All Forum Posts by: Bruce Lynn

I notice lots and lots and lots of rentals now.  Everyone from Chinese to Hedge funds, to mom and pop are getting in on the rental game.  Some people see to not care so much about rents.  I've had overseas investors tell me specifically they don't care about the rent, they just want a safe place to park money.  I'm guessing the hedge funds could be in a similar position that they are not buying for cash flow, that they're buying for appreciation.

I'm seeing a ton of houses sitting for long time about $2400-$2500/month in rent.

Just put one on for $1100 in Irving and phone blows up, so I think it depends on the price.

Put one on the market in Anna this week and notice 54 rentals in Anna....2-3 years ago there were probably less than a dozen.

I've seen houses where purchase price was something like $400,000, seller moves up, thinks it is a good idea to keep it as a rental and rent for $2400/month or so, because it is paid off????   In a neighborhood that will likely see little appreciation.   That's our market now.

Saw 3 great recent articles about this.
http://www.businessinsider.com/amazon-headquarters...

https://www.bizjournals.com/dallas/news/2017/09/28...

This is probably the most insightful one I've see.  Lots of people dreaming, but 4-5 years ago heard something along the same lines from one of the big housing providers.  Regulations in CA kill things..at the time he said something like DFW area had 50,000 lots ready to go for builders and another 50,000 that could be ready in a year.  CA did not have 50,000 lots in the whole state due to red tape and regulations.

https://www.bizjournals.com/atlanta/news/2018/01/08/viewpoint-amazon-hq2-national-site-search-a-look.html

@Jennifer Brown   What do you want the attorney to do?

TALK-----go talk to him.....friendly.   Find out if he has a lease.  Does he want to stay or go?  Maybe you want him to stay and pay rent?  Keep an eye on the place.   Some people will leave peacefully and easily if you want them to and ask them to do so.   Make it win win for everyone.

Risky Endeavor.  Visit on vacation.  Invest close to home.  Plenty of opportunity where you are.

Language is different....how well do you speak Malay, Hokkien, Hakka, Cantonese, Chou Chou or Mandarin.   How well do you negotiate in the markets....10x that when you're not local and negotiating quality, building materials, labor.

Can you get a visa to live there?   Can foreigners own property?  What taxes do you pay on capital gains?  Is anyone licensed like realtors and contractors?   Can you get title insurance?   There's about 1000 questions I would want to know before I would move 1/2 across the world to start flipping properties.

Beautiful place though.....I have been there several times...

I have not seen this, but I believe it. There's lots of funny stuff I learned once upon a time working short sales...and that is that we don't know what is going on behind the scenes. In this case I'm guessing the lender had FHA insured loan. So they try if they can to sell it themselves through auction.com. If it ends up better for them financially to turn it over to HUD they do. So they tried auction, it didn't work, so they punted to HUD. I've also seen that with mortgage insurance. Lender/Servicer tries to sell, they can get their punt price, so turn it over to MI company to sell.

I think you need to spend more time in Austin.  

I'm sorry all this has happened to you or if you feel like you were taken advantage of...

If you need to cut expenses hop an overnight flight.  Spend the day, take the last flight out.  If you're going to spend $400-$500K you'd better know your neighborhood inside and out.  

Especially as an investor, you need to have looked at 25 or 100 houses before buying one.  Go on a Sat/Sun and hit all the opens all over the city.  See what the other houses look like.  Once you are in the option period, go in all the rentals around where you are buying...see what the competition looks like, see what the rates are.

Have you talked to the inspector?  Smoke detectors are on the inspection report?  Is it missing?  Were they called out?  Did they get hot water?

Not sure how old the house is, but no outlets in the bathroom is weird?   As a realtor/broker that's probably not something I'm looking for, but I think a good inspector would catch that or call it out.   Not sure they were always required.  How old is the house?

Is the flipper reputable or fly by night?  Might talk to them about it too?  Obviously some will say sale is done, see you later, but some have a reputation to uphold in the area, and might come back to fix/update or help you.

Did you get a home warranty?    Fairly standard in my market, but in multiple offer situations we do see it go away frequently.   You do have the option to pay.  That might help with water heaters and HVAC units.   Did your inspector note the age on the reports of these big ticket items?   If they're old...like more than about 8 years, they could go out at any time.  Did they note the brands?  Do you know which brands tend to last longer than others?

I know $7300 sounds and feels like a lot of money, but it is probably something you should budget for now and in the future.  Budget for vacancy now and in the future.  Austin is very transient.  It would not surprise me if you have turnover every year....so you might have one month vacancy and one month rental fee.

