All Forum Posts by: Zane O.

Thanks for the welcome!

Great discussion, guys.  Thanks!

Thanks, Scott.

Yes, new construction on the other side of the neighborhood is going from $130/ft - $160/ft. for "non-custom" stuff.  The most similar and recent comp. to my house is on my street with similar size and finish-out (and no pool) and was listed for $143/ft.  It sold somewhere in the mid-$130/ft.  If we get $125/ft. - $130/ft., we will be satisfied.

I've also watched the houses on Spartanburg and Aberdeen.  To me they're good buys for someone looking to move in and live long term but don't have much margin to flip.  Colonies has about 175 more lots complete in the last two units and those will be open within the next year or so.  Those are essentially the last lots available in AISD (with the unknown status of Woodlands).

I can't say for sure, but I feel like 3 years is the closest time frame to start seeing completed homes in Town Square, but I guess time will tell.

As far as leads for $200k+, we would definitely entertain them in Sleepy Hollow and Colonies.

I started reading the forum a short time ago and decided to join.  Thankful for the resources and community.

My name is Zane.  I'm 32, married, and have a 14-month old daughter.  I'm currently a financial planner for a living.

We have a long history of real estate in my family, and it's an area of passion for me.  I have been consistently studying and researching real estate in our area for about 4 years.  We made our first investment purchase in November.

My long-term goal is to transition from investment on-the-side to full-time development and investment for a living.  We are currently entertaining both commercial and residential development and investment projects.

Thanks, Blake. I agree whole-heartedly on it being difficult for others to understand a specific area or market like Amarillo, just like it's difficult for me to know the same about different markets.

As for the Town Square development, I believe their schedule for the residential development and homes of similar specs will be about 3 years out from completion. It's also in Canyon ISD opposed to Amarillo ISD, which I feel is a larger positive to my property.

In regards to the holding costs, I have factored it both ways and believe there's a numeric value associated with that. I prefer to omitt that for the time-being to assume more conservative projections.

Thanks again for the input.

Bob - I lived through, watched, and studied the local market during the last oil bust and economic situation in 2008.  During that time, prices in our area deviated less than 5%.  Holding times were longer, but prices weren't impacted too greatly.  I am aware that if we sell before the 2 year mark well will pay ordinary income on gains versus long-term capital gains.  My accountant believes I won't have any issue still deducting the interest on my return.  "If you are living in the house while doing the rehab I would rethink your holding costs in calculating profit."  Could you elaborate a little further here?

Jeremy - Midland/Odessa definitely experiences much larger swings in pricing and cost of living then our area in Amarillo.  We are fortunate to have a fairly broadly diversified local economy, even though oil and gas plays a major role.

Thanks for the feedback, Crystal.  I understand your comment on time.  It could be a negative for us if the market changes during holding.  The positive is that we do not have a deadline to sell, so we have some degree of liberty in waiting for the right situation.

The updates are mostly complete.  Our plan is to list the house in the Spring with our desired asking price (about $140/ft.) and see how the market responds.

Our local economy and residential market have proven fairly stable over time, so our hope is that our flexibility in timing will help us achieve the best sales price.

I'm a new member and would love some feedback on our recent purchase and analysis.

We bought a residential property in an upscale neighborhood.  It was built in 1999 and has 3,824 square feet.  They added an in-ground swimming pool in 2004, but otherwise the house was not updated/improved over time.  We bought the house for $98/ft and the average sales price for the area at the time of purchase was $130/ft.  Our plan is a "long-term" flip.  We are making updates/improvements and living in the house.  We plan to put it back on the market within a year.  We were able to finance the property as a commercial loan at 4% with no cash out of pocket.

$371,500 purchase & closing price

$35,000 (projected) improvements

$28,102 holding costs (property taxes, insurance, and debt service)

___

$509,900 projected sales price

$15,297 sales commission split (3%, my mother-in-law is our broker)

$3,500 closing costs

With round numbers, we are looking at $50,000 net profit assuming 1 calendar year. I've calculated our ROI as 13%. The cash-on-cash is somewhat skewed because we're essentially rolling everything back into the line-of-credit/commercial note and spending almost nothing directly out of pocket (104% if we paid all holding costs out of pocket).

I have a detailed spreadsheet, but I'm not sure if I can upload that here.

How does this look, and what other analysis could we be making to continue making sound decisions?

Thanks,

Zane