All Forum Posts by: Scott R.

Although this may of worked out for you, not filing an eviction did not help out the next landlord, which will see the sons 750 credit score and have no clue of the stress you went through and the non full and non timely payments they made. If the tenants cannot follow the contract they signed, they need to have that eviction on there record to warn potential new landlords.

Will you be living in this property, you mention buying it owner occupied so I'd assume youd actually move in?
my one piece of advice, coming from a similar aged investor.
NEVER ADMIT YOUR THE OWNER!
its way best way, and the tenants are more laid back and themselves around you! your just the maintance man/manager working for someone who owns the property, probablly lives out of state, and is a dick..
Being new in the game, you dont always think things through 100% if put on the spot, it's too easy to give in and people try and take advantage of you at a young age, new in the game, this ALWAYS gives you an out, gives you time to consiter anything,

tenant wants to have a dog, put on the spot you might agree, but as the manager you'll ask the owner and get back to them. !
there rent is going to be late, well you'r required to charge them the late fee, its not your rules, its your job. you dont get the money and it doesnt effect you at all,
they almost seem to think your more on there side if you live in the multi unit and are not the owner
Hundreds of small situations, and your tenants are more likley to tell you stuff IMO if they think you are not the owner.
TRUSE ME it works! :)

as long as im making money on the property i dont care!
If I can mortage 100%, 14% interest, and still cash flow, using 50% rule, im fine with it. when i started I didnt have money to carry properties for 1 month unrented, guess what, i worked harder, faster, and made it work. kinda wish now a days i had no reserves, although my reserve fund is TINY compared to most, I think if I had NONE I would be at one of my empty recently vandalized properties right now replacing sheetrock as oppose to being on BP!
people FREAK OUT when I tell them I pay 14% for some of my money, and up to 5 points up front.
yet I couldnt of gotten into this property without it, property is on a 5 year note, 20k purchase, PI $475ish, and rents for $700.. althought this doesnt fit all the rules and guidelines on this board, im willing to strech some and have this property paid off in 5 years. If it wasnt for that money at 14%, I couldnt of purchased this property, period. Was rented on hud for 2 of those 5 years for $800
smart investment IMO.

Im in similar situation. I moved, from a falling real estate economy in Arizona to Texas 4 years ago, just for real estate. Everyone thought I was crazy. Im 25 and have 2 paid off properties and another one close.. 5 total right now that are rentals, downgraded some trying to get stuff paid off to have a greater net worth so i can leverage better. I skipped college, everyone else I went to school with graduated in the last year or two, and got 9-5's most making $30k or less. I bartend on the weekends, when I want, love the job, make $30k bartending, $30k in real estate with my rentals, and chill! so glad I decided this career choice from others, College just didnt seem right for me. couple more years, have these rentals plus my house all paid off and Ill be able to grow alot quicker. My family all thinks im crazy, and most my friends dont even own there own house.
Although you have said you havent had any major problems, I HAVE had problems that most would not even believe with tenants and property, major vandalism, arson at another, major tenant problems, and these have been the biggest headaces ever, but now im alot more prepared, alot better insured, and ready to grow my business!
As Rich Weese pointed out, I've had 10 years worth of bad luck in just 1 or 2, so i should be good for the next 8 ;)
Real Estate has produced more self made millionairs than any other "business" venture minus some dot com boom stuff, but that is unlikely to happen again, real estate has produced these people for 100's of years.

First, yes I and most the others who replied on this form do know how amazing real estate is in Texas, over half the replys to your questions are from people somewhere in Texas!

Second, I HIGHLY doubt very many if ANYONE is buying $50k properties, flipping, making $25k on each, and able to do this multiple times a year, little alone 8 times a year, not realistic. high profit spread for such a cheap priced house IMO

Another thing I think, personally, is if your going to flip your better off in a little bit of a higher price point, maybe not the $250k you talk about buying as rentals, but in the 100+ range for the texas market. I also feel if your going to hold rentals your better off in the sub 50k range. more profitibality.
It seems IMO since the first time home buyers credit stopped, ALOT of the $50k-75k price range houses have been A TON harder to sell, sell cheaper, and take longer. Dont get me wrong, no houses are flying off the market in ANY price range, but realistically the people willing to live in 50-70k houses are generally lower income, older neighborhoods, outdated areas, older schools, and have worse credit and not as much money down, = IMO harder to sell.
the $100-250k price range in most areas of texas can get you nicer older neighborhoods and newer neighborhoods, bigger houses, 2 bathrooms, stuff not often seen at the lower price point.
If you were to buy 2% rule houses and apply the full rent payment to the principal you should have paid off houses after 10 years, thats giving buffer room for repairs and unexpected cost. You should realistically be able to purchase more properties per year then 1, and therefor have a 20+ house portfolio after 10 years. IMO, this is the more profitable way, and the more "secure" way. Flips can and do go bad, If you have one flip sit on the market for a year, and all your money is tied up theres not many options for doing another flip.,
I feel your lower income might not be as easy to sell in 10 years, but as far as profitibality, this is the way to go in my opnion, this and/or owner financing these lower income properties. everyone has there own cup of tea, this is my choice.

