All Forum Posts by: Scott Sutherland

Welcome Mike. There are a number of active groups in Austin. Big Daddy's on Thursday at noon. REICA held monthly. Guy Jimenez has a group. Also we have a monthly BP group on Wednesday's at 10am (South Austin Coffee Talk). Any many more on meetup.com. 

You'll have little problem networking and getting up to speed in Austin. 

PM me if you start your own group. Always looking to network.

For longer projects (6-12 month hold) I like to use the 70% rule. 

For quicker turns I might pay 75%

So if ARV is $450K, then your purchase plus rehab should be $337,500 for a quick turn project (75%). You're looking at $375K for purchase plus rehab so I'd say it's not a good deal.

Also, I would never bet on appreciated ARVs in a flip project. If the market rises, good for you. But if it has to for you to make money, you're taking too much risk.

Lone Star Carpet

I like the stuff closer to 183 around Jamestown road. There are a number of good pockets and plenty not so good.

I'd suggest driving the neighborhoods where subject properties are and checking out the neighbors. 

Look for areas where there are some single family properties close and without furniture in the lawn.

In general you want your property to be the scourge of the neighborhood so you can easily elevate the value and rents through renovation.

Not much in the city limits. The best you can do right now is a 1% duplex in 78744 or 78758. You might be able to find a .8% SFR that would cover payments at today's low interest rates but it will be primarily an appreciation play.

There are some new duplexes and 4plexes being built in Bastrop and San Marcos at 1.05%. At least you wouldn't have the maintenance worries of an older property. 

Investors looking for cash flow are moving to the outlying suburbs or San Antonio. Converting a property to a vacation rental is another option, but management will be more active.

My percentages refer to the monthly rate as a % of purchase price.

Great post James.

My wife and I were laughing as we read it this morning because it's exactly how we feel right now. 

We have the capital and credit to purchase, but refuse to buy the "best of the worst". 

We are also considering Bastrop, San Antonio, San Marcos, and New Braunfels at this point. The growth is good in those areas and 1% rentals can still be found. 

We're also looking at flips in Austin, but finding a flip deal in the MLS is nearly impossible.

Sometimes your best investment is the one you don't make. Better to be the person with the cash when things slow down.

Twisttours is awesome. 

Family and friends have been my go to. But also friends of friends and business associates of friends. Trust is very important when sourcing capital. I've focused on building my real estate resume and providing capital alongside the other investors. Sometimes as little at 2.5% of the investment, but investors like to know that you have skin in the game. On other deals, I've subordinated my investment (I lose everything before they lose anything) to illustrate my confidence in the project and my abilities.

I'm not an attorney, but I do know that when you start sourcing from investors that you don't have a prior relationship with that you can run afoul of the SEC. 

If you have concern about investors not funding, might I suggest that you require any interested investors to replace your earnest money prior to the expiration of the option period. If they back out and the deal dies, it's their money. In my market earnest money is typically 1% of the purchase price.

Travis,

What is your plan for the property? Are you wanting to hold it long term or are you repositioning it for resale?

Would you consider bringing in a financial partner that would supply financing in return for an ownership share?

You can do the LLC yourself for $300 or you can have NRAI (national registered agents) do it for about $600 which includes being your registered agent for receiving any documents.

One of my partners works off a boilerplate agreement we've used before. I typically form the LLC and the company reimburses me after formation (once we get the bank accounts set up).

Feel free to ping me if you're ever in Austin. We can grab coffee or catch up at a local investor meetup.