All Forum Posts by: John Claborn

I wouldn't consider it dead in Lubbock necessarily as I'm sure there are properties out there that can attain 2%, but it's probably so infrequent these days, you'd be looking for months and months before even getting close to 2%.  I think it's feasible to expect between 1.2%-1.5% on average currently. If a property makes it to list, you're likely below 1.2% from what I've seen. Of course, time of year is a major factor as well. 

As you're probably aware, Lubbock is in a seller's market for rental props, but if you find a 2% deal, will you let me know??    : ) 

Hey everyone, are there some good events lined up for 2018 here in Texas for real estate investing? Conferences, events, seminars, etc?

If anyone knows of a calendar to access, that would be helpful! 

Buy/Hold SFR, Multi-Family, Commercial, etc?

You probably meant West of Q. Staying west of Q allows for higher quality tenants and rents, but the market is very competitive right now. You'd likely be able to increase rents for that property with renovations, but the higher quality tenants would be hard to come by. I'd start with Alliance FCU for financing. They have a great program if it fits their model. What are the numbers on the property? Would it cash flow at 400-475/unit based on current sales price? If not, it may be risky. If it does cash flow pre-reno, then it could be a good buy! Good luck!

Semi-strange question. Other than Bigger Pockets clearly, who are some good Twitter follows for REI in Texas specifically? Essentially, twitter users that provide great articles for buy-and-hold and multi-family investing. Thanks!

If you're going to househack, rents likely would not be the full $1,300. If you have a roommate, you're likely looking at $650 for A and $325 for B. You're still covering expenses, but the cash flow decreases significantly. Moreover, that particular area of Lubbock is not highly viewed by investors. It's in a pretty rough part of town. Tenants are likely to be a little more cumbersome than other parts. 

In Lubbock's market, duplexes and any rental are hard to come by. The price is good, but you might want to adjust numbers to compensate for a decrease in rents if you live in one side, which you'd be required to do to secure 3.5% down. I agree that the interest rate seems low as well. I'm closing on an investment prop Thursday at 4.125% on a 15 year note. The 30 year was 4.75%. So you might check that as well.

Good afternoon! Does anyone have a recommendation for a company specializing in make ready's for single family buy and holds? Typically, costs are between $8k-$10k on the properties we purchase. I really would like a company that is all-inclusive for interior renovations. Or if there are specific contractors you have utilized, I would appreciate as many names as possible!

I've not heard much about Quincy Park being a great place for investors. It's a great neighborhood for young families though. We looked at Quincy Park when we moved our family. Appreciation is certainly high in SW Lubbock, but cash flow potential I doubt would be very high because of the price of the homes compared to the rents. I like to find properties with 1.5% rents or higher, so Quincy Park likely would not allow that.

Wolfforth (Frenship) has higher property taxes than the city of Lubbock, but it is a very popular school district with more people moving out there, similar to South Lubbock and Cooper ISD. My realtor doesn't recommend Wolfforth, but certainly recommends SW Lubbock properties based on the appreciation. I like to have a Cash Flow aspect as well, so I've stayed out of SW Lubbock for now.

Tech Terrace is the investor hot spot. Prices are inflated due to demand. It's where the college kids want, therefore it's where the investors want to be. So purchaser demand is extremely high pushing prices higher and higher. If you can find a deal in Tech Terrace, jump on it. 10's of other will if you do not.

Lubbock is just a very hot market right now. I had my realtor bring me a home for $99k in central Lubbock on Friday morning at 10:00a, and by the time I could run numbers at 1:00p that day, there were 4 offers with an accepted contract. 

Students are a great crowd, and a growing crowd in Lubbock. I rent to a law student right now, and it's great. So either direction is fine. I would advise getting set up with a realtor here locally and really dig through criteria. Quincy Park and Tech Terrance aren't preferable for me personally, but they might be for someone else. 