You might want to use a consultant as well if you want to be hands off and outsource all your due diligence.   Pay another realtor or two to give you an opinion on lease times and rates for that specific property while you are in option.

I don't want to throw your realtor or inspector under the bus, but I think you have to be aware sometimes of who you use....and how they talk....I hear a lot of realtors for example...say stuff they shouldn't....that's a solid house....that foundation is solid...I'm sure I can rent it for X..... is X at the top of the range you see on the CMA, at the bottom, in the middle? What do you think the numbers are? I try to be very very conservative with my numbers, but many are very very optimistic....

Hopefully you get the fixes made...they last....and you get some great tenants who will stay forever, never call, never complain, take care of the place  like it's theirs...and you start cash flowing soon.

By the way...can you work remotely?   Can you spend a week in Austin in a sleeping bag in the house if it is vacant?   Can you stick a sign in the yard and have open houses every day while you're there working?   You might do better to meet the tenants yourself.  Get to know your property.  Get to know the neighborhood.

Best wishes.

You could get lucky on this, but who has more money for the court battle.

My thought is they're going to fight you that they weren't properly notified.

Tie it up for a year or two or three.

The sale gets cancelled and you get your money back...no interest....

So you loose.  You pay your attorney fees, you loose the use of your money for 1-2-3 years.

You loose the opportunity to buy something or many something elses for 2-3 years while your money is tied up.

These are always...WOW---what if, but I think success is probably rare in these circumstances.

One thing you might check is to see if the bank owns or leases the rest of the property.

Is that sliver worth anything to any body else?  Could another bank put ATMs there?  

Is it big enough for anything else to go there?

@Steven J.    There are bad players in every industry and every business.   Not sure these are bad guys, but often it depends on your outlook and if you are generally positive and solution oriented or if you are a negative naysayer.

One thing some people might say is no matter the circumstance, the city, county, hospital district, community college, school system or whoever collects the taxes needs that money to operate.  You can argue how much money they need and if they spend it wisely, but to me that is a discussion for the elections, not the tax collector.   So once that system is in place, I would say almost every one of these taxing entities needs their money....that's why there is  a system in place to resolve the issue when people for whatever reason don't pay.  To me that is ethical....you don't pay, that's unethical.   Someone pays for you that is ethical.

So with your story and the fence.   Buyer in my opinion has the right to try to sell it back, but often the previous owner also has the right to buy it back.  As an investor their options are pretty limited...who else wants to buy this strip?  I wouldn't bet on that parcel for anything, but there are people who might.   Is it ethical for the homeowner to tell the investor to take a hike?    Now they might be able to use it and enjoy it without paying taxes on it...or maintaining it.   New owner needs to mow it, pay taxes and insurance on it.   Maybe they use it at night while the new owner is not around?   Maybe they offer to buy it back at less than the investor paid?  Is that ethical?

Same thing with the underwater drain area. What if the HOA just says...congratulations...doesn't want them back..now the new investor gets stuck with the taxes and maintenance, but the HOA gets the real use and enjoyment?

I think buying these "undesirable" properties is very risky for most investors and may be money down the drain.  I do see people buy these properties.  I was at one about a year ago and we can warning a newby not to buy a land locked property with no access, but she did it any way.  We're all pretty sure she did not have a clue as to what she was buying, but did it anyway.  

I think your developer story is probably a horrible strategy.  #1 he might not be able to buy them back....maybe someone wants to bid more.  #2 he is paying penalties and legal fees he could have avoided.   #3 some locale require arms length transaction....so the owner can't buy the taxes down......for example let's say the lot is worth $1000, taxes owed have built up to $2000 penalties and fees are another $1000...so first time around property does not sell for the $3000 owed, so it is on the struck off list or attempted be resold in a future auction at a discount...let's say $500.....often the taxing entity won't let the owner or a related entity buy it back at a discount.

There are probably enough great deals out there, that you don't have to try crazy stuff to help yourself and ever other person involved.  Strive to come from a point of contribution to every situation and you will better ensure your long term success.   I don't think you gain long term success of trying to stick it to everyone at every angle.  One time success maybe, short time maybe.  But you may get it handed back to you as well.  Think good karma/bad karma.  Which is it you want.

How do these hold up for hurricanes and typhoons?

What is the standard of construction?

What I see in these parts of the world is often concrete blocks, or solid concrete for lots of different reasons.  One is strength.  One is people live in one place for a lifetime.  One is tropical elements are not friendly to many of the materials we tend to use here like fiber insulation and wood frames.