All Forum Posts by: Corin Prendiville

The market has definitely gotten to the point where you will have a hard time getting a cash-flowing property with 20% down in an area with good school district and commute in North Dallas.

My recommendation is one of the following:

1 ) Broaden your search to include areas that may not have as good of school districts, focus on communities that are seeing an influx from out of staters or upward growth in population due to displacement and have higher or increasing home-ownership rates.
2 ) Consider increasing your cash investment to reach a positive cashflow if that is mandatory for your investment.
3 ) Consider investing in a REIT or REMT instead of a property, or reconsider investing that money in stocks as this isn't a bad time to be buying stocks.
4 ) Consider partnering with another investor who wants the same kind of deal as you and can pool finances to get the return & cashflow you desire. Make sure you consult a lawyer if you decide to go this route.

DFW has become a much more desirable and expensive area since covid and getting cashflow on a turnkey property is not easy in this market. If none of the options above work you could also consider scouting for a better location for your investing needs. 

As many others have said I would focus on learning everything you can in the next few years while you get your life in a position where buying is a good option.

Rent-hacking is another option that can help you learn the ropes of being a landlord and getting comfortable with renting out rooms to others while you rent yourself. If you can rent a 2 bedroom and rent out the 2nd room to someone for half or more of the rent you can cut your living costs down. 

You could also look into airbnb arbitrage, personally I think it is a bit saturated right now but it is probably easier to get into than purchasing a house in your situation. 

It sounds like you are pretty busy with getting your career setup and that is okay. Focus on learning when you can about how to invest, how to grow your networth, what a good house-hack buy is, etc. In the meantime get good at budgeting and living below your means, focus on yourself and be ready to tackle the real estate game when the time is right. If you can afford to put any money away then do that.

At your age the most important thing is building the skills so you have a reliable and substantial income that gives you options for investing. Real estate is primarily a game of investing, there are careers in real estate but until you have cash in the bank it is hard to make serious plays in the world of real estate investing, and most of the short-cuts are trading money for time which you may not have a lot of right now if you have a career path lined up. 

There are Facebook groups for DFW investors and things like that. If you found a real deal and posted it there you'd have more buyers than you could ever do anything with. The hard part is finding deals. 

If you go this route just make sure you know how to determine what a deal is, when you find a deal and market it even for the briefest of time you will get more piranhas than you know what to do with. :) 

Before you go doing any of that, have you considered finding a job that pays better than $25k a year? Everything you just mentioned is a ton of work, and if you've got the work ethic to do that you could easily find something where you could make $40k-$60k+ by just shopping around for a better job and moving up in something.

I'd even consider finding a Property Management firm to go work for and get some real world experience in this industry. Or you could even look at getting your mortgage brokers license, becoming an insurance agent, contractor, etc and learning about the industry at the same time. There are so many different ways to make a good living without going down the path of trying to find people to seller finance or doing subleasing, both investment strategies that are full of snakes and usually involve one party taking advantage of another if I am going to be completely honest. 

Someone else who gets involved in subleasing could probably answer better on that but many cases I have seen of it involve someone doing it behind the landlords back, and seller financing will often be the result of the seller getting the buyer to pay significantly more than a property is worth (especially in this hot of a sellers market, every instance I have seen of a seller soliciting seller financing was with a property that was $100k overpriced), unless you find a property owner who just takes kindly to you and doesn't mind giving you a start with it I would definitely recommend getting a third party BPO or Appraisal before you sign any agreement with a seller on seller financing. 

I'm not saying these aren't workable strategies and I know of people who have made a killing doing subleasing especially in places like New York city, but even among those many of them are doing it without disclosure and exposing themselves to a lot of legal liability in the process, and the work required to set these systems up is as difficult if not more difficult than building a fully above board business. 

For the contract stuff you should talk to a lawyer about that and someone already utilizing the strategies you are discussing, know the risks of the strategy you want to implement before moving forward and maybe try to shadow someone already doing them.

Again my initial recommendation is that you put your work ethic and drive toward something with a more predictable payout, stop wasting hours working for Walmart, bring your earnings up and continue learning about this industry and then make a move for something bigger once you have a nest egg built up and have taken the time to develop enough skills to make it in whatever you decide to pursue.

