All Forum Posts by: Alex G.

@Vince Light re: DTI. You're talking conventional loans that take DTI into consideration. If you don't have a lot of personal income and/or have some debt, it's quite a challenge to meet the DTI required by FNMA loan guidelines given the prices of properties here.

However, FYI, there are non-conventional sources of investor money available right now at the rates we have NEVER had in the last 28 years that I have been in the market. You can get some 30 years fixed rate investor non-FNMA loans with rates in low to mid- 5% range. I’m getting a 70% cash out loan now at 5.25 %, 30 years fixed. 

These lenders don't look at DTI, rather at DSCR (debt service coverage ratio), ie., rent / PITI+HOA. So your personal income doesn't matter. Very worthwhile looking into these, even though your P&I will be higher at 5% than at 4% FNMA. I've even seen some similar loans quoted recently at rates in the 4% range.

... And just watch that end of October Fed meeting on rates. If they drop it again, we may even see lower rates.

Your SF3 zoning is fine for 2 units. However, you also need to check deed restrictions for your section of the subdivision to see if they allow 2 units. Both zoning and deed restrictions have to allow 2 units before you can build two. 

Most garages are about 400-450sf. If you’re planning to build 800sf atop garage you’re looking to extend the unit floor area significantly over the footprint of the garage. The curb appeal may suffer. 

Slabs under garages are often thinner than under the main house.You’ll need an architect to make sure you have adequate foundation to support the weight and configuration of the new unit. 

I’m curious in which part of town you think you’ll be getting $2/foot in rents?

The only accurate way to answer this is to get list of sold duplexes for the period you're interested in and look up owner's mailing addresses in TCAD. If you have access to MLS you can also go into the sold duplex listings and click on a "Tax" tub to see the owner mailing address info. But keep in mind, it takes a while (3-6 months) for TCAD to update the property record with the new owner's info.

Investors who seek cash flow in Austin don't really understand what this city can do for them. Spend a little bit of time researching homes selling on the market right now in 78723, 78721, 78741, 78745, 78702, 78756, 78757, 78758 and others within a reasonable proximity to the DT.  

Click on the History tab in MLS listings and you'll see the same houses sold in MLS around 2013-2015, but now they are selling for 100K+ higher. These are NOT homes that have been rehabbed or updated. They are substantially in the same condition as when they sold 4-6 years ago. That's all you need to know about investing in Austin. Same or even better story with 2plexes and 4plexes.

You haven’t mentioned your plans for the property. If your objective is to build as many units as you can on the lot, you are obviously going to be a lot better off with MF-4, that is a high density zoning. If that’s your objective I wouldn’t rely on a the county or a listing agent to supply that data. 

I’d go see a good, very experience land development engineer who could look at this from every angle and give you the real scoop.

It’ll probably cost you some money and you’d want to get a 30 days option on the property to do your investigations. The land engineers are swamped right now with thousands of big and small projects being done in the city, so you’d want to have enough time so the engineer takes your lil research project on.  

Not sure how realistic it is to get a 30 days option from the seller. It all depends on how much attention they’ve been getting and how long they’ve been sitting on the market.

I imagine being able to get it zone MF-4 would allow you to pay somewhat of a higher price for it vs SF-3. If a parcel is large enough, you may be able to subdivide and squeeze more units out of it then currently built. Again, the land engineer is your friend who’ll be able to see if there is a way to subdivide. Just keep in mind, subdividing the parcel will take at least 7-8 months, possibly longer, so you have budget for that. 

Also keep in mind, Clarksville is notorious for its neighborhood association that is extremely protective of historic properties and in general opines against building higher density properties.

