All Forum Posts by: Ryan Harthan

Price should be total investment.   So your NET operating income, something a lot of people have trouble calculating correctly, divided by your total investment

Gross income - vacancy and collection - taxes - insurance - property management - capX

Divided by

purchase price + repairs + closing costs

Georgia may be different but in Texas you do not get a title policy at a trustee sale.  You do want to check the title as any unsatisfied liens are now your responsibility.  It's easy to pick up a $100,000 federal tax lien if you don't know what you're doing.

I've done the S Corp formation but I found out I'm still paying the same amount of taxes.  If I hold it in the S Corp and not distribute it as income I minimize self employment but I wind up paying taxes to hold it in the corp...  If you made money you owe Uncle Sam, they're collecting one way or another...

One of my friends bought a house for 30 and sold it for 90. I bought one for 43 and sold it for 80. MLS deals are going to be skinnier because there's more competition but I see people making better than 10% of purchase price on off market deals. Also comes down to your strength as a negotiator on the front side and the strength of your buyers list on the back end.

I'm a big fan of series LLC's for long term hold strategies. Some favor land trusts but series llc's are so new that there's not a lot of case law on how to handle them. They effectively work as setting up an individual llc for each property under one name i.e. Texas Holdings llc series 1, Texas Holdings llc series 2, etc. You have to be careful about how you keep your books but I know a couple people in Atlanta that would be able to give you some better advice on how to structure that up.

It really depends on the servicing company. You're going to want to read the offer instructions very carefully and make sure you follow them to the T or they'll kick your offer back. Some come with 45-90 day deed restrictions about reselling the property. For larger REO agents you will almost never actually speak to the listing agent, most have several assistants handling their day to day operations. If you're planning on investing in that area for a while you also want to make sure you perform on your contract. REO's have a good memory and will recognize your name if you're dropping deals with them over and over. Some also have restrictions on investor offers. Reading the instructions is really the most important part.

All lenders are going to lend you less than the property is worth.  In the event that they have to foreclose on someone they want to ensure that they can cover the amount of the loan.  If you think it's worth 200, you're buying for 100, and the rehab amount is 40 they're not going to lend you more than 200.  Typically they'll have a percentage amount the lend out up to but are going to want to see you bring some cash to the table.

If you're going to spend a couple hundred thousand on real estate you may as well spend a couple hundred on a license.

Ft. Worth as opposed to Dallas offers about 4% more equity capture on single family deals.  

Texas is generally a 3-5% VC expense depending on the property