Hi Russell,

It is a lot to parse through. If I was you I would research a few different neighborhoods that you like and then compare the rents, purchase price + anticipated renovation cost. Turnkey investments close to city centers won't really cashflow in this market and even getting a BRRRR deal today that is worth the sweat equity is a struggle, the further out from the major cities you go the more reasonable things get and the less competition there is.

You need to compare your expected return with what you can handle as a landlord and investor, some people only invest in B or higher neighborhoods, others are perfectly happy buying in D neighborhoods all day long. The higher class property you get into you are more seeing equity paydown and appreciation as your long-term ROI, but if you put enough cash down anything cashflows of course. I would avoid anything that doesn't look like a rental myself if you are interested in making money while you hold the property, that means 2/2, 3/2 or 4/2 in decent neighborhoods with ideally no HOA and lower than average taxes. Once you start getting into new builds with HOAs and $8,000 tax bills it becomes a lot harder to make any money off anything but appreciation, and you will get killed on make-ready and CapEx with such a large property. If you are flipping its another story, anything can work and higher priced homes often have better upside.

I got started buying a property that needed some TLC and fixing it myself, forced appreciation on it by 30k in the process and then rented it out when I moved. The easiest way to get a portfolio going is to buy a personal property, live in it a year, spruce it up and then rent it out and move on to the next house with another personal home loan. Even an easier fixer upper like flooring, paint, some kitchen reno is not a bad buy sometimes. Going for the hard work isn't always the most money in your pocket at the end of the day. 

As for hard money its a longer conversation I could give you some details about how it works but every lender has slightly different criteria, loan amounts, etc. Your best bet is to talk to a few hard money lenders who could share with you how they do business, what your payback schedule would look like (often nothing until due or interest only), when the loan is due, and how much they would loan on a sample property. The rule for most hard money lenders is they loan on the property not the individual, they will usually have a BPO done on the place you are financing to determine its value, you will want a bit of your own money to play with if you go the hard money route. The harder part right now isn't getting financing for the deal, its finding a good deal.

Since most people are on the side of the new normal and continuously low inventory forever and always going forward I'll play the bear case just so you know the other side of the coin.

From a bear perspective the risks in the market are in the US dollar losing value due to rising inflation and foreign investments turning away from our market. At the same time that this is beginning to happen we also have supply-side constraints that we haven't seen in a century and all it will take is the smallest of negative events to blow the powder keg off this bubble. People who are weary right now are seeing what is happening in the Chinese real estate market and feel like that will be what lights the fuse on the next recession (combined with the oil, gas and coal shortages affecting most of the world right now). Stock valuations are highly inflated right now, especially growth stocks/tech stocks which will tumble fast and hard when we enter an era of stagflation. Take Rivian as an example which is currently valued at 147 billion dollars, keep in mind this company has sold less than 200 vehicles which were all prototypes, that means a supposed tech car company that does not have a proven model (yes its backed by large mega-corps, but keep in mind GM almost bought Nikola recently before it was uncovered to be a complete scam), is somehow valued at more than 2x the likes of Ford Motor Company and GM. Tesla is also highly overvalued currently (even a year ago Elon Musk himself stated it was over-valued back when it was valued at only $400 a share), although it is at least a real company it will see its stocks likely halved or quartered when we enter a recession. This just one example you can find many many examples of over-valued companies on the market right now. This is because people are pouring their assets into the stock market to guard against inflation, that won't last forever though. 

The competing argument says we can keep printing money forever, many times in history people have thought that this will work and it always ends in hyper-inflation and the devastation of the economy, if we continue down the money printing path at the rate we are going we will begin to see continuous double-digit inflation which will create significant civil unrest and rioting, point to the rioting in the 60s and 70s in America and Britain as an example of this, or the rioting in the Weimar Republic in the 30s, or the rioting in Venezuela the last few years. Its clear we are gearing up for a period of inflation because everyone is fleeing into asset classes and nobody wants to be stuck holding cash. If the Fed has any brain they will increase interest rates to combat rising home prices and drive investors out of the housing market, this will create a slowdown in the economy but it will guard against a much worse crash. They should have started raising interest rates at the beginning of this year but instead went for another year of quantitative easing so its already a bit late. 

