. So my problems are that sense I am around a military post there are always hundreds of rental options. I don't know how I would make my unit stand out or how to market the unit effectively and I don't have an exit strategy. Any help at all would be greatly appreciated and be sure to tell me if I've missed anything crucial. This will be my first buy and I am no expert.
You can contact a local management company to manage your property once you get it.
1. Make sure it cash flows and puts money in your pocket monthly
2. Know what it cost you on a monthly basis to operate that property
3. Call 3 local real estate professionals and 3 management companies to see what areas are in demand and what avg rents area.
4. Getting someone close to nice schools and shopping is always a plus.
5. Contact the professionals above to see how quickly the area is appreciating. If you wish to sell in 2 to 4 years, this is important.
If you follow this link there are several articles that will show you about duplexes, how to buy/sell and care for them.
Welcome to Bigger Pockets
@Marshall Holmes I think the biggest thing is do you have extra money for emergencies and vacancies that will arise with your property? When the property is rented, will you cash flow?
As far as standing out, I would suggest to go around and look at the other properties for rent and see what they offer for the price. Now you just need to offer at minimum the same or update your units a little more than the competition and/or lower the rent slightly below market.
Welcome to Biggerpockets!
My husband is active dut, Navy. We actively turn our personal properties into rentals. It is a huge part of the investment plan. We also buy pure rentals on the side. This is a great strategy. We have found in our experience that there are not as many rentals as you think. As long as you have a good rental in a great neighborhood who's house is at the right bah rent. For exmaple, a 2 bedroom house that appeals to E1-E3 or O1 should not be priced at a E7 or O5 level. I have started a blog/website that talks all about our strategy. How we have used the va multiple times, manage from a distances, and how we have turned this transient lifestyle into a great way to invest in real estate. I look forward to seeing you around. Let me know if I can help/
Hello neighbor - Being new to real estate rentals as investments, I have found that BP has a wealth of info. My potential properties will be located east of you in Belton/ Temple areas.
Because I'm also new to this type of investment, I have minimal advice but in pricing you may consider not pricing rent on the high end as you may not get as many tenants to screen and may be left with a short list of not-so-preferred tenants. The better the rent = more applicants = you can choose from a better pool.
Are you working with an agent? The listing agent can obtain surrounding rental info - an idea if it's a high rental area, what the rental rates for that neighborhood are, etc.
I read in your profile that you are unsure of how to finance - have you since decided to go VA loan? I am not directly military so I am shopping banks for a commercial loan (my LLC will purchase the rentals so I have to go commercial route - ARM or Balloon loan and I'm leaning toward ARM)
I'm heading over to the link Gerald gave as I continue my research.
Welcome to rentals! Welcome to Ft Hood!
Do yu know how long you will be at Hood? and what is your leng term strategy with the duplex. As far as getting your rental noticed in a sea of other rentals, A tip I use when PCS'ing to a new duty station is to look at the area through my target rental eyes. So how good are the schools ? Crime in the area? What does neighberhood look llike? Commute to/from post during rush hours. As far as unit itself.. What utulities is renter pciking up versus landlord.. Is W/D inluded ? As part of your long term strategy , figure out who would be your iseal tenants and then look for properties that appeal to them.
@Marshall Holmes Do you find that enlisted personal that are E4 or above treat your properties better? I would be worried that someone that has never been in a house before and knows that they will be reassigned in 2 years or less, will not take care of the property. I know that you can contact their superiors if they do more damage than what the damage deposit is, but I do not know long that would take.
I was a "dorm rat" single guy in the Air Force and heard how bad base housing was where I was at in Germany. Even the dorms were below par, as they were built by the Canadians at the end of WW2. The opposite was true in Montana. Very nice Dorms and Base housing but there was a waiting list for housing as a new Wing was brought to the base. That base is closed now, Malmstrom AFB Great Falls MT, so I do not know if they ended up building more base housing as I opted for the early out program that was offered.
My BF and I bought our first rental using his VA loan. I'd recommend really educating yourself on the details of the VA loan. We were given a lot of bad info by banks who didn't work with VA loans.
-We were told we couldn't buy a duplex with a VA loan, which isn't true as long as you owner occupy.
-My BF has a disability from a deployment, which allowed us to skip paying the funding fee, but we had to tell the loan company that all the time, as the funding fee just kept "accidentally" reappearing.
I think those were the two big problems we had. Check and double check everything you're told and the VA loan can be an amazing tool.
