All Forum Posts by: Aaron Gordy

@Travis Smith

Sounds good. Cheers!

@Tony Karns

Wait a second. The way I read the thread is that the rents were total of around $2k a month and the price that you will be, hopefully, getting the seller to accept was $400k. On the surface that sounds like a bad idea. Then I read that you were going to move into one side of it. That changes things considerably. I can assume that both units of the duplexes are mirror images and that you could get total rents of $4k if you were to rent both out and its renovated. If that is the case then the $400k duplex doesn't seem so bad after all. Given that you are going to be living on one side and renting out the other side then your housing cost of living is $800. So, in my mind you are getting a $2k unit for $800 a month and that is a bargain! If the rents keep rising in Dallas like they are in Austin, then it shouldn't be long before your monthly living expense is ridiculously low in presumably a primo area. $2k in Austin gets you a nicer area and I am assuming that is about the same in Dallas.

What are the renovation costs? If I have to put in granite at an expense of $5k and I can have an increased rents by $700 then where do I sign up for that deal! 

@Joseph Rios

Leverage and do what you do best. Hire a property manager to deal with your real estate endeavors or the opportunity cost for dealing with it is greater than your earnings. Folks forget all the time, including me the basics of Adam Smith... Leverage. 

Real Estate is very good. Don't give up on it. Think of it in terms of passive income and a nice rate of return within the context of alternative investments such as stocks, bonds, cd's. 

Good luck. 

Bachelors Government and Economics Lamar University. Masters in Library and Information Science. Boatload of real estate classes in becoming a Broker and maintaining Broker. The best education though is street experience and learning to be a bs detector. One has to read between the lines when chatting with contractors, tenants, agents, etc. I love it! Study real estate and play chess/cards/bridge to understand angles is good too! 

@Bhaskar Upadhyayula Cash is king. If I have a prospective tenant that has low credit, I do not automatically decline them. I understand that having bad credit is from not paying bills on time and running up huge debts. I do know that they do not teach credit building skills in high school education. There are many folks that I have come across that have excellent rental history but lousy credit scores. So, in such a scenario, I will be very diligent with tenant rental history. If you charge a huge deposit to alleviate or negate the risk then that tenant will be more likely to not only pay the rent but also keep the place clean. Its important to hire a good property manager to read through the bs on applications and credit reports and tenant history though. 

But if you are getting alot of applicants then politely decline the person with bad credit history. 

A vacancy is much better than dealing with lousy tenants.  

@Travis Smith

The city is pushing for ADU construction and are being flexible on many related issues. I converted a detached garage into an ADU last year. While it was complicated at times, we were able to achieve our objective. It was 900 sq ft. The costs were about $60k to convert it. Keep in mind that I was the GC and I am able to keep my costs down given many years in the real estate industry as a broker, property manager and remodeler/flipper when the opportunity presents itself. I also have friends in permit department that made it easier to get questions answered as well. The analysis the value of creating an adu or even a duplex should be dependent upon the area. I am not sure of the are in the city that you are referring to.

My two cents are if you go through the trouble of building an adu/duplex then you might as well keep it. Sure the taxes will go up but that is just reflective of the overall price increase in the structure. The rent will also go up accordingly as well since will have two rental properties as compared to one rental unit. Keep your winners and sell your losers.

Pm me and we can chat further. Or if you would like to meet for coffee then I am always interested in such projects!

Good morning, Molly

Go see my pals at Triple A Stoneworks. They do the granite for Wes People homes, just to give you an idea of their capabilities. And they are reasonable. Its a family affair. Andrea or Jason. http://aaastoneworks.com/. 

@Evan Bell Really! Its an interesting remodel of a duplex but I think they are nuts for asking $825k for a duplex. It remains to be seen if there will be fools out there that will buy it. It wouldn't cash flow in probably like 10 years in my estimation

@Stephen Stokes Its hard to find good 2-4 unit cash flowing properties. Its simply because Austin is on the national radar and so there is significant demand for smaller rental properties. Given the high demand agents/brokers including myself will price a 2-4 unit property very high just to see if there will be any takers. And there are takers. For the folks that are long term holders the higher price (within reason, of course) isn't as big of a deal as the underlying fundamentals are very strong. For the folks that are buying only on a cash flow basis (using conventional financing) in 78704 especially, those deals are slim. In those areas, its best to figure out how to force appreciation through remodeling or changing the unit types or adding rental space. And if you choose the latter situation then you are running into a city of austin permit process which coincidentally is a nightmarish process at times. Currently on the market is a duplex on lightsey for $825k....come on now. That is outrageous pricing! In Austin, one has to be patient and be ready to pounce when good deals come on the market. 

@Jason Mak If all things are equal, which they rarely are, then location wins out every time for me. Location location location is gold. Its easier to rent. You may not be able to have huge rent increases in downturns but you will be able to rent it, though. If the economy is going strong then you can get premium rents. Yields are reflective of the pricing of an area, generally. In less desirable areas you will face more headwinds leasing the property. Only when the economy is going strong can you attempt to get premium rents because folks do not have as many choices. My two cents.