Everyone's style is different. A guy that I meet with regularly to discuss real estate has a completely different model than me. He's all in on appreciation, while I'm more of a cash flow/appreciation type of investor. So I'm willing to wait a little longer. 

Bottom line is, even in a hot market, is every piece of property is a great buy at the right price. If you're aiming at 1% rents then I think that's achievable in Lubbock almost anywhere you want to go though.

Just my opinion from my personal experience.

Good morning! I wanted to share a story of the first rental our family purchased this past February. I owe it all to Bigger Pockets and the BRRRR strategy.

My brother-in-law (realtor) found a house that was basically in shambles. The previous owner was just looking to get out with the property as is. This property was in terrible shape. Rentable neighborhood, but the amount of work needed was intense. He purchased the property for roughly $45k and wholesaled it to me for $50k. The tax appraisal (for what it is worth) was listed at $69k. 

I bid it out, and the best bid for rehab was $17,200 with an estimated time frame of 4-5 weeks. We identified the property February 7th. I had planned to put 20% down and close in 30 days, but we decided to ask my mother-in-law to provide us the cash to close immediately. She agreed on the $50K at 20% annual interest (high, but we obviously knew we'd refi within a month).

I found a local bank that was willing to loan 85% of the ARV. So after the appraisal came in at $105k, we assumed a bank loan of $87k on 5 year fixed at 5% that will adjust after 5 years (not completely ideal, but we'll take it on this deal).

The renovation took only 19 days and was only $250 over budget.

The purchase price of $50k combined with the renovations of $17,500 (after all said and done) plus $1,000 as "interest" to my mother in law for providing the funds saw us receive a check for $18,500 at closing the first week of March. Assuming the appraisal would come in around $95k, we were surprised to find out the appraisal was much higher at $105k. Due to this, we considered paying $10k towards the loan balance to increase cash flow, but the loan payment would have only decreased by about $20/month. So we just decided to hold the cash and try to do the same thing on 2 more this year rather than just one.

Bottom line is we found a tenant within the first week of marketing paying $1,100 per month cash flowing at $192/month after prop management, taxes, insurance, P/I while we also have an extra $15,000 of investment capital after cushioning our "Rental Savings" Account for repairs. We ended up not having to use a single dollar of our own money, and we now have an additional $15k in the bank for future deals and a cash flowing property all created within a 28 day period.

The BRRRR method wasn't going to be utilized originally, so we owe everything to family that was able to locate a gem and provide the financing to close quickly then refinance. After the project was completed, I asked my brother-in-law to find me another one just like that. His response verbatim was, "I can promise you'll never find another deal like that in your lifetime." I asked him why he thought that, and his response was, "Because I'm going to buy them from now on!" We'll see : )

Our current house was purchased for $80k, so we put a $150k policy on it. The difference between $150k and $125k (which would have been the bank loan plus our money into it) was minimal. I believe $300k of liability is standard with this insurer. You'll have to choose ACV (Actual Cash Value) or Replacement cost on the fire/wind/hail insurance. We went with ACV. Not sure everyone would agree with this, but that's the path we took. There's more than one way to skin a cat : )

$1 Million umbrella's are incredibly cheap, but that's standard as well. CGL will depend on the scale of your operation, financials, etc. A good agent would be able to direct you to the proper number on that. 

You'll need a vacant dwelling policy for the actual structure itself. It might be tough to find coverage for an LLC, but we use Farmers Insurance. They can write an LLC as the primary insured. Those policies typically have liability coverage as well, but you'll just need to make sure that's the case. Our attorney advised our LLC to have E/O coverage along with an umbrella policy in the event of a lawsuit. He also recommended Commercial General Liability with an umbrella to act as cover for any of the series' (if you have a Series LLC).

We actually just had an identity theft scare with our bank, although it turned it out not be the case thank goodness. Possibly consider identity theft coverage. Since we're dealing with investors, we want to ensure we're covered as much as possible without wasting money. Identity theft may be overkill, but it's cheap and protects us.

Good luck!