All Forum Posts by: Bruce Lynn

@Juan Rosado The property taxes are based on the TAX value of the home and the tax rate for the location. TAX values are all over the place...sometimes too high, sometimes too low, but the best way for analysis is to use either list price or what you expect to pay and multiply by the tax rate. Typically the tax rate will be between 2-3% of the value of the home per year. For the payment I also estimated the insurance. I can send you a list of the tax rates. For any listing I can also quickly look and see if the taxes are listed. For insurance I know typically use about .75%/year. That could change depending on where you buy, what you buy, and some other factors...but that is probably a good ballpark. I'm also estimating your monthly MIP to be .8% based on 3.5% down payment and this price range. You can always check with your lender to get current interest and MIP rates.

@Scott Byer   

Every situation is different....but I think often an agent can help you sell it faster, for more money and with less headaches. If all your deals have been smooth that's great, but the one that is trouble can make you want to go back to an agent. To me it's not just about getting it in the MLS, but getting it in front of other agents who might have buyers. A great agent can use reverse prospecting for example. Getting your property out to other agents who have set up searches in the MLS specifically for the area or features that your property has. A great agent also networks with their office, with realtors from other companies, at sales meetings, at MLS meetings, at trainings, and at other events. They'll be trying to get your property info into the hands of an agent that has a buyer for you. You may be hitting a handful of those people on your own, and more by getting it in MLS, but they should be getting it in front of even more people. They could be sending it out to people who leased a year ago or two years ago, that might be ready to buy now. Anyone probably leasing for $5000/month or in that range might be ready to buy. There's just almost no good way to reach those people without a great realtor.

Some realtors don't like to show the flat fee broker listings, even if you're offering the standard buyer agent commission.  Too often they know the deal will be more difficult or they're now working both sides of the deal for 1/2 the commission.

So every buyer you're cutting out to me means less money for you in many cases.  While it only takes one buyer to close on the house, I'd rather have a 100 buyers looking at it, than 1.  Chances are it will sell for more.

On the headache factor....sometimes it all goes smoothly, but if you ever have to pay a lawyer for basic questions or have a buyer sue you, chances are you'll loose all those savings.    Hopefully that is a pretty rare occurrence, but a great agent should have 2-3-4 board certified real estate attorneys in their phone and able to get questions answered quickly at no charge.   That's probably pretty rare for most investors.  If you need language drafted for the contract, will they do it for free or what will they charge you.

While they don't always tell you all the small things they're doing, that could be really big things........I think a great agent is making you money....not costing you money, even if it feels like it sometimes.

@Rachel Steenland    Denton, TX   3 universities...at least 2 of which seem to be expanding rapidly.  Nice diverse economy.  Peterbuilt manufacturing facility.  Major casino nearby with no real housing much between Denton and the casino.  Train available to downtown Dallas.  In the path of progress.   The areas just to the East and West of Denton are some of the hottest growth markets in new construction in the country.

@Andrea Bailey

#1 You want to refer to the lease so you can speak intelligently to the tenants about it.

#2 You can tell them to check with their renter's insurance to see if hotel is covered.

#3 You can check with your insurance to see what is covered.

I would almost never offer hotel room.  It happens to the houses we own, we rent, in hotels, etc.  It's no fun and makes you angry, but it is part of life.

One risk you run by putting them in a hotel is that they do not want to leave when they're having fun and you get stuck with the bill.  

If it drags on and on, lease discount might be in order.  A couple of days I would think no discount is in order and no hotel.

Where's the property?  Do you have a good quick plumber?

@Juan Rosado

#1 on FHA loan you have to occupy the property. On Duplex you can live in one and rent the other side to help with your payment. They do ask for the leases. In this case one lease just renewed and the other is on a two year lease. You do have to honor the leases....so you can't get FHA loan on it. You have to find one either with month-to-month tenants or with one side vacant.

Unexempt taxes on this building is $3500/year.  So I estimate your monthly payment on $155,000 value and $150,000 loan is somewhere around $1165/month.  That includes your insurance and taxes.   So to me the house hack is not that you can live for free, or even get cash flow, but you can live cheaper. I would say this is the normal deal you will find around here.  Maybe even better than most.   Of course it would be a dream to find one like this for $100,000, but those seem to be very rare occurrences.

So you rent the expensive side, leave in the cheap side for $200-$300/month....not accounting for vacancy, repairs, reserves, leasing.   That's the hack....not to many places you can live around here for that cheap.  I'm not sure you can even rent a bedroom for that?

