All Forum Posts by: Ronnie Woolbright

Thanks for the advice all. Since I confirmed the MTM status with the seller I am going to provide a 30 day notice upon closing and have an eviction ready to go if that does not go as planned.

Thanks again

I am in the option period

HI all,

I have never run into this situation before and would like to get a little feedback. I am looking at a duplex in DFW Texas and one tenant is on a MTM lease that I would like gone (preferably before I purchase). The reason is that they have a huge dog in the back yard which I believe is a restricted breed with my insurance company. When I toured the property the dog seemed aggressive and was only held in the backyard by a short chain link fence which it could easily jump. Is this something you would negotiate with the seller or handle afterwards? If the seller does not handle the issue (move the tenant out before closing), how quick do you think this could be done after I purchase? The reasoning is pretty clear that I want to minimize liability as much as possible. I am worried if I have to deal with it, the tenant would be reluctant to move (they are under market rent) and I fear it could lead to a lengthy eviction. Thoughts?

Hi Dallas BP members,

I am looking to invest in the Bishop Arts area and neighborhoods right around it. I have mostly invested in Tarrant county (Arlington, HEB, FW) but looking to add a small multi unit in Bishop Arts. Budget would be 300-500k range. Does this sound reasonable for the area and what is your experience in leasing this area? Wanted to get a feel for the quality of tenant in the area and turnover. 

Also as a followup does anyone have any info on remodeling in this area? I wanted to know if there is a lot of red tape involved in remodeling since it is a historical neighborhood.

Thanks,

@Matt Donley

Hi Matt, I'll just add my two cents here. I think the guys that look at the cap rate, ROI, cash on cash return (all similar metrics) are spot on. When someone says they wont purchase something that negative cash flows, that is one of the most basic rules to investing and most people on BP already assume it. All good deals will and should cash flow.

You need to compare your potential deals with an apples to apples approach instead of just asking "does it cashflow". I use a cash on cash return which works on financed and non financed deals. A rough calculation would be yearly NOI divided by your total cash investment (all in cash outlay for financed properties or all cash deals). For my all cash deals I like to see 12-15%. If I finance the deal the returns go up because my cash outlay is a lot smaller. I think if you use this approach you will quickly see the difference in the good deals and bad deals. The hard part of the calculation is making sure you get a good NOI estimate. This requires the most work as you need to determine realistically what you will get on rent and pay out on the expense side. Let me know if you have any questions.

hi, I live in Arlington and think it's a great place to invest in rentals. If I were you I would call the owner and try to get as much info as possible about the home over the phone- price, condition, reason for selling, ect. then when you go look at the home take someone along that is knowledgeable about repairs and rehab to get an estimated cost. You will want to talk with someone that has access to mls and can get you a broker opinion on price or an equivalent fair appraisal. I would back out your repair cost plus your desired equity pickup to make the offer. Also, since this is a rental you will want to get rental comps to find out how much you will make after you factor in tax, ins, loan payments, and repairs. This is a basic overview of the process. Sometimes for sale by owner homes are priced a little high due to owner bias on price but its worth a look. 

Originally posted by @Cliff Odom:

When you look at volume (how many people are in the total population of people to interview) all it takes to run an article on 5 biggest mistakes for anything (real estate, relationships, swimming the English channel) all you need is a journalist that who may not even be able to spell the subject and people willing to quote a list of mistakes.  There are thousands of people that bought a rent house that blew up in their face to quote.  Now if you say tell me how to successfully do anything real estate included you have to find someone that has done it correctly and get them to tell you how they did it.  That is a lot more difficult.  You have to find a person that has been successful, then qualify that person and the person they know what they are doing and why they are doing it.  

Whenever I see an article on 5 biggest mistakes what I see is a lazy journalist.

I agree here. The question is how to put together a successful rental and copy that process over and over again. I am going to list my top 5 things that will make your rental a success (simplified version) and would suggest that any non-conformity to these would open you to failure.

1. Buy the property at the right price (like most have said you need to consider all expenses and include these into your desired ROI and adjust your buy price accordingly).

2. Fix everything when you rehab it. This does not mean spending a ton on the rehab for fancy fixtures and finishes. Just make the place clean and functional. If your water heater is already 15 yrs old replace it before you put a tenant in there. 100% of the time it will break on the weekend or at night and you will have to pay extra to have it fixed or it will cause extra damage that you otherwise would have avoided. Also, if you have an old AC unit and  the summer rolls around the tenant will start blaming you for the high electric bills. I can't over stress this point- proper rehab will go a long way in getting better tenants, lowering your maintenance, retaining your tenants, and reducing your stress while managing the property.

3. Screen your tenants properly- don't get lazy here. Do a full credit/criminal/landlord history check and call the previous landlords. Put on your detective hat and find a reason not to rent to them. If you come up with some legitimate reasons either deny them or increase the security deposit to cover for added risk.

4. Set your boundaries early with the tenant and stick to them. I have not always followed this and it comes back to bite you. It could be laziness, neglect, or getting your feelings involved but it always costs you. 

5. Build a good team. I cannot be a maintenance guy, landlord, accountant, lawyer, marketing guru, and real estate agent all the time. Sometimes if I have a low skill repair that is not an emergency I might go out and fix it if I feel like it (gives me an opportunity to look at the property) but I rely on a team of individuals I have used and can count on to get things done right and quickly. 

looks like we have very identical backgrounds- accounting and re investing in Arlington.  let's stay in touch. Good to meet you!

Originally posted by @Jon Klaus:

Welcome aboard, Ronnie.  I reall enjoy the podcasts, too.  Are your rentals in Arlington?  I have some on the east side of DFW.   We are glad you've joined us!

 Hi John and everyone else that has welcomed me. I actually live in Arlington but rentals are spread through dfw( ft worth, Bedford, watauga, Euless). I love Arlington and moved here because family is close and it's my old college town (UTA alum). Do you know of any local groups close to Arlington? I found one for north Dallas and Fort Worth so far. Good to meet you. 

New member from Arlington Texas. Hi all, been listening to the BP podcasts for a few days now and decided to join. My plan is to check it out for a few weeks and possibly join the pro or other member level. I have been investing in buy and hold SF rentals in the DFW market for 5 yrs now. I have 6 deals worth of experience so I'm still a little green. I am joining in order to expand my horizons beyond the mls and traditional financing method of acquiring rentals. My background is in multi family management where I have worked at two of the larger management companies the last 6 years in the capacity of accounting/financial reporting. I love the management side of the business and will eventually switch from single family to multifamily investments when the opportunity comes. Feel free to connect. I am here to learn and help others with the little I have learned over the last 5 yrs.