All Forum Posts by: Justin Fox

In Texas you can do whatever you want with the security deposit money but it still has to be refunded either by the management company or owner.  The problem with using the deposit in that way is you have to treat it as income.  I keep deposits in separate accounts and refund that plus the accrued interest less any damages.

It's not hard to list a property for rent at 150% more than market rent.  If you do it yourself, you could re-invest that money instead of saving up for a lawsuit.  If you ever get a smart tenant, that non-refundable deposit is going to land you in some hot water.

I've thought about renting from shady LLs/PMs and taking them to the cleaners after retirement.  Would probably be easy money.  Give proper notice of vacating agreed upon in lease with forwarding address, don't mention deposit, wait 31 days and take them to court for 100 bones, 200% return on my deposit and court/attorney fees (Section 92.109).

From the time the property is rented until it's fully seasoned and closed on will be, on average, 7 months.

The size of the property and the scope of the renovation will definitely impact the time it takes to complete the renovation. For instance, an equally distressed 3/2 SFH will take less time to renovate than a 6/4 4-plex. Also, it will take longer to rent 4 units vs 1. I bring up the time to 100% occupy because I'm pretty sure residential cash-out lenders look at the DSCR (Debt Service Coverage Ratio) as well when cashing out on an investment property.

@David Olson

You're right. The acquisition, all the repairs and soft costs need to be equal to or less than 75% of the ARV, ideally. You'll also pay closing when doing a cash-out as well, so keep that in mind. I believe we closed sooner than the traditional 6 months. I can give you the lender's and officer's information if you PM me.

Work out an owner finance deal with him after getting the tenants out.  Get it at an awesome price, renovate it and then rent/cashout or sell.  Carpet and trim-out doesn't seem like a huge deal, not sure about the basement flooding.   Should be easy profit for you.

The labor for tacking up shingles is so cheap (at least here).  I would line a reputable roofer up, get a materials list and just demo it yourself.  The last two houses I built (both ~1200 sqft footprint with 9/12 pitch) only cost 500 & 600 dollars for labor.

Call this what it is:  A personal life-style choice.  A 500,000 home with maximum market rent of 2,400 is and never will be a good candidate (for cash flow now).  Pay the bare minimum on your personal property and put the investment money you're setting aside into actual investments.  Sell the home when you're shipping out.

Now if home values are doubling every decade or something like that, then that's a different story.

Travertine and concrete both have to be sealed and probably waxed (waxed at least in high traffic areas).  So they're both pretty high maintenance options.  I prefer sealed and/or stained concrete.  I think travertine tile would appeal to more people though.  Concrete, to me at least, whether or not it's scored, always has a cold, industrious/commercial look to it.

What types of flooring are houses selling with?

Yeah I lived in the ghetto when I was a kid with my wife (then girlfriend) before we built our first home.  Looking back, I can never really pin-point what made me so stupid.  We were always like, "We need more money to build.", but in reality we had enough to cover closing and DP on the construction loan before we even moved into the ghetto.

Was it worth it?  Hell nah!  My car was broken into multiple times, a hooker lived up stairs and would bang different dudes (I guess they paid her more to yell?), gunshots all the time and a lady barged into our apartment one night saying she was raped (she paid me $5 to drop her off on a corner).

I always thought my parents were just mad because I moved out.  Nope, turns out I was just a dumb kid and they knew better.  I'd be in the exact same situation financially had I not subjected myself to that mess.

Do yourself a favor, spend the entirety of your 1600/month on housing, utilities and etc, save 2,200/month instead for now and get the hell out of the ghetto.  Sacrifice by eating Ramen, not putting your 'sweetheart' and yourself in danger.      

What @JD Martin said.

Keep a close watch.  When you see them attempting to drop it off, run outside with only your underwear on, shooting a shotgun into the air.  I've found that's the best way to keep the lookey-loos away and the rent payments late.

As they drive off, rub your belly-button all deliverance-like.