All Forum Posts by: Jacob Pereira

I'm going to disagree with @Karen O. and say that I actually think it's a good thing to post as much information as you're comfortable with so that the advice others give you on this site can be more directly tailored to your situation. For example, I see that you're looking to invest 100k, but I'm not sure if you mean 100k total, or 100k of your own money as a down payment. 

In the former situation, you should expect to have about 30k cash (unless you have investors or plan to owner-occupy) and can probably only find an efficiency condo in an outer part of Austin. Condos tend to be very hard to cash flow, so be sure to double-check your numbers before jumping in.

In the latter situation, most of the suburban areas of Austin are open. You should be able to leverage that money into a little under $400k, which is slightly above the median single family home in our city. In my opinion, you should look at a 2-4 unit property at that price range and "BRRR" it. I'd also be happy to recommend my agent team to you if you want to PM me. They mostly work off the MLS, but they're used to working with investors, and off-MLS deals in Austin tend to not be that much better than on-market stuff these days.

I just ran across this thread for the first time and have little experience with the AAA, but I may look at it more closely now. I like my current lease, but I've also never had to defend it in court, so getting a lease that has been battle-tested may be worth the small annual payment. I don't know what other benefits there are, but I have to imagine there's more to it than that as well. I hope you do keep the thread updated on your progress, @Mike Austin

I was going to say the same thing as @Curt Davis. $40k is not enough to buy two $100k properties, as most banks will require 25% down on investment properties, and then you'll still have closing costs to contend with. Assuming they're not turnkey, you may also need a bit more money for the rehab. Expect to need $60-70k to do what you want to do.

Gift cards seem to be the consensus here, but I disagree; if it's a crappy gift to give to family and friends, then it's also a crappy gift to give to residents and clients. I like to bake cookies and give them out. They're cheap and easy, everyone loves them, and it shows (or at least appears like) you actually put some effort into your gift. 

I like the basic idea, but as @Joshua Dorkin mentioned, there used to be one, and it died out, and I have a strong suspicion why. I'll explain briefly:

Military and veteran investors such as myself have one big advantage over the general public, and that's the VA loan. Once you have used up that eligibility it is no longer of value, and we have to compete with everyone else on the free market, so after the first (or sometimes second) deal, we're no different than any other investor on this site. There are plenty of threads telling you how to use the VA loan on here, but outside of that, we'd be doing other vets/active duty military a disservice by segregating ourselves from the rest of the community.

Before I get too much hate mail from my fellow vets, I'm aware that there are minor issues that civilians don't deal with such as changing duty stations, deployment, renting in military towns, etc. but those issues are better addressed in a regular forum post than a separate category in my opinion. 

semper fidelis

I have to reiterate the advice of my fellow Austinite @Lance Adams and say ignore everyone else's advice and go with your head rather than your gut. Keep in mind that the way that you worded the question invites everyone to say it's a bad idea. Does the inspection suggest that it still could be a good investment post-rehab? Either way, the answer is simple. If you're purely speculating on appreciation, there are better cities to gamble your money on.

@Steve Shaw got it exactly right, in my opinion. Based on the way you worded the question you're bound to get mostly sympathetic answers, but in reality the best tenants are those who have high standards for their living spaces. They'll replace filters, fix minor maintenance issues, care for your yard, and let you know when there are real problems, rather than let them fester until they become very expensive for you.

If you have met the rare Neverhappyian and they really have nothing valid to complain about, follow the advice above and give them the option to get out of their lease. However, should the insulation really not be that good, and the shower door really not have been installed properly, go ahead and fix it for him. The whole process should cost you less than $1,000 and improves your property's value, saves him money (which makes his payment to you slightly easier), and allows you to keep a tenant for longer who is likely to treat your property better than you would treat it yourself.

Here's my experience: accept the Section 8 applicant, inspector comes about a week after; he's required to fail you based on one minor infraction, such as a loose wall plate, missing fire extinguisher, smoke alarm without battery, etc. One week after that, he comes back to verify you fixed the technicality, and they're in. It's frustrating, but it's the game we all play to make sure they stay employed.

Be careful with giving out your tenant's name on a public forum; I'm not a legal expert, but I could foresee some issues with doing that. Other than that, I don't see any real problems with your plan. You may want to consider charging slightly more in rent considering there are more people living there, which means more wear and tear on your property, but for such a short period of time it may not be worth the hassle.

Personally, I would just tell them it's fine for a month, but after that I'd have to amend the lease and charge extra for them, but I'm also pretty lazy...

I don't know about Dallas, since I'm Austin based, but your basic idea seems sound. I'd suggest you also add quadplexes to your search since they follow the same rules as duplexes and triplexes. Also, 12 months in and out is too ambitious, unless you plan on committing fraud or possibly taking a major paycut in order to meet your timeline (provided you opt for a HIGHLY advantageous conventional loan). 

Looks like most of the rest of the information on this thread is giving you advice on sites in Dallas, which is the most important part, but outside of that, I'll give you some more generic advice; if you have capital, put 20% down to avoid PMI, but if you don't, you can get away with 3.5% plus closing costs, so don't let a lack of funds scare you away. For most small houses that means less than $20k in; if for some reason you can't earn/raise/save that kind of money, you're not ready to invest yet. Plan for closer to 15 months for a rental, but if you're looking for a flip, either don't bother with conventional financing and do it as quick as possible (3 months or less), or use conventional and live in it for two years to avoid capital gains (provide you make less than $250k profit or $500k if you're married).

Certainly get your financing in order in advance. If you want to go with wholesale, you'll probably need to work with their preferred lender, have a larger amount of available cash, and be ready to move in a day or two. Should you choose MLS, be prepared for a smoother process, but also lower margins. I'm not super familiar with HUD, but I get the sense that it's largely off limits to investors, but hopefully other posters can give you more exact info on that one.

There's plenty of info on the BP site to do the basic math and analysis which is less subjective, but I'll leave you with one more piece of advice which I may get some flak for, although I believe it to be true: Don't worry too much about your mortgage broker and real estate agent; 5% of them are terrible and 5% are amazing, but the vast majority do the exact same thing. In the case of mortgage guys, they just immediately sell your loan to Fannie Mae or Freddie Mac, and the rates are identical, barring a few thousand here or there, and in the case of agents, they all get 3% and give you access to the MLS and do your paperwork for you, nothing more, nothing less.

I'd love to hear the points of view of others (except agents and brokers) on why I'm wrong (or right), but either way, I hope that my comments end up helping you in your new endeavors.