All Forum Posts by: Leland Barrow

I only speak for myself but maybe go into a few details. I see tiny houses in your profile so maybe give a few details about what you are looking for. Who are you looking to talk to? Why are you looking to connect with them? What is the proposal? What is in it for them? It looks like you want to give away business equity for funding proof of concept. How much equity? 150k is a lot of money for proof of concept. 150k will get you into a corporate franchise with a proven track record. I wont criticize the tiny house concept. Just be aware that real estate is harsh on niche concepts that can be considered cultural fads and not long term viable markets. Who is the target market? What is their name? Why would they buy a tiny house? Are you cost leadership or differentiation? What is the regulatory environment? Would they lease lots? Are new lots for a trailer based homes being permitted in Austin? What counties would you have to build lots in? If you don't have a business plan, then write a business plan that answers every question before it is asked. You will lose any investor as soon as the words "I didn't think about that escape your lips". You have to know everything that you can possibly know, and probably have your proof of concept completed. Just some advice I hope you make it happen.

That is the million dollar question. The I35 corridor between Austin and San Antonio will boom. There is about 300k people in those cities by 2050 it will have over 2 million people in those counties.That is using today's growth.

That is one reason why they rent and you own the property that they rent. If no one made sub-optimal financial decisions then it would be a harder sector to make money in. Why does any landlord care about what car tenants or anyone else sees them driving? Tenants are not going to sue you because you drive a Mercedes, and they are not going to feel sorry for you if you drive a 1988 Toyota Corolla. They will sue you because that is who they are as people and regardless of what you drive. If you are in war zones then you may want a appropriate post apocalyptic vehicle. Otherwise it is all contrived speculation. I look at what tenants drive because I don't want oil stains in driveways. Other than that I don't care. When I was 18 I worked at a tire store in Studio City, California. I learned my first valuable lesson about people there. It blew my mind the first time someone driving a 7 series argued with me about a $20 tire repair. A person's vehicle is not a good way to judge their financial situation. My definition of poor is arguing with a kid at a tire shop over a $20 flat repair. Thank goodness I moved on from that nonsense long ago.  I drive beaters by choice because my fellow Californians inoculated me to the facade of success. Dave Ramsey opened my eyes to another option about living and Robert Kyosoki reaffirmed it.  "Nice slab bro, but is your house paid off".

Austin is tough, there is a lot of marketing going on. Seller knowledge on their home values is also increasing. Wholesaling is going to be tighter because investors are starting to direct market to sellers and not just wholesalers. South East Austin is a good area to find value adds. Surrounding areas are probably the best areas for new investors. You can get a better balance of cash flow and appreciation in those areas. Inner Austin is tear downs or having a good marketing funnel.

The article is pretty spot on. You can be a part time real estate agent if you develop a good niche. If you have a great W2 and can drop 3-4k per year in MLS fees and other fees then go for it. If you develop a niche then you can quickly become "that guy, that does that thing", being "that guy" can bring in clients and doing "that thing" can be considered more of a premium service. Finding a broker will be difficult. What most real estate agents do not get is that marketing will make or break you. If you are a full time agent then targeted marketing needs to be the biggest part of your business. Joe or Jane Blow new real estate agent thinks the 4 Ps is a set of bad words, and neither one of them knows how to research their way out of a paper bag. They couldn't tell you who their target customer is and what that target customer does if their life depended on it. That is why so many fail. The truly successful real estate agents are naturally gifted at marketing. Everything these days is about branding yourself and target marketing. It is the Pareto principle put into practice. As a part timer you probably wont have the funds or the time to throw at marketing so that is why you need to develop a niche. Use that valuable 20% of your time to get 80% of the results. Let someone else take John Q. Public first time home buyer on a tour of twenty homes. When you can say things like "I dont work with first time home buyers" or "I dont list those types of homes" then you start educating people on what your brand is.

Eventually people will say "go talk to Eric he deals exclusively with investors" or "Eric specializes in those types of homes". That is how you get clients without spending marketing dollars. Real estate agents throw all kinds of money at things like Zillow hoping that some random stranger will pick up the phone and call them. You don't need that nonsense if you know your customer. If you try to be everything to everyone while sharing time with a W2 then you will waste money and time.

If you pay a handyman to level a house then you are asking for issues. Major repairs should go to a skilled tradesman that is licensed and bonded. You should have a formal agreement that includes scope of work and a release of lien. A "handyman" is someone that replaces garbage disposals, paints, repairs trim etc. these are minor repairs and should be about $20 an hour to $40 an hour for less than a days work or $15-35 an hour for multiple days work. @35-40 you are paying someone that has done it many times and needs no direction. @15 you are paying someone that may have done it once before and you will act as supervisor and quality assurance. General labor (home depot) can be significantly less and you are paying them to be able to dig holes, move rocks, or load trash.

It seems obvious to me that the market is about to change but the market always changes. Like several people pointed out there is going to be cycles. There are investment opportunities in every market if you are diversified and cognitive of what is happening. Personally and based on little facts I believe we will be in an appreciation market until interest rates rise. Even priced to perfection buy and hold, and value add (forced appreciation) are still good strategies. If you are financing right then buy and hold can ignore the market changes. If housing slumps then rentals will be in higher demand. Buy and hold is a good hedge in any market. Flipping is probably the riskiest investment strategy. Calculating an ARV when prices are even slightly artificially high may mean losing if prices drop or the days on market are high. This will be an interesting market due to politics and interest rates. Some big national markets are in a bit of turmoil like energy dependent cities that may see some lag with their changing markets. Investors should invest in all markets as long as they are perceptive to what is and can happen. Everyones investment style is different. When the returns become tighter and the effort becomes greater then it is time to go play other games for awhile. I know to many people that were hammered in 08 and 09. They dropped out of REI (mostly home builders) and now they want back in. These are people that couldn't read the writing on the wall in 2008 and now in 2016 they are going all in. That is a bit concerning to me. Multiply the few that I know to a national level and you can see a lot of dollars chasing real estate. Over supplying the market and artificially raising demand and prices like they are doing is going to require a correction. Even hedge funds are starting to back off REI. That should speak volumes.

Good questions: Below 300k is doable anywhere in Texas. The metric is what renters are willing to pay. Usually a combination of how nice the property is and how competitive the rent is. There is a sweet spot that you can adjust up or down based on what your competitors have done. Market rent can be determined from real estate agent input. Dont accept breakeven that is a terrible financial goal. That is the equivalent of having a goal of not dying while running a marathon. Your properties need to positively cash flow. Something that you do not know will eventually cost you money. That will turn your breakeven into a loss. You just died running the marathon. Instead train, prepare, plan and set aggressive goals. Train for those aggressive goals. If you train like you will finish top ten then it is highly unlikely you will kill over. People rent for many reasons. They are transient, bad credit, lifestyle, saving for a house, its easy etc. millennials and boomers are driving the rental market. Both generations are transitional. Boomers are retiring and liquidating assets so they can travel. Millennials love urban environments where everything is walking distance. Millennials also tend to be broke with high cost of lifestyle choices. Boomers own 70% of the U.S. wealth and are driving retirement rentals. Rentals will be hot for a long time.

People retire in Florida or find Jobs in Texas. Florida gains retirees and loses GenX and older Millenials. Texas is affordable, young, and has a thriving job market. That is attractive to young professionals. They are not sacrificing much by moving to Austin.

...will figure out that selling quick is far better than waiting in a down market. You also have a lot of cash residuals in that area. Cash can temporarily ease the pain until that cash is gone. I expect the market will change a lot in the fall/winter.