New investore (newbie) in Austin, TX
Austin, TX · Member since 2013 · 9 posts · 3 votes
Hello real estate gurus and newbies!
My name is Anthony Brown and I am ready to take the jump into the great world of real estate. I would categorize myself right now as an aspiring buy and hold investor with goals of producing a steady stream of income. To achieve this goal I would like to purchase several multi family units (while also picking up a couple SFH along the way). The Austin market is pretty crazy right now so I'm looking at other Texas markets for potential investments.
I would like to thank everyone on BP for the wealth of knowledge I have received!
@Anthony Brown if you wish to consider starting out, with buying a Duplex, TriPlex, or a Four Plex. Many Realtors will suggest purchasing a property using a FHA Loan, to reduce your out of pocket money. If the property requires rehab, the Realtor and/ or Mortgage Broker will suggest applying, for a 203k Loan. A 203k Loan is where the purchase price and rehab costs are rolled into a single loan.
Assuming you have a respectable FICO you can buy, with a FHA Loan (3-5% down, a 30 year amortization schedule, and a residential loan rate). You live in one unit and let your tenants pay the mortgage and other property expenses. This will give you experience as both a Landlord and Property Manager. The downside is you will need to live there, for a minimum of one year (to satisfy FHA Requirements); AND because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC. What happens if one of your tenants has a slip and fall, on your property, or something else happens to them? You are on the hook and can be personally sued, for everything you own. Some people will say, "Take out a quality Insurance Policy and you will be protected." Ambulance chasing attorneys know their way around and can legally navigate around Insurance Policies. Another downside is you loose on the advantages, of the Federal Tax Code, by not closing in the name of a LLC.
If you want to close in the name of a LLC, Mortgage Lenders will offer you Commercial Loan Terms (25-30% down, a 15-25 year amortization, and a ballon due in 5-7 years). This is what I am encountering, in the current Mortgage Industry.
If you think you will go FHA, 203k, etc. and then Quit Claim the property, to a LLC, or a Land Trust you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days. These clauses are contained, in all Promissory Notes nowadays.
Many Realtors and/ or Mortgage Brokers will not tell you this information. Many, but not ALL are only focused on the commissions he/ she will earn and not focused, on your best interests. You many be asking yourself what can I do? Locate a Motivated Seller that will consider Seller Financing. You may have to put more money down (10-15%), but you can close, in a LLC, with no worries about banks. I have a lengthy Legal Opinion, from my seasoned Legal Team regarding this matter.
Welcome to BP! San Antonio is pretty hot right now too, but jusldicious buying will still work here. Austin is much tougher.
@Anthony Brown if you wish to consider starting out, with buying a Duplex, TriPlex, or a Four Plex. Many Realtors will suggest purchasing a property using a FHA Loan, to reduce your out of pocket money. If the property requires rehab, the Realtor and/ or Mortgage Broker will suggest applying, for a 203k Loan. A 203k Loan is where the purchase price and rehab costs are rolled into a single loan.
Assuming you have a respectable FICO you can buy, with a FHA Loan (3-5% down, a 30 year amortization schedule, and a residential loan rate). You live in one unit and let your tenants pay the mortgage and other property expenses. This will give you experience as both a Landlord and Property Manager. The downside is you will need to live there, for a minimum of one year (to satisfy FHA Requirements); AND because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC. What happens if one of your tenants has a slip and fall, on your property, or something else happens to them? You are on the hook and can be personally sued, for everything you own. Some people will say, "Take out a quality Insurance Policy and you will be protected." Ambulance chasing attorneys know their way around and can legally navigate around Insurance Policies. Another downside is you loose on the advantages, of the Federal Tax Code, by not closing in the name of a LLC.
If you want to close in the name of a LLC, Mortgage Lenders will offer you Commercial Loan Terms (25-30% down, a 15-25 year amortization, and a ballon due in 5-7 years). This is what I am encountering, in the current Mortgage Industry.
If you think you will go FHA, 203k, etc. and then Quit Claim the property, to a LLC, or a Land Trust you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days. These clauses are contained, in all Promissory Notes nowadays.
Many Realtors and/ or Mortgage Brokers will not tell you this information. Many, but not ALL are only focused on the commissions he/ she will earn and not focused, on your best interests. You many be asking yourself what can I do? Locate a Motivated Seller that will consider Seller Financing. You may have to put more money down (10-15%), but you can close, in a LLC, with no worries about banks. I have a lengthy Legal Opinion, from my seasoned Legal Team regarding this matter.
Hello and welcome to BP! Everywhere is probably the same. There is a low inventory on most properties. I was born and raised by in Dallas Texas And I have been keeping up with current stuff. I am 59 years old and I found BP about 6 months ago and I am still trying to decide what to do. The low inventory is making cash buyers more competive with financed people. Why? Because they can typically close faster. One thing you need to do is to tell the seller/owner why you are lower than what they asked for and make sure they understand. Be patient and consistent with your offers. Always do the numbers and make sure they are real. I graduated from college with a business degree that emphasized real estate. That same year, in 1980, I got a broker license. Regardless of what I had I felt more comfortable in the construction business. I have been in the construction business since I was 17. My dad has been in real estate for about 30 years and I have learned a little bit from him. If you think I can help you please contact me through BP at any time. Good luck!
The Texas market as a whole is pretty hot I see.
thanks for all the info guys.
Hello and welcome to BP! I have several friends that have moved down there to Austin. I was bor and raised in Dallas Texas. Austin is a great place to be but I am staying in northwest Dallas County. I have been here for 31 years and I love it. I am 59 years old and I found BP about 6 months ago and I am deciding what to do. Ci have been in the construction business since I was 17. I do have a business degree from college and it emphasized real estate. That same year, in 1980, I got a broker license. Just remember that the inventory is kind of low. So just be patient and consistent with your offers. Cash buyers are getting deals usually with all being equal but they are winning because they can close quicker. Just know your market well and choose right locations. Those are really important things for you to focus in on. My dad has been in real estate for about 30 years and I have learned a little bit from him. If you think I can help you please call me through BP and I will give you my advice. Good luck!
A-Town and S.A. are supposed to be the two biggest in TX right now... I'd say to stay focused there and build up a solid network that I can eventually plug into once I'm ready to branch out that way. hahaha!
Hello! I am sorry it has taken me to get back to you but I just found this option. Contact me any time to ask me about construction or real estate and I will do my best. Best wish!