Hello @Marshall Holmes ,
In order to achieve a goal you have to first define what that goal is. In my opinion, the goal is to consistently buy properties which generate a sustained positive cash flow and are located in areas likely to appreciate over time. However, meeting these two goals are not easy. There is no simple answer but I can tell you a process that should work. First, an overview:
• Find out what is the best type, configuration, rent range and location within the area you are considering.
• Determine whether you can make an acceptable profit? If you can't make a profit in the area you are considering, buy somewhere else. Never buy a no-profit property.
•If you determine you can make an acceptable level of profit, contact a Realtor and look at appropriate properties. Always run all properties by the property manager before you consider making an offer.
•During due-diligence, get combined rehab lists from the property inspector and property manager and have a contractor estimate the actual rehab cost. Once you have this, recalculate profitability and only proceed with the purchase if it makes sense.
Below is more detail on the process:
What is the best type, configuration, rent range and location?
You need the intersection of four factors.
• Type: Condo, high rise, single family, duplex, single story, two story, etc.
• Configuration: Two bedroom, three car garage, mud room, etc.
• Location: Usually a very specific area. For example, west of 23rd St and south of the river, etc.
• Rent Range: If the majority of the population to which you want to rent are willing and able to pay $1,000/Mo to $1,300/Mo. you should only be looking at properties that you can purchase, rehab and profitably rent in the same rent range.
Below is a graphic illustrating the above.
Where can you quickly get this information? Interview some property managers. Property managers work with the same rental properties you want to buy every day of the week. They know what type, configuration, location and rent range works best in their specific market area. And, just as important, they know what will not rent. Locate a few property managers and make an appointment to meet with them. Tell them that you are just starting and you are looking for a property manager to work with. I have a set of property manager interview questions which I use (I am a Realtor in Las Vegas and my practice is almost exclusively remote investors and I occasionally have to move my clients to a different property manager when the current one starts to go bad.), and I will be happy to send to you. Just drop me an email.
Can you make a profit?
After talking to a few property managers you will have a very good idea of what properties rent best. The next step is to determine whether you can make money with these properties. Look on Zillow (or similar sites) for recent sales of such properties. Once you know the sale price of such properties and know what they will rent for (from talking to property managers) you can use a tool I created to determine if you can make money. (Break-Even Calculator - see here for more information.) If you cannot make an acceptable level of profit, buy somewhere else.
Time to look at properties
If you determine that you can make an acceptable profit, it is time to find a Realtor. Ask each property manager for a recommendation. Since you will know what and where you want to buy you can be very specific in directions to your Realtor. Tell the Realtor up front that you will not buy the first property you see but that if they work hard with you, you will buy through them. If they do not fulfill that commitment, get another Realtor.
Once you see a property that matches your requirements, make a video walk through and send it to your property manager and anyone else that makes sense (handyman, landscaper, etc.). Remember that the last thing a property manager wants is (another) unrentable property so if they tell you no, listen to them. Like you, they only make money if the property rents. I look for investment properties every day and I never recommend a property to a client unless the property manager approves.
A frequent question I get from new clients is, "How much should I offer?"
â¢ Offers must be based on ROI, not on the listed asking price. I do this in my practice and end up making multiple offers to get one property. However, when we do get an offer accepted, my clients make a solid return.
• Buy a property not just for renting but also for your next buyer. Sooner or later you will want to sell the property (maybe for a 1031?) and if it is an unusual configuration you will not get the best price or have an easy time selling it. Remember, if potential property owners do not like the floor plan, potential renters won't either. This is where a Realtor's experience really pays off. While the property manager knows what will rent, the Realtor knows why since they deal with clients feedback every day. Also, I would expect a Realtor to know what the market trends are and what is happening with the major employers.
• Be certain to consider rehab costs in your total acquisition costs. More about this later.
Your offer was accepted. Now what?
During the due-diligence period you need to get two people into the property ASAP: the property inspector and the property manager. The property inspector will generate a report containing a list of defects and you will want to have most of them repaired immediately after close. The property manager will provide a list containing cosmetic issues that need to be corrected. In general, I do everything the property manager recommends and most of what the property inspector recommends. Potential tenants select properties based on cosmetic reasons; they assume that the A/C, plumbing and such work. Once you (intelligently) combine the lists you need to have a contractor (or handyman you trust) provide a written estimate of the total cost to make the property market ready. Once you know this amount, re-run your profitability calculations and if the profit is still at an acceptable level, continue to close. If not, terminate the purchase.
Marshall, I believe that if you follow the above process you will not go too far wrong.
Feel free to ask questions or ask for clarifications if any of the above does not make sense.
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