All Forum Posts by: Andrew Herrig

@Ashley Wolfe In general I would not recommend spending money to convert the garage into living space. The size of your house (3/2 and 1350 sf) is perfect for a rental.

From what I have seen in Dallas, you are not really adding value by converting the garage. All else being equal, in my experience a 1500sf house with a garage would sell for about the same as a 1900sf with a converted garage.

If houses with converted garages are renting for substantially more and you plan to hold it forever, I would maybe consider it. If not, adding more living square footage and additional plumbing that you will have to pay to maintain is not worth it.

To answer your questions:

1) I don't think so. Biggest issue here is the permitting process.

2) Maybe, but if so you can't take it all at once, it would have to be depreciated over time.

3) Rough estimate would be $10-15k to finish out 400sf and add plumbing.

I am in Dallas, and would in general recommend the Texas market. However, as @Jay Hinrichs mentioned, as the market has heated up, so have tax appraisal values. I am paying 20-25% of gross rents just to cover the tax bill.

@Brendin Wood You are going to have a tough time finding a private lender for your first deal unless you have a relationship with them already. Without a track record of successful projects, a hard money loan is probably your best option. Yes it is expensive, but they fill a specific niche in the market.

Hard money will lend around 70% of ARV minus repairs, 2-4 points, 12-16% interest.

I don't know as much about Arlington. It is a pretty good area for investors as far as rent/price ratios go. You still aren't going to find a lot of 2-4 units, but cash flow would generally be better than Dallas proper.

@Peter Kush In my experience you're not going to find a lot of fourplexes in desirable areas in Dallas either. If you're looking to house hack, I'd probably look at duplexes where you could live in one side and rent out the other. You'll have better luck finding good neighborhoods to live.

There are some fourplexes in Old East Dallas, but they are not going to cash flow very well. As far as areas to avoid, generally you want to stay away from anything south of I-30, except for the Bishop Arts/Oak Cliff area southwest of downtown.

I am in the process of protesting the taxes on 5 of my 6 properties in Dallas County. I will try to remember to post how it went. One of my properties' valuation went up 40k in 2015 and another 40k in 2016. Crazy. I am seriously considering selling it, but it's tough to find good deals in this market to put that cash back to work.

Like others have said, if you purchased within the last year or so using a realtor, they should take the price from the HUD as the value. Otherwise, try to find out if your property is valued higher than other similar houses, or try to justify a lower valuation based on repairs or updates needed.

@Ryan H I don't have much to add that hasn't been said. Agree with starting the eviction process, and if they decide to pay they'll pay. Hopefully they are serious about leaving town at the end of May. 

Title company should have done a better job communicating closing timeline. I've run into a few of these where probate dragged on for months and months then all of a sudden it was approved and everyone was racing to close. 

Good luck - 90% of the time I love having rentals. Then the other 10% is nonsense like this...

I have 6 rental units. I use cozy.co for all but 1 (that tenant doesn't have a computer). No transaction fee for ACH transfer. Only downside is it takes 5-7 days to clear. They just introduced a feature to get payments deposited faster for a nominal monthly fee.

The typical advice thrown around BP is you need to buy for 70% of ARV minus repairs. That will not work in Dallas right now. North Dallas flips are in high demand (especially around the $300-500k ARV range). The going rate is 82% of ARV minus repairs or even higher. So if you find a house with an ARV of $400k that needs $50k in repairs, expect to pay around $280k for it.

Those are pretty thin margins, but you can still turn a healthy profit if you know what you are doing, and you probably want to avoid hard money financing as that will eat up your profits pretty quickly.

@Jason Clifford Depending on your existing real estate investing knowledge, I would consider investing your money with an existing hard money lender, or pooling your money with other investors on larger commercial deals. Before jumping into being a pure private lender, you need to understand the risks of individual deals and be able to validate the numbers that are presented to you.

There are a ton of investors in DFW that would gladly take your money, just do your due diligence and find the trustworthy ones who have been in the business awhile and aren't going anywhere.