All Forum Posts by: Kelton Johnson

If you're like me, you likely got your tax bill in from the county assessor's office within the last few weeks and your taxes have gone up considerably!  Most people suggest you take matters into your own hands and file a protest online to get your home's tax assessed value lowered.  There are a number of ways to justify your claim, but one of the most effective I've found is to look up similar build and size houses near your property and then look up their tax assessment's on the county website.  You can usually find vary similar homes that have considerably lower assessments.  I've put together a simple Comparable Appraised Homes Calculator to help folks use to input the information from these other properties in order to justify their appeal. 

Feel free to make a copy and make changes to any of the adjustments as you please.  Enjoy!

@Peter Kush

If the property is damaged, the landlord can levy a complaint against the tenant and they can lose their section 8 eligibility.  So basically if they want the government to continue to pay for 90% of their housing, they need to be somewhat respectable.  However, that would in no way guarantee anything, just a bit of motivation for them is all. 

@Jaysen Medhurst @Kevin Fox

You both make some solid points.  I've only had one short conversation with the seller (it's for sale by owner).  During the conversation she just said she wants to get rid of it and not have to wait any longer and that cash is easier for that.  Which, I of course followed up with by asking if it would appraise for the selling price or higher and she acted confident it would.  Obviously that's not something you just take the seller's word for, but it was definitely what she said. 

I like Kevin's idea though. Basically just offer an attractive financed deal where I can still get an appraisal and have the option to back out, but it will close in a timely manner. I'm not too familiar with how to write something like that up (high EMD, short due diligence, etc) but I'm hoping my real estate agent knows how. :P

@Account Closed

Yeah, my parents are strapped for cash right now, but I do have a few relatives who I could ask.  I've just always been a 'figure it out myself' kinda guy and hate to seem like I'm looking for handouts. That being said, asking family is still one of my top options, but I'd have to wait 6 months to cash out refinance and pay them back, right? 

@Account Closed 

Oh this one is already in the hood, it's just been renovated already so it won't need a lot of work.  Not to mention a steady tenant is already in place which means a lot in an area like this. 

@Andrew Herrig

Hey, I'm actually looking into a property south of I-30 right now.  It's definitely not a great area, but the houses are cheap and appear to be able to rent out at reasonable rates (albeit to lower quality tenants).  Do you have any experience in this area?  I know most people say to avoid these areas, but what specifically makes it so bad?  I'm considering buying a property and qualifying for section 8 housing, which should mitigate some of the risk of non-payment and damage to the property.  

Hi guys, 

I'm currently looking into a deal in a low end part of Dallas where a 3 bed 2 bath SFH is on the market for $55k. The current tenant pays $750 and the rental comps support it raising to $850-$900, along with the section 8 pricing actually being $1030 a month. The taxes and insurance would be low on this property, so overall it seems like a solid deal that could potentially almost meet the 2% rule.

However...the seller wants cash.  This property has been fully updated and needs almost no repairs, and I think based on comps it would actually appraise for $65-70k (in fact, a smaller house 2 streets over is under contract for $89k).  But based on what the seller is saying, she just wants to get it sold and ASAP, so cash is what she wants. 

So that brings me to the question... Where should I try to get $55k?  Personally, I have about $25k I could put into the deal, but I'd still need another $30k.  At the end of the day, I want to buy and hold on this property, so I'd like a way to come up with the cash and refinance ASAP to get my cash out and have a traditional rental property.  I've looked into hard money and personal loans and while some lenders do deal with amounts around 30-40K, most don't, and the ones that do have very high fees. 

I'm not sure if there is a creative option I'm missing here, but I'd love any and all advice on the best way to get myself into a traditional mortgage on a 55k property, but with cash up front. 

Thanks for the help! 

@Sunny D.

Those are unrealized profits...you won't see them in your bank account until you sell, refi, or HELOC. I'm not saying they don't matter, because they certainly do, but every house has equity pay down.  If I go buy a primary residence, I'm going to be making a 'return' through my equity, but that doesn't make it a good investment vehicle.  What if the house doesn't appraise for what you want, or what if you can't sell it due to a cold market.  Think 2008, what would you rather have a had a 100k house that you are making 20% on from equity pay down but no cash flow.  OR would you rather have a 75k house with  less equity pay down and $300 in cash flow a month?  If you have a house that first house, you'd be up a creek without a paddle if the housing market crashes, making nothing on the house each month (or losing money since you are paying into negative equity).  However, if you have the second house, you'd be much 'safer' as you can continue to rent it out and at least make a decent return until the market corrects. 

Just my two cents. 

@Clayton Mobley 

I appreciate you taking the time to write out a thoughtful response to my earlier comment.  I now better understand that nothing is done in a 'deceptive' manner, but just as an industry standard. 

Nonetheless, I just feel personally that turn key investments aren't right for me due to the small returns. I know in your example you show that with 'high' estimated expenses the returns are still up near 20%. However, the actual cash flow is only $480 a year...that's $40 a month. I could easily make that going out to eat 2 times less a month. I understand the equity portion is important, and I certainly take it into account for any total ROI I'm looking at. But at the end of the day, cashflow is king, because otherwise you will never see a tangible return on your investment until you sell (and lose the investment) or refi...both of which require large sums of money going towards fees. 

My point is, when I put $20k into an investment, I want to see money hitting my account each month, passive income.  Unfortunately, turn key products don't seem as good for that normally, compared to local deals in my area at least.  Once again, they certainly could be good for others, especially those looking for passive wealth building, but I want a little more and I'm sure I'm not the only one. 

@Sunny D.

You make some great points, I appreciate the feedback.  

And as far as tips go, take a look at the second tab 'Rule of Thumb'.  It will show you the monthly cash flow of the property using the 50%rule and let you know if it's abiding by the 1% rule.  Obviously these are easy metrics to use as a basis, then you can dig further into the true numbers on the 'Detailed Analysis' page. 

Let me know if you have any specific questions. 

Thanks,