In my view, a good way to assess whether a contractor may be a match for what you're looking to accomplish is: 
(a) Walk through a recent remodeling project or two done by the contractor (this one is important if you already know the quality level you are trying to get),
(b) Get addresses of recent projects and check how quickly they sold through MLS,
(c) Talk to the property owners who hired him for remodels and see what they say. Ideally talk to those who sold their remodeled properties, rather than rented them out. Check that property addresses and names of the owners you talk to match. Sometimes people giving references to a contractor are either partners or marketing folks who get paid a fee when the contractor gets a job,
(d) Find out exactly which parts of the project the contractor did. Often multiple companies work on the project with responsibilities for different pieces. 
(e) Find out who did the design for the project (paint color scheme, tile, flooring, countertops, selections of vanities, plumbing & light fixtures, etc). This will effect the out come of the project as much as the quality of work. Often contractors volunteer to do a design for you. Be careful about it - especially if the contractor is buying materials. You may end up with lower qualify items or materials.

Yes, it’s rather simple to do, and more than one way to do it. One of them would be a Transfer and Assignment of Note and Deed to Trust, where your Contractor would transfer and assign the Note and DT to the two parties. 

It’s important to file the Transfer & Assignment of record in the county where property is located. This puts title companies on notice who the new lien holders are at the time when the note is paid off. 

 You’ll need to visit a real estate lawyer to get the legals done. Robert E Black or John Pluethner are both quite capable.

Before you do this, I’d check a lender’s title policy your contractor has for his Note and DT to make sure he is, indeed, in the 2nd position, not further down in priority. You wouldn’t want to discover you’re #3, or #4 behind some other parties entitled  to be paid before you do. If he doesn’t have a title policy, you are running a risk of missing liens without an insurance. 

Why you’d want a title policy for your lien? I just got a commitment for title insurance on a refinance of the existing loans I have on a rental property. The title company missed 2 liens totaling about $70K. If they missed it and issued a policy, they are on the hook for your losses. If you didn’t have a policy and missed some senior liens - you may not get paid because your lien will be junior to some other liens on record.

@Nick L. Certainly, not within a week. More realistically within a month or so, IF the tenant doesn't play games. The outcome sometimes depends on the judge and some precincts have quite liberal judges. 

There are ways for a tenant to first stretch the response time, then to raise enough doubt in the eyes of the judge to warrant a new hearing, etc. Most of the time evictions are pretty straight forward, but over the years I've been on a receiving end of a couple of the crazy ones that took longer. 

One comes to mind when a tenant presented a copy of the back of her check endorsed by me, claiming she already paid  the rent and I'm unjustly evicting her, etc. This was a copy of the check endorsed from one of the prior months, not the current one. It took getting a subpoena of her bank records by a county AG, to prove the check for the month in question never cleared through her bank account.

Ages ago I had another tenant who worked in the precinct office to which the property belonged. Imagine how peculiar it was to evict her in her own precint when she stopped paying rent. 

Just did a quick lil research on Open Door activities in Austin. They've entered our local market in 2019. I've been getting their mailers for the last 3-4 months on some of my properties. It apears they are quite effective. 

In Wilco they bought 146 houses in 2019 already. In Travis they bought 82 houses in 2019. 

And it's still mid-May.

They already resold/closed 30 in Travis and 26 in Wilco. Probably more under contract to sell. 

It looks like they are getting mortgages on some of them. Perhaps, they'll be holding these. Anybody knows what their margins are on buy/sell scenario?

They use their own brokerage company, so they make some money on listing fees.

@Jason Hirko - where did you find this chart? Thanks.

@Chloe Kwon - it's a good area to invest in. I'm on my 4th property right in that very pocket.  Had a 3-unit building on Parker. While I haven't lived there myself, I haven't heard anything negative from my tenants. The prior owner did have some problems with break-ins, but it was poorly managed.

It certainly  always is advisable to exercise basic safety precautions, such as keep windows locked up at night  and when you leave the house, getting dead-bolts installed and using them, etc.  I think @Nate R. made some good suggestions about getting a dog and others. Burglars don't like to trying going inside once they hear dog barking.