All Forum Posts by: Jacob Pereira

The first question is pretty straightforward and has been answered very well by @Jason Hirko and @Walter Key, so I'll just address the second question:

78704 is a red-hot zip code, but that's well known, and future appreciation expectations are already priced into the market there. If you can buy an SFR and only lose $1000 a month you should count yourself lucky. The strategy there is an appreciation play which I (and it seems most of BP) think a risky move.

In Austin in general, it's very hard to buy SFR and cash flow without doing significant value add. I'm currently investing in fourplexes the 78724 area, which is a lower-income region, but has a lot of improvement potential. It has a lot of out of state owners who have hired really bad local property managers which have devalued the area for a long time. You can definitely hit the 1% rule which people here like to tout, but I expect that to increase once local landlords are able to clean it up a bit. Feel free to PM me if you want to talk more.

I would go streaking across a field of starving mutant rats for a monthly cash flow of $800 on a property costing $120k all-in; however, this is not what you have. Keep in mind that no matter how good past maintenance and rehab, you will have CAPEX and OPEX expenditures. That said, with the limited information you've given, there is still probably some meat on the bone.

I can't do accurate math for you because a lot of it is very case by case, but major expenditures you should add in are vacancy, roof, HVAC, property management, and any concessions you give tenants such as free water, cable, yard maintenance, etc. If you give some more details, I (and many others on BP, I'm sure) would be happy to do some analysis for you.

As far as appreciation goes; conventional wisdom on BP tells you to ignore it and just consider it icing on the cake, but I mildly disagree. I believe Sugarland is a big Oil&Gas area, right? It may be that prices have just come down recently with the O&G pricing issues. How is the rest of the area appreciating? If it's still growing, it's also possible that the area may gentrify and you'll see very rapid appreciation at a certain point.

Disclaimer: I tend to invest in D neighborhoods, so I'm a bit biased.

Unless you have real concrete evidence that you under-priced your home, I'm going with the majority here and saying you should ask for highest and best and accept whichever one that is. I don't know your local market, but in my market if you only have three offers, and only one above your asking price, you've probably priced it about right, or maybe a bit high.

I'd love to read an update on this; doing business with family and friends tends to be tricky.

@Teo W. I'm curious. Did you end up investing in the area?

I like the idea, but be careful. Opening multiple cards and holding high balances can really mess with your credit. Also, as mentioned above, be careful and make sure you have a contingency plan in place, because once your teaser period ends, those rates will be brutal. 

I have to say I agree with @Neal Collins. Unless he (or you) is expecting a lot of additional maintenance or vacancy, he'd get pretty good returns to start with.

@Nicolas Jefferson,

Are you sure that you want to be an agent that specializes in investors? We're a much harder bunch to work with than retail buyers. Yes, you get more repeat business, but you will be working much harder on each sale.

Investors generally aren't going to be happy with a simple MLS auto search; they're going to want off market deals, expect you to put in a lot of low-ball offers, know how to properly calculate cap rates, rehab estimates, etc. and also generally will be looking in a lower price range, meaning less of a comission for you.

Retail buyers on the other hand are much more likely to be happy with the selection on MLS, take your advice, and give better offers. I'm not a real estate agent myself, but I've worked with a few over the years, and I know the ones who really make the big money tend to focus on the luxury retail side.

If you're doing commercial rather than residential, ignore everything I just said, however.

Keep in mind, that's 5.3% since '77. nationwide housing prices track pretty close to the inflation rate over the long term, which is more like 2% annualized. I see what you're referring to, but I certainly wouldn't consider them "bubbles". Being cautious is a good thing, but if @Michael DeFrancesco is walking away from good deals because he's worried about the possibility of a bubble, I think that's a mistake. Again, none of us know the future, but I'm looking forward to that beer in Hawaii in 2024.

My full last name is Rodrigues Pereira, and I once had to send a letter to the underwriter stating that I wasn't Jason Rodriguez (my first name is Jacob), who was some random guy who had a judgement against him. I couldn't resist adding in the line "our respective names are spelled and pronounced entirely differently."

Very nice. Anything you would have done differently in hindsight (other than price in more for rehab)?