Contractor · Rego Park, NY · Member since 2015 · 53 posts · 20 votes
My wife (business partner) and I are headed to DFW Texas to look at SFR's tomorrow.We are New Yorkers looking for an ideal buy and hold property. Very nervous!! Just wanted to know of any mistakes you guys might have made when shopping around for your first investment property. Any help would be greatly appreciated!
@Antonio Marte I had several mentors early on in my investing carrier who told me one the biggest mistake I could do as a newbie is invest too far from where i live. They said before i should consider properties out of state of even out of the county, I should build a small portfolio of properties not more than 30 minutes from my house so i can learn the basics. I still find this advise sound 15 years later.
How ever If you must invest out of state, i would say:
1, Do some basic homework in advance before you go. Check us census data for stable population growth for each zip code you are considering, i like to see at least 1% population gain both historic and forecast AND very important to check for crime infestation in the area, so you can to to here for that: https://www.crimereports.com/
2, don't trust your realtor's input on investing, rather maybe ask a round thee RE Investor clubs in DFW area to locate a reputable investor and pay them a reasonable consulting fee to give you a second opinion about area or even a particular property. (make sure they are not involved in the transaction in any way.)
Good Luck to You both and I hope it does work out!
My area is absolutely nuts, depending on where you are looking expect to pay well over asking if you even want to have a shot at getting the property. As for the foundations, here is a picture of a foundation in the process of a 13" lift.
so after raising you would just fix and extend the existing foundation? thank you i will make sure to have foundations checked.
@Antonio Marte one mistake that just came to mind for me was not hiring a CPA till last year. I've been doing my and family taxes for 20 years, but I truly underestimated the value of an accountant with deep knowledge of RE investing. He's not only helped with taxes, but he's also taught us a lot on entity and structuring deals.
hey Sergio thank you, i spoke to my accountant and he assured me he could be of help however something that concerns me is he might not know what a cpa in texas might know (he works in ny). I honestly remember looking in Philadelphia but the nicer parts of town were a little pricey, i went to a few open houses in allentown.
@Dmitri L. - any foundation company in the area should offer free foundation inspections. Basically they come out, walk outside and inside, and measure the levels inside the house. If you need piers, they will tell you how many and give an estimate. If it is a reputable company, they will not try to sell more piers than you need and will let you know if no work is needed.
Usually we try to get our foundation company out when we go under contract and have an inspection period. We work with a couple, so if one can't make it on short notice, we have back ups. It is a good way to get a handle on a major component of rehab that I have found I sometimes mis-estimate (over and under). These guys have saved me from a few bad deals in the past at no cost.
Some foundation guys require you to also get an engineering report prior to starting work, some don't; you might want to get one anyhow, as we have heard of some considerable differences in scope of work between foundation co and engineer.
Our inspection team does shoot the foundation levels as well, as part of their regular inspection - but they do not create the pier diagram, which is what I usually want to see.
Thanks Andy, that is very helpful! I'll keep it in mind for the future. Certainly better to get a free inspection first.
You mentioned that you've seen the foundation co estimate and the engineer's report be significantly different in the past - how much was it off by? As in, 20-30%, or by multiples? Was it any specific issue that the foundation co missed that we can look out for proactively?
@Lynn Weber My exact thoughts... "Basements? What are those? They don't exist in Texas lol. Seriously though, I think I've been in one house in my entire life that had a basement. RARE
I admire your courage to invest so far from home. As others have pointed out, make sure you hire the BEST property manager since you obviously need to outsource that. If you think about the business of buy and holds, it is about 95% property management. And the profitability and performance is a direct result of the quality of your property management.
Keep us posted on your journey, I'm curious to see how your trip pans out!
@Dmitri L. - I have not run into the foundation co/engineer difference personally; just heard of situations talking to other investors. I think it is more likely to come up if you hire your own engineer and don't use the foundation co's engineer.
On small jobs of 5-10 piers - probably not an issue. If you are getting up above 20, you are likely to see more variance. At this point you should be getting multiple foundation company bids too. We have seen as much as $1k difference in bids for a 20+ pier job.
@Antonio Marte - definitely spend your time here in DFW building a good team; as others have said a good property manager will be critical in your situation. But it is nothing insurmountable! - I have an investor friend that did what you are doing. Bought a number of properties from NY until he had a large enough portfolio to retire on. Then moved to TX and kept building his empire (still is).
I hope that you enjoy the thrill of the hunt! I find it exhilarating - and I hope you do too, and that you find what you are looking for. Take your time and stick to your numbers. :)
Not sure if you have heard but oil has fallen precipitously in the last six months. Texas real estate has been devastated in the past by a similar drop. I'm not certain it will be the same this time but why gamble when there are other markets which haven't had such a big run up nor have had one of their main job producing industries take a major hit?
@Cal C. - I think this may be a greater risk for Houston, which is more focused on oil and where I understand rent growth has slowed already. DFW is better diversified and I do not expect any big hits - at least not from oil.
I will also be visiting DFW for 8 days. April 1-8. Looking at primary residences mainly but will also be looking at areas to invest in. I should be moving sometime early next year. My wife is planning to attend Texas A/M Law so we will most likely buy in Fort Worth or Arlington. We are leaning towards Arlington since it's "in the middle"
Not sure if you have heard but oil has fallen precipitously in the last six months. Texas real estate has been devastated in the past by a similar drop. I'm not certain it will be the same this time but why gamble when there are other markets which haven't had such a big run up nor have had one of their main job producing industries take a major hit?
I would take this as a true investor's wake up call for action. Wait a few months for the Houston market to cool off, inventory to build back up beyond a 4 month's supply, and then start picking off the ones that fit a 20% discount (or more) and meet my criteria.
That is, if I were interested in Houston. Since DFW is exposed to the energy markets in a very small way, this makes me a bit more nervous. Those that have moved to Houston in the past several years and never realized this fact might get the idea to pack up and move up the road a few hundred miles, because of the non-effect that the energy industry has on the DFW metroplex.
The DFW market has less than a 2 month inventory. Extremely bad for investors as too much outside money coming in and making the prices stupid crazy. We need a good 4-6 months inventory just to make sense in acquiring rentals.
Congrats! Just bought my first house last month (about 5 minutes away from DFW airport). Im curious about what specific areas you have in mind?
congratulations,where did you end up buying if you dont mind me asking? We just looked at a few properties in saginaw, watauga and bedford. Really liked a few move in ready properties we saw in saginaw, going to try and run the numbers tonite. Do you use a property management by any chance?
I will also be visiting DFW for 8 days. April 1-8. Looking at primary residences mainly but will also be looking at areas to invest in. I should be moving sometime early next year. My wife is planning to attend Texas A/M Law so we will most likely buy in Fort Worth or Arlington. We are leaning towards Arlington since it's "in the middle"
Good luck shawn, alot of good deals out here, makes it hard for me to remember im looking for a investment property and not a primary residence.
Take a deep breath... wooo... saaa.... and dive in. I have a feeling a year from now you will look back and laugh at how nervous you were. Good Luck! and congrats on diving in and taking action!