All Forum Posts by: Michael Robinson

I am an out of work professional looking for something new to do in real estate investing in the Greater Houston area. I am open to all opportunities. Let me know how I can help you.

I am experienced with managing renovations with my own rental portfolio. I am also somewhat handy and can help with make-ready operations, minor repairs, coordinating work crews, etc. I have a pick-up truck so I can haul materials and I have a pressure washer and tools.

I have a B.S. in Management Information Systems and an MBA. I am just not interested in sitting at a desk all day anymore and am looking to pursue something that I am passionate about and that will allow me to be "out in the field" so to speak. My previous career entailed working in project teams, so I am experienced with project management, critical paths, deadlines, budgets, etc.

If you need someone who is mature, reliable, and detail-oriented, then message me and let me help you be successful. I am open to working for an hourly wage as needed. I am willing and able to pass a background check, credit check or drug test.

Mike Robinson

I use Broad Financial and am happy with them so far.  It's been 4 years and I've had no issues with buying and rehabbing rental properties.  They provided full service and guided me through the entire process of getting started.

Thanks for the replies. I agree @michael regarding inspectors. This seller doesn't have a stack of offers though. This is second time this year she's tried to sell house and DOM this time is about 65 so far. ARV for neighborhood is about 100/sq ft and she wants 85/sq ft. House has significant foundation issues and no heat. Everything else is minor. I want to offer about 65/sq ft. I just don't know if I should mention fact that garage conversion is not permitted. It does have a closet and a window by the way and a deck floor to make floor height even with adjacent room.

I viewed a Houston, TX area listing for a 2 bedroom/1 bath recently and discovered that the house is actually a 3 bedroom due to a converted garage that was most likely done without permitting.  I assume they wished to hide the conversion because there is a dummy garage door at the front of the house.  The agent listed as 2 bedrooms only per appraisal district record.

I am not sure whether I wish to flip or rent this house, but I am leaning toward using it as a rental for a few years and selling later.

Should my offer be accepted, my gut says that I should convert the "bedroom" back to a garage and rent/flip as a 2 bedroom. 

I am interested to know if others would do the same.  Also, should I get some leverage in negotiating with the seller due to the fact that the improvement is most likely unpermitted?

That's a great idea @Scott W., but the problem with that is that while they pay rent on time and consistently, they are not the cleanest people.  Some of the things in the house were in very bad shape when I bought it from years of abuse.  They let a lot of stuff in the house go, I'm assuming due to financial strain, hence the short sale.  I think I will continue to fix major things and the exterior while they are there so that when they do leave, I can do a quick turnaround with interior cosmetics like drywall repair, paint and flooring.

Thanks @Dmitriy Fomichenko and @Steven Hamilton II for the SDIRA advice.  I definitely make sure I stay 'arms length' of all transactions.

The intention of my question is to help me determine whether it would be wise to continue on the path I am now with current renter or part ways, rehab and charge market rent.  I'm under market now, but the house is not rent ready and the tenant is ok with that given the current rent.

I'll do some more research and try to crunch the numbers so I can make an informed decision.

Thank you @Daria B. My thoughts are that I should consider these late repairs as cost since I would have done them in my get ready for a new tenant had the seller moved. My ROI is certainly much better doing it this way rather than considering them expenses. What may make this case unusual than most I guess is that there are no current tax implications since this has all been done with cash from Self Directed IRA.

Thank you @David Dachtera. My intention was always to buy and hold....at least for quite awhile because rents are really good in our area and I got the house at a really good price. It was nice to walk away from the closing with first month rent and deposit in my hand. Since the house is owned by my SDIRA, I need to take the time to research fix-and-flip using SDIRA funds and for sure research non-recourse loans since I didn't know about them before. I think I need to be able to calculate ROI to determine how this has actually worked out for me and whether it makes sense to move tenant out, rehab, and rent for more or leave him in without rehabbing and raise his rent. That's the piece I'm missing to be able to make a good decision.

I bought a short sale in Jan 2013 for all in of $54,000 with Self Directed IRA. My plan at the time was to spend about $15K and rent for approximately $1200. The seller, who entered into short sale, approached me at closing to ask if he could lease for a year. Since money was tight and I would not have to spend a dime at the time, I agreed to $800 rent. Long story short, he is still in the house 4 years and 3 months later. I increased rent to $875 in Jan 2016, but now I have had to spend some money on major repair.

I have two questions:

1. How do I factor in the major repair expense with regards to ROI? Do I calculate as yearly expenses or back into my cost basis. Since this is self directed IRA, taxes are deferred so there are no deductions now.

Major repairs were 

• Year 3 - $3800 for HVAC system
• Year 4 - $1600 for plumbing issue requiring 6 foot of tunneling in year and $1000 for elecrical panel update
• Year 5 - $2600 in electrical repairs

2.  Is it time to break ties and go ahead and spend the needed $10-15K now and go for market rent of about $1100 to $1200?  If not, I will definitely go up on rent to $925 soon as he is month to month at the time.  My thoughts on this is that it totally makes sense to make the improvements and go for the higher rent, but he is a very good renter and I know what to expect with him.

I think if I get an answer to question number one, I should be able to calculate my ROI and answer number 2 myself.