All Forum Posts by: Beau Fannon

I had a great conversation with a gentleman this morning and I'd like to relay his story to see what y'all would suggest he do.

Bought a 3 bed 2 bath 1500 square foot Ranch with good proximity to downtown 6 years ago for $200,000. Current amount owed on the mortgage is about $170,000. Total monthly carrying cost for the property is about $1,700.

The gentleman would like to move his young daughter to a better school in a year or two. The neighborhoods he has in mind cost about about $450,000 to $500,000. He doesn't have a down payment saved. He would love to keep the current house as a rental.

At the peak this summer, his current neighborhood was selling homes at $375,000 to $450,000. Rents were $1600-$1850.

How would you game play this to achieve his goals? Can he get his daughter to the good schools in 1-2 years and keep the current house as a rental without substantially increasing his monthly expenditures?

Matt, I like that equation. The biggest variable I see people screw up is estimating the OE. People just aren't good at counting all of the associated costs. Then they get into the deal 2-6 months and start shoving issues off on the tenants or their contractors. People want to own the asset, but they don't want to own the responsibility.

I'm curious -- what steps are you taking to achieve that 18% ROI?

Mini accountant rant...

If the difference between acceptable NOI and unacceptable NOI is the cost of lawn care, the investor isn't an investor. They are an over-leveraged consumer who has no business risking their family's liquidity so they can call themselves an investor!

I should add that a couple of the vendors I've worked with lately have either mentioned or complained that they are driving further than they used to. Bastrop to Marble Falls. Georgetown to Kyle. 

For major residential construction projects like roofing, drywall, plumbing, and electric, it's still taking 7-14 days just to get someone out to start the estimate. I don't have any recent involvement with cement or framing.

For small home repairs like changing water heaters, changing AC units, repairing foundations, etc, it can be done within a few days now.

In light of the boil water order here in Austin, here is a public service announcement. 

Change any water filters you have in your home after the boil order is lifted. Advise any tenants you have to change their water filters after the boil order is lifted. Let's be good stewards and keep everyone healthy. 

https://www.kxan.com/news/local/austin/austin-wate...

 I wish my millennial brother and brother-in-law would get out of their renters mindsets.  I hate to say buy it really is a true stereotype for many people my age.  FYI, I'm the oldest millennial.

Who saw the latest declining rent rankings?

https://zillow.mediaroom.com/2018-10-18-Rents-Decl...

Austin is listed as down 1.6% y-o-y. What have y'all seen? I will tell you that I've seen SFH in good school districts stagnant for a year. The apartment complex I watch as an index for college housing is down far more than 1.6% right now. They've dropped their units a $100 lower than this time last year.

Is anyone else feeling the pinch on rents?

@Renee Burke You should also consider the timing of your lease offering.  Posting the open unit for lease in July will get it leased in a handful of days.  Offering it for lease in the winter will take 2-3 months.  Be prepared to eat an extra $4500-$6000 while you find a great tenant.

Love it!