Well for starters, congrats on getting a job. maybe we should give that advise more often, and to everyone even non investors!

assuming your rent doesnt go up since your lease is over, $250 is very hard to beat. hopefully your able to stack away some cash for a rainy day or amazing deal.

Personally I like condos, most investors seem to dislike them, that being said I have zero condos. You have to remember, with condos there is a HOA due rented or not. I looked at some condos in Vegas, I think there are AMAZING DEALS in Vegas in condos. Ive seen condos there for $10k, might be a terrible area, but its $10k.
some HOA's DONT allow rentals, or restrict number of rentals allowed in complex. Also they can have assessments that you are required to pay for, they repave the parking lot, you pay for it, even if you didnt want it.
Condos are harder to rent, harder to keep full, and generally rent for less, its basically renting an apartment. people tend to rent houses for longer periods of time then condos.
That being said I KNOW there are some condos deals in vegas, and I think for your situation I'd be very active in looking for a deal right now, you could move into for a few years, and hopefully sell with the market somewhat recovers and make some money.

Everyone lies, believe no one, trust no one.
People lie about ARV, people lie about rental rates, people lie or underestimate repairs, people lie about repairs needed, tenants lie about everything, there mom just died for a second time, contractors lie, are never on time, always need money up front, always estimate less, and take longer and it cost more. Realtors tell you to offer more, they wont accept your low offer, they tell you your house is worth more ARV so you will list it with them.
Research everything yourself and you will be fine.

This website probablly provides the easiest way to pass those leads on. Most investors will pay a referral fee for properties they purchase, I'd look into that.
I have gotten several leads for properties in my area that were provided from people on this site, (shout out to Jesse & Blake! keep em coming!) problem is you have NO CLUE as to terrible areas in other cities you dont know about, problems with the specific area, or house. The last two I got from other investors that live elsewhere the one was a trailer and that wasnt disclosed to the person that passed the info on to me, and the second one was in a very bad area, with the house next door half burnt down, and "zillow" way over estimated the value, the property was worth WAY less then that person owed. Most the time if your getting out of town properties for a local website, its probablly because they have tried everyone local and no one is interested at the price theyre looking for.

You can hold out of state property in a LLC formed in the state you are from. I'd say that'd be the easiest, as youd have local help to create that LLC and tax information. All state LLC's are a little different cost wise, but should provide the same protection.

As Nathan stated above, based on 50% rule, $32k. Simple answer.

Based on my own personal experience with section 8, which generally pays based on the number of bedrooms, the section 8 stuff i have done and properties i have seen, that rent is generally inflated IMO.
You dont say where this property is, so I'll use my local stuff for example.
IN MY AREA, AMARILLO TEXAS -
Maximum HUD will pay for a 2 bedroom is $696
Although it MAY BE ILLEGAL, (thats a different discussion), in most the lower income areas, properties that are 2 bedroom and rented on section 8 are rented for close to this number, even if they wouldnt normally rent for such. I have a non section 8 house, 2/1 720sq ft rented for $500/mo, theres a house not as nice rented across the street, rented for $700/mo with section 8 paying almost the full rent, tenant pays $50 a month. I showed interest in purchasing this property, but the owner overvalues the property based on what the property brings in.
The tenants on hud dont look for good or even average rental rates when they are not paying the rent.

My house I paid $24,000 for, the one across the street is similar size, but not as nice. I would personally pay probablly $20k
Based on 20k and 2% rule that house should rent for $400
Based on the $700 he rents it for, it should sell for $35,000
$35k is almost double what this house is REALISTICALLY worth. Now if he was willing to owner finance this property, I'd say he'd get every bit of $35k asking price, owner financed.
If he needed to get rid of this property in a realistic time frame, $20k $25k tops.
Based on this you can see how rent doesnt fully allow you to set a purchase price, or value on a property
There are properties in my area selling for $60k range, renting for $700 a month,
the property i reference above is valued at 25k tops and rents for $700/mo

My second question/concern with this property is you say the taxes are $387 annually. for texas that is EXTREMELY LOW!, again I dont know where this property is, but that seems extremely low.
I'll use actual numbers for the property I talked about above for reference, now dont get me wrong, tax apprasials are not a value you should base sales or purchase price off of, i just feel this property is probablly valued very low in the tax apprasial.
My house,
Building value $11,254
Extra feature $250 (storage shed)
Land market value $6,500 (yea right)
puts my total apprased value at $18,004
and I pay $420 a year.
to be in that $390 area your tax value would have to be roughly $15k building and land value. I'd GUESS with a property valuation so low based on tax apprasial for a 720/sqft property its a lower income older area. thats just my guess. These areas are often the best areas IMO to cash flow, but hard to sell.
would I sell my property for $18,004? hell no I just paid $24k for it, just using this as a "estimate" on your taxed valueation, based on what you pay locally.
In Arizona, my parents property is tax valued at $200k and they pay $600 a month. Texas is highly over taxed for real estate IMO, althought we have no state income tax :)