@Debra Grumbach

There are already 3 Amazon warehouses/fullfulment centers in DFW area.  I think that is the most of any city.  What they're talking about getting is a HDQ2 building.... or a 2nd HDQ building... not sure how that compares to Seattle....but I've heard something like 50,000 jobs with average salary of $100,000.... I'd think that might create as many as 150,000 jobs or more.  Some people here already, but many would move here too.  I think the issue for most cities and what the detractors keep saying about DFW is we don't have that many spare tech workers.  Probably no city does though.  There's a ton of great places around DFW where they could build a campus for 50,000 people.   State Farm is supposed to have 10,000 workers at their place.  Toyota about 4000.  You can see the size of those places, so think about 50,000.  That has to be a big space.   It will affect many cities.  That is a city.   Let the good times roll if we get it.

@Josh Calcanis   I think Dallas will have as good a shot as any.  3 fulfillment centers here already.  So they obviously like the area, know the hiring potential, know the real estate and associated costs, and like the logistics.   As we just went through a Toyota HDQ move, I can assure you there will be plenty of news once the decision in made.  Set up a google alert.  I'm guessing for a campus for 50,000 people there will be a 2-3-4 year time lag from announcement to final opening.  A few people will start to move in for constuction right away, and then gradually until opening.  Then a big spurt...and then more gradual as they build it out over another year or two.  So you have plenty of time.  To me the real question is where would they put it.   DFW is a big place with lots of options.   North, South, Central, Downtown, Northlake, Ft. Worth, Alliance, Denton, maybe even someplace like Sherman where they could buy the airport and turn it into a hub.   Probably doesn't matter much where they put it adding another 150,000 people to DFW over 5 years just with this move will put pressure on lots of parts of the city.  While some will live right near the HDQ, that can push out others to other parts of the city.   They say 50,000 at HDQ2, but I also see many other people moving to support HDQ2....all the vendors, suppliers, hanger's on.  If they don't already have one, they probably add a separate data center building as well.  

@Dakota Ferguson   Starting price doesn't matter as much as the ending price which will typically be at minimum the outstanding loan balance and potentially more than that.   Typically the foreclosing lender will be the amount of the outstanding balance, but they could bid more...for all kinds of different reasons.

Go to the sale...see the trustees....talk to them...watch others bid....see what the amounts are...

Remember typically there will be no financing......typically you will need cashiers checks on you or go get one nearby by a certain time.  

Now you will see hedge funds and other bidding up to 90-95% of the retail value of the home.  They have millions or billions to spend...and don't worry about repairs at this point.  So can be a tough game for a small investor.    This link may answer some questions for you.

https://www.auction.com/blog/how-to-buy-foreclosures-at-auction/

@Loren Miner    You're buying a hotel..... probably needs to be licensed as a hotel.... 50 units...you'll need full time maintenance, maybe security, front desk person, housekeepers, HR, etc.   I think that would be crazy to keep up with trying to do everything al-la-cart.   1-2-3 units maybe....you're buying several full time jobs likely if you want to do all 25-50.

Condo conversion can be done, but remember when you start trying to sell, it's going to be very tough likely for buyers to find financing. So you either have to do that yourself or find someone who will. Not sure what price range you are thinking about, but many buyers likely in the price range you are thinking are FHA or low down payment buyers. Those lenders and maybe even all lenders hate to be the first 1 or 10 or 15 lenders to lend on a project like that to buyers. The like to see 50% or more owner occupants...reserves and budgets for HOA, etc.

Things may change to make these requirements easier, but I would not gamble on that.

So then you are left with cash buyers or high down payment buyers....those tend to be investors, who typically don't like condos....and then you still run into the problem of financing for owner occupants.

If this is your first deal I applaud you for thinking outside the box.  It's a grand vision.  One I would advise against.  Way way way too much risk for 1st time deal.  If this is your 10th multifamily and you've learned a lot on the first 9, and you have lots of resources and time....and you can get a freaking awesome price on the purchase side, might be worth a shot.   Start with 1 as AirBNB and expand it as demand warrants and tenants move out when their leases are finished.   Best wishes.

@Warren Robinson   Draw a big circle around DFW....and pick some of the mid-sized towns around DFW....like Gainesville, Bonham, Sherman, Waco, Tyler, Longview, Weatherford, Granbury, Decatur, Wichita Falls.