All Forum Posts by: Leland Barrow

As already pointed out a 100k is a low to try and enter that market. Syndication is an option, find several other investors at that price point or more to join you. There is a lot of money available and not enough deals. If you have a good deal, experience, and 100k then you can find other investors. A 100k goes a lot farther outside of Austin. 40 minutes in any direction and you can find good opportunities. The trade off is you will give up some appreciation.

Appeal, sell, or wait for market rent to adjust. If market rent is not keeping pace with tax increases then sell when you hit break even. It is not a bad thing unless you wanted to hold the property indefinitely. Texas is not a market where you can set rent and forget it. Also realize that market rents will adjust in reaction to this but there will be lag. Property taxes have gone up in multiple markets in Texas. Renters will end up paying the increases you just have to deal with lag. Let the property go month to month and raise rents when they start adjusting in your area. Regardless you should file an appeal if you can get good comps.

There has been a lot of good information in this thread. I would like to look at a couple of different points. The first is that property taxes were identified as a big reason not to invest in Texas. I agree that property taxes are a concern, but like anything it is good and bad. Property taxes should be passed down to the tenant. If you buy the property correctly and did your cash flow analysis correctly then the tenant should be paying your property taxes. Higher property taxes also means that purchasing a new home has a barrier to entry. This means that Texas has a fairly strong rental market.

Property taxes can become an issue as property values increase. We just had a $80,000 dollar increase on property valuation for taxes on a property. This property is now very close to break even. That is hardly bad news because the property comps out higher than the increase. This is when exit strategies come into play. If market rent cannot keep up with tax increases then cash out at break even or sooner. 

Houston and parts of Texas have seen some lag with market corrections. I believe that this lag will not take full effect until this fall. In the fall I expect to see a correction in some of these markets and an opportunity for better deals. 

Prices in all of the major cities have been propped up by out of state investors. Hedge funds and investor nationally and internationally know that Texas is a good market. Following population movements is the easiest way to see where demand is going and demand drives the real estate market. You don't want to get caught buying at the wrong time in any of these markets. Ideally you want to buy before the big investors show up and exit before they exit. If you are having issues with cash flow then most likely you bought at the wrong point on that timeline. 

My personal opinion is that this is the wrong time to buy unless you are doing your own direct marketing. That is not to say there is not good deals but I would suggest being choosy and cherry picking your deals. The energy sector looks like it is about to recover. Venezuela's demise can be good news for Texas. As has already been mentioned San Antonio is a stable market. It is probably the best market right now for new investors. If you are out of state I wouldn't put Houston on your list until spring of 2017. That is not to say that experienced investors cant do very well in Houston. However, being out of state puts you at a disadvantage you are better off investing in more stable markets. Austin is a savvy market and is probably best suited for experienced investors. 

Real estate investing is not rocket science. I am sorry but it is not...no I am not even sorry, it is just not. The vast majority of what you need to learn in real estate investing is done by doing it. There is absolutely no benefit from these programs. It is not the equivalent of a college education. A college education is a long lasting bullet point on a resume. Put "I spent 40k on The Montelongo System for Real Estate Investing" as a bullet point on a resume and see if that helps or hinders finding a job. Someone else said you could make the mistake of buying a property in a war-zone. I think I would rather have real property in a war zone than flush 40k down a toilet. The fact is that everything you need to know about real estate investing you can learn from the search button at the top of your screen on this site. You don't need a mentor, what you need is to educate yourself, make a plan, take action, be prepared to make some mistakes, and learn.

Next time someone gives you advice on how to spend your money put their name into Google and hit enter. You may find some interesting tidbits that may make you want to discard their advice and keep them at arms length.  This site is not benign, people with money (like 40k), will attract all sorts of people. Take all advice with a grain of salt and be aware of what your intuition is telling you. 

If you like your friends then don't do business with them. That is meant to be very friendly advice. Although this is a great idea on paper housing is very emotional for some people. Doing business with friends and family is how all the "I wish I had known better" stories start.

Welcome, dont hesitate to reach out if you ever need anything.

What is often not discussed is that Texas State is attempting to close the gap with other area schools. They want to be right on the heels of UT Austin, Texas A&M, and Baylor. They have a master plan to increase enrollment to 75,000 and just instituted their 1st tuition price increase. They are actively recruiting better professors and are wanting to elevate the business school. There is already friction between the old guard residents in San Marcos and the school. There are investors that are salivating about buying up land near downtown and turning into a miniature downtown Austin. The ease at which students can get student loans means that there is $10,000- 20,000 available to every student every semester. In a city like San Marcos that is a tremendous influx of cash that keeps the school growing, overflows to the community, and increases staff salaries. UT Austin doesn't have a river or the atmosphere that can draw students like it does at Texas State. They have revamped their football program and are leveraging their differentiation. When an MBA at UT costs 75k and 15k at Texas State it is a bit of a no-brainer. 