This economy could go either way to be honest. We could just see higher inflation rates, a steadily raising interest rate from the fed, and a bump in unemployment and the feds taking a larger market share of the working economy by paying more peoples rent, that is the best case scenario outlook for the next year or two. Or we could see 10-20% inflation year over year for the next 5 years, seller financing becoming the norm for home-buyers like it was in the 70s, oil and natural gas shortages (and coal shortages in China), which then results in empty store shelves and rising unemployment. The bigger threat on the horizon from that is less about whether your house was a bad investment (inflation will assuredly make it a good investment from a leverage perspective) and more about how miserable you and your tenants will be when you can't buy anything because supply is diminished and inflation is spiraling out of control. Not to mention the civil unrest causes another bout of mass rioting in the streets of major cities that your investment happens to be in and then that area never recovers. 
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Nobody can predict the future, but at some point the bear is right. Always protect yourself against the bear outlook on the market while moving forward to grow your wealth. Its not safe to hold on to cash right now that much is a given, the question is less whether to buy and more what and where to buy? 

Texas imo is a fairly safe bet if you are going for real estate, but not without its risks. Holding a little bit of gold, crypto, etc is also not a bad idea, and if we do start seeing double-digit inflation its probably time to buy yourself a bug out bag and some dehydrated food just to be cautious. :)

Welcome to BP  @Shanna Nikole - I am in the North Dallas market, I am an agent and an investor as well. Sounds like you might be planning relocating down here soon. Its a great market and I moved here myself from Seattle 3 years ago. 

If you need anything feel free to reach out. Sounds like you found a good agent already but I am always open to giving advice, contractor referrals or whatever else you may need. With a first investment just focus on something that can work when you move on in a year or two into another house-hack situation, 3/2 or 4/2 are great or any small multi-family that is priced right. As a first time investor and possibly first-time homebuyer I would stay away from any large projects until you get your feet wet with the basics of just owning a place and renting it out. 

Welcome again and enjoy your stay, a lot of solid advice here on BP and good discussions about how to go about this business, there is no one right away as long as it works for you and you get the returns you are looking for in the process. Good luck!

I would probably start by buying your own property to live in and house-hacking it. Decide where you want to settle down for a little bit and get into a house and rent out the spare rooms, if you can afford a 4 or 5 bedroom this strategy can be very lucrative. Once you are ready to move to the next house in a year or two you just get a second owner occupied loan and continue renting out the first house either as a full house or house-hack it while you don't live there. 

There is so much data to analyze when it comes to selecting a new market, but places with high growth, good landlord-tenant laws, lower taxes, and purchase price are all things to weigh and consider. No market gives you everything and you can make money in every market it just depends on what strategy you are using and what your preferences are for strategy.

The only time I would not recommend a house hack is if you live in a place like San Francisco and are planning your escape in the next 5 years or something, in that case select a market you want to live in when you leave and start buying rentals there while you rent somewhere in SF (or better yet live in a spare room in SF).

The only problem I see you having is that now that you no longer live there if your renovations only brought value up 10-20% since purchasing it a cash-out won't work since LTV on investment property refis now is usually around 70% maybe a bit higher for some banks, but if you went into the home on 5% or 10% down that will be an issue. Without details of knowing how much equity you have in the house its hard to say for sure whether you can pull anything out or if it will even be worth it.

You should be able to do an investment home refinance though at the lowest at 70% LTV, maybe a bit higher. The interest rate will likely be higher than your owner occupied loan though. 

Why would they not have got a cooler and some ice? Would you let all $1500 of food go bad over $40 worth of foam coolers and ice ? 

I'd probably give them $300 credit if everything else is good, but if they keep pushing $1500 and don't pay rent I would tell them I am beginning the eviction process, 95% of the time they will pay their rent - remember if they get evicted they will have a terrible time renting in the future, if they are decent functional people and can pay then they will. 

This is also a great example of why providing your tenants with a refrigerator is a bad idea. If fridge is on the tenant then you are not the least bit responsible for what is in the fridge or dealing with the repair when it breaks.