All Forum Posts by: John Chapman

You're going to need to share more details.  Address?  East side or west side of 75?0 Photos?  What's your price point?  How's it stack up to the competition? Zestimate?  (It's stupid but tenants look at that and use it to see if you're overpriced.)   99 times out of 100, it's just a matter of  price.  I see you're out of state. When's the last time you physically visited the property?  

I have never heard of vinyl plank vs laminate having any effect on appraisal. If you're holding for your portfolio, then vinyl plank is the way to go.

I gotta agree with @Jay Hinrichs . I'm a lawyer and I can't see any value in a lawsuit like the above. No reasonable lawyer would take it on a contingency and hourly rates and expenses would eat up any recovery, assuming you could even collect. There is nothing open and shut about a case like as it appears highly fact intensive. Only people I ever see file cases like this are dumb rich people who don't care about the money or people who have a close friend or family member as a lawyer. There's also the emotional component of a lawsuit that few really consider. It takes a long time to litigate a case and it's very draining and distracting. The stakes really need to be worth it. Stuff like the above happens, just shrug it off and move on. You'll be much better off in the long run.

I'm sorry @Dan Bryskin, but I gotta agree with @Jay Hinrichs.  I read each of your bullet points and nearly choked on my coffee.   They are all, as a general matter, incorrect.  (There are exceptions to everything, of course).  In particular, the statement that "the only you have to go is up" strikes me as incredibly naive.  There are many, many houses that will never go up in value and will in fact continue to decrease in value.   Contrary to popular belief, there are many, many houses that one should not own even if you can obtain them for free.  

Being able to deduct a bullet proof vest as an operating expense strikes me as the most obvious benefit. That good feeing you get from duping another investor into buying your property when you cant take anymore? (just share those awesome pro form numbers, not actuals of course)

Unfortunately, what you are looking for is pretty much what thousands of investors are looking for every day.  Even hardened investors with boots on the ground and years of experience are struggling very hard to find deals that even remotely pencil out.   I can't imagine how you are going to find such a deal from afar.  I do see a lot of opportunity for you to get ripped off, though.  Why not just invest within a couple of hours?  I can make a much stronger argument for investing in CA than DFW right now.  

I would also add that, from a tax standpoint, it makes zero sense to live in a state with an income tax and minimal property taxes and caps and invest in a state with no income taxes and sky high property taxes with no caps.

Your post is very difficult to respond to because it does not provide enough information and is very open ended.  That being said, I really wouldn't take advice or accept as true anything said to me by someone with whom I was negotiating.  

If you're property is on the open market (i.e. listed and marketed for maximum exposure), then you will most likely receive market offers. If you are doing FSBO stuff with a handmade sign, well you might not. Sure sounds like you need to consult someone knowledgeable about land sales in your area if you haven't done so already.

No one I know would pull a permit for that. Maybe it's technically required but I wouldn't waste my time with it. Maybe if you were doing the whole line or something but it sounds like you'll just be digging and replacing a small section. Ain't exactly rocket science.

I’ve seen a lot written on this, so I thought I would make a list of pointers for those looking to invest in single family rentals from out of state in DFW. (This is in no way a commentary on multifamily or other asset classes.) I base these observations on both my experience as a landlord, my familiarity with eviction records (which I marketed to for years), and my general familiarity with the market. The bottom line is that I think too many investors look at our market from the outside and think they can just buy into the market at retail, and it will bail them out. Unfortunately, like any other market, you still need to buy right out here. Here are some observations/pointers.

• The 1% rule does not work here. Cap ex and taxes are simply too high. You cannot pay $120,000 for a house, rent it for $1200, pay for property management, and still do well. The returns, if any, will not justify the risk. (If your exit plan 3-5 years, then this may not apply.)
• Foundations. They are a real issue, and there are a lot of houses with foundation issues (this ranges from slight shifting resulting in sheetrock cracks to heaving and worse). Older houses that are well-suited for rentals are going to have more of these issues.
• A repaired foundation is in no way a guarantee that you have fixed the problem. 9/10 foundation repair contractors are bottom feeding contractors who do crummy work and whose work generally fails within a few years. Many, many investors skimp in this area, and then dump the home on unsuspecting buyers. Lifetime warranties are a joke and almost never honored as there are always weasel clauses.   
• Side note: Overall, I have had very good experience with foundations as you can get good discounts and end up with a very solid home. I prefer to fix foundations myself, though, and I pay a lot for the work.
• Sometimes, no matter what you do, a foundation is going to keep moving. Doesn’t mean the house needs to be bull dozed or anything, but it does affect your exit costs.
• Many out-of-state investors buy way too much house, particularly newer construction. I see out-of-state investors buying 2500 square foot houses all the time. Rents will not cover the increased maintenance and cap ex. (Again if your exit is 3-5 years, maybe this isn’t the case.) The truth is that we build them bigger out here in Texas, but that does not mean they are good for rentals. (Kind of like the notion that just because the bank offers to lend you a ton for a house doesn’t mean you should take it.) Keep your square footage low to minimize expenses.
• New construction is not necessarily the answer. New construction, while obviously safer on the cap ex side, generally comes with its own issues. Specifically, you are entering at a much higher price point, rents will be relatively low compared to price, you will have a lot of rental competition from other out-of-state investors, and these new developments are generally in less convenient locations. Also, for some reason, my property taxes are lower in older areas. I think this probably has to do with there being a wider range of comps.
• The better properties, in my opinion, are the older properties in the better locations that have been thoroughly rehabbed. This is probably a debatable topic, but I still subscribe to the old adage, location, location, location.
• Do not buy from large wholesalers. You will get robbed.

This is not meant to be doom and gloom scenario. I’m still buying in DFW (thought at a slower pace given the run up in prices). It’s just that with recent hype many investors are piling in without any regard for the realities of investing here. 

@Heaven Boswell, you need to be able to full comp homes like a realtor/appraiser in order to intelligently analyze the homes. This means you must have full access to the MLS so you can run CMAs (comparative market analyses). Zillow and other public websites are not going to cut it. You can use a realtor or get your license to get MLS access (those are about the only ways I know).

You also need to know how to adequately estimate repairs. Finally, you need to know what investors are paying for homes. (e.g. buy and holders may be paying 85% ARV - repairs or higher).

Honestly, it is really, really hard for newbies to do wholesaling well because you need to be an expert in marketing, comping, and estimating rehabs.  If you are really hustling that hard you might want to get your license so you can at least earn some commissions while you learn the business.