West San Marcos is hot with or without flooding. Drive from Wimberly to San Marcos and you will get an idea of why the area is so desirable. Three of the neighbors on my street work for energy company's out of Houston. If San Marcos is drawing from Houston then there must be something special. The area has been traditionally poor but gentrification is changing the landscape. The poor are being pushed out due to high rents and developers are looking at capitalizing on the transient student population. It is a pretty nice deal when students will rent for twelve months and only occupy for nine. 

The downside is that the flipping and buy and hold inventories are low. We just moved here in December and had to listen to my friends that are paranoid about floods. All of the flood zones are being remapped and the city has flood control as their highest priority. San Antonio used to flood also....now the riverwalk is one of the hottest areas around. Conversations are coming up again about an International regional airport that will serve SA and Austin. It is only apparent that growth is being forced between SA and Austin. You have big names that are starting to come into the area including Amazon, Walmart distribution, Sysco etc. Farmers are already starting to feel the pinch as what they can get per acre to develop skyrockets. There is no other place in Texas where you are within two of the fastest growing cities in the U.S. 

In recent years suburbs like Cedar Park, Kyle, Pflugerville, Leander, Georgetown, and Buda are becoming filled out. East of 35 is still available in most areas but no one really wants to live east of 35 no matter what city you are in. I believe that Cedar Park is almost entirely landlocked and their growth will be kept in check. Kyle has become a sea of houses and that has made it less desirable. New Braunfels is hot and will continue to be. It has a lot of what is great about the area and little of the downside. Kyle to New Braunfels will look completely different in twenty years. 

Then you have Gruene and Wimberly that if they can keep their character and charm they will become some of the hottest real estate around. Canyon Lake is almost completely off the radar but that area has a ton of potential. These cities have the distinct advantage at looking at how poorly growth was handled around Austin and being able to make decent master plans. Developers are getting shot down left and right because they dont understand these cities. They think that these tiny towns that are booming will get week kneed at their cash and fold. If you want to get a foot in the door you need to know who the power players are and who pulls the strings for the community. In San Marcos there are a couple of families that even Texas State struggles with.

Listen to the podcasts and start writing down what your goals are. If you do not know what your destination is then how in the world would you shop for flights to get there. The first step is identifying your destination. The second step is identifying all of the possible ways to get to that destination. The third step is to narrow your strategy down to one or two optimal paths. If you do this then you will build a vision and strategy working backwards. The more specific that you get the more likely you will be successful. A simple example is below.

Destination (Frame what you want): I want to have $20,000 a month (adjust for inflation) in passive income per month to replace my income when I retire at 62. This will require approximately 14 SFRs @ $1500 per month rent. The SFRs need to be completely paid off by 62. The units will be rented and go to the heirs of my estate when I expire.

Brainstorm ways to get what you want.

Optimal Path (Decide your likely path of success): I need to buy at least one property per year and scale the payments accordingly to reach my payoff goals. I will use 15 year traditional mortgages or the equivalent in private financing. I will buy 3/2/2 and the median price is $100,000. I will need $30,000 per year in cash reserves for down payment and costs. I will use a version of the debt snowball to payoff each mortgage early or on time. I want at least $200 per month in cash flow that will be snowballed into early payoff.

Current Resources (know what you have): $25,000 in cash for real estate investment purchases, great credit, strategic partners.

What I need to do soon (identify your first steps): Accelerate saving $5,000, vet local banks, vet real estate agents, start networking increase contact with potential purchases. 

What I need to do today (what is the most important task to do today): Look up all of the potential banks near me.

Once you have the framework in place you can start build out your vision, strategy, and build a step by step plan to accomplish all of the tasks that you identify. People can certainly be successful with BIFLI decisions but for the rest of us a road map is the best way to get to a place that you have never been to before.

I believe that you can get traditional construction loans and refinance through the VA. In Texas you can buy a lot through the Texas VLB, get a construction loan through the Texas VLB, and then move both loans to a Texas VLB VA loan. Texas has some of the best loan programs for veterans out there. One thing to consider is that they require occupancy. Using the VA for investment purposes can be considered mortgage fraud if you are not following the rules and guidelines. Other states may have similar programs.

Welcome to BP if you ever want to connect let me know.