Advice on rental properties

[Ali Samana]

Hello everyone,

I am looking to buy some rentals here in CC, TX. I came across a deal that I think I am going to move forward with. I wanted to run it by here to make sure I wasn't making a mistake. I do think I agreed to pay too much.

The deal is for units (4-plex and a duplex)
They are 100% occupied with the total income of 2600/month
the owner pays water (300-500/month)
He wanted $151500 for them. They do need some work from my standards, but if they are already rented then it wouldn't matter that much.

I offered him 140k with him repainting all of the outside on both buildings (we told him what color). There are also some electrical units that are going to be replaced (just faceboards ertc)

So, shortly here are the numbers again.

Purchase Price: 140K
Total Rent: 2600/month
Utilities: 3-500/month

Is this a decent enough deal to get involved with?

Thanks in advance for your help.

[Eddie Ziv]

Ali, I own two SFRs near Austin and I've been always a big proponent of rentals in Texas. However, I was recently exposed to a revelation ( ...and being Jewish that doesn't happen so often...:) I was hit by a huge raise in property taxes that put the financial viability of my income properties there in question. Old data shows that Texas has an average of 1.76% tax rate however, the reality is that the tax rate is more like 2.6%-2.8%. The general problem in Texas is that properties don't appreciate that much and the amount of rent that can be charged is limited.
For example, If you own an SFR that cost $125,000,your taxes are likely to be between $2,850 to $3,450 and the rent would be between $1,000- $1,150 which means, three months out of the year, the rent goes to pay those taxes and I haven't touched mortgage, insurance and maintenance. Yes, Texas is the biggest state in the union (In land) and data is vary. But that my feeling. I moved from Texas to Alabama where I own 4 SFRs.and my property taxes are about $800

Now, it may be that the story with MFS is different but I would strongly recommend to research the property tax history and have an tax analysis made prior to purchase.