All Forum Posts by: Cassi Justiz

Something important to know would be the purchase price. Many investors look for 8-12% returns on the cash invested. If you are buying in cash those may be less than if you plan to buy with financed terms. 

Many people say that it's not wise to mix business with family, but only you know the dynamics. If you think that your parents will take care of the home and pay rent reliably, it could be a great "easy" first property. If you have ANY doubts, I'd probably pass on this for a property that doesn't have family ties. 

Hey @Aaron M. VanVoorhies, 

Everyone has a different idea of reserves. It will strongly depend on the age/condition of the house that you end up purchasing. For me personally, I want to have AT LEAST my insurance deductible in reserves at all times. Ideally, I'd like to have enough to cover an insurance claim and a few thousand extra for turn-over, cap-ex or extended vacancy. As you scale, you'll need less per door but I think that's a good rule of thumb. For me personally, I have no intention of paying myself until I reach the monthly cashflow goals for me to fully live off of rental income. Until that point, I plan to reinvest 100% of profits back into the business. 

Hopefully that's helpful!

Is the son in law planning to live with her long term? If so then you can count his income. If not, then I wouldn't consider his income. 

I don't count future alimony as income. At any point if the ex-husband decides to not pay alimony or ends up without a job then she wouldn't be able to pay rent until that gets resolved. 

With the eviction moratoriums going on, I'd hold out for a more stable tenant that can comfortably meet your income/credit requirements. 

They are not "tenant proof" at all. They require regular maintenance and sealing plus they can be sensitive to moisture and heat. I'd stick with a solid surface like cheap granite or go with a neutral laminate depending on your price point and market comps.  

Hey @Wesley Mullen, 

I would recommend you have a property manager on board before you get something under contract. They can help double check your rental numbers and be a second/third opinion on the properties that you do get under contract. I would personally recommend getting a first choice property manager and having a back up one as well. One thing to keep in mind is that many of the PMs that focus on OKC do not manage in Norman and likewise. Many of the Norman managers do not go further North than Moore. There are a handful that truly cover the entire metro area, but not many.  

I'll shoot you a PM with the contact info for some of the property managers that I work closely with. 

I'd start with the county courthouse and see if they have any records. Most of the time they'll at least have a copy of any docs if they were filed. 

1. Refi your mortgage to a lower interest rate to make the number's work. 

2. Sell the house and take the equity and buy something that does cashflow. 

3. Utilize a creative rental strategy that allows you to rent for a higher rate (Airbnb, rent by the room, furnished rental, etc).

 I personally wouldn't want a cashflow negative property. But there are some people that are are okay with negative cashflow. 

Also, it's worth noting that solar panels that have a payment attached to them will generally not bring much value to the home. If you are close to being able to pay them off, it may be worth it but I'd consult an appraiser or agent that is familiar with your area before doing so.  Buyers will generally need to qualify to take over the payment in addition to the mortgage payment. 

Hey @Ryan Dignan, 

Welcome to BP!

I'll try to shed some insight onto your questions. I think as with most things, time IN the market is better than trying to time the market. Figure out your goals and stick with them. Would I try to flip a multimillion dollar house in California with a 12 month rehab plan that banks on the insane recent appreciation and unprecedented seller's market? Probably not. But a conservative BRRRR project done right means that if the house's value dropped 20-30% overnight (which is highly unlikely in most markets), you'd still be all in at market value instead of 20-30% under market value.

As far as OKC goes, it's a great market for buy and hold with slow and steady appreciation. It's not fantastic for BRRR deals unless you are able to do your own marketing. The market has become a lot more competitive recently with a super limited supply of homes coming up for sale. A lot of the off-market deals being sent out by wholesalers are selling for at least 85-90% of retail value once you factor the rehab budget. The investors that are doing their own marketing are having much better success rates with getting properties at a discount vs investors trying to buy from wholesalers or off the MLS.

I

@Vijay Nidumolu, 

There are some areas of Lubbock with higher crime, but no worse than any of the other cities you are looking in. As mentioned above, the types of homes that you are focusing on are typically in areas that are not known for crime. I am from Lubbock and still own property there. I really like South/SW Lubbock and the Wolfforth area but there are lots of nice pockets. My former primary residence in Lubbock is my best cash-flowing and lowest maintenance rental to this day. I wish I would've known (and had the means) to buy about 10 houses like that one back in 2012. :) 

I am pretty much only buying in the OKC area now because I live here and am licensed here, but I definitely keep Lubbock on the radar. 

From what I can tell it looks like you'd be cashflow positive a few hundred dollars per month after expenses. I'd still plan to build up reserves for the inevitable make-ready or future cap-ex expense, but it looks like a solid investment property. I'd plan to keep it for at least 2 years and see how it does as a rental. If you are pretty confident that it will rent for $1800/month, it looks like a solid deal.  

Here are a few other thing to consider that made me decide to keep my primary as a rental. 

-You already live here and have spent the money, so I wouldn't put as much emphasis on your purchase cap rate. I'd lean more heavily into the actual cash flow amount moving forward. 

-Could you take your post sale net earnings and put it into another investment that would cashflow more? 

-Do you think the area will continue to grow/be desirable or do you see a down turn? 

If you feel like it's a solid area that will continue to hold value and you don't need the money from the sale, I'd stay the course. You can always sell after 2 years of renting if you change your mind.