All Forum Posts by: Adam D Rinehart

I was initially going to use the one lease & "house mom" model because my college experience was similar in that peer pressure to pull your weight and pay rent goes further than some guy saying "pay me or else every month". However, I decided against it because it doesn't market well when listed for rent and I would have a really hard time justifying evicting the other tenants due to one person potentially not paying. You wanna talk about irate phone calls from parents...Also, my rental is a 5 BR house and rooms go for $700/mo. Putting a $3500/mo rent flyer up doesn't generate much interest because of sticker shock. Even if they can pay the room rate and have 2 friends who can as well, they still won't apply because they're 2 people short. By the room is how I chose to go because I thought it would be best for my situation, but I completely get the one lease payment side also. The deciding factor for me was how tech savvy this crop of college kids are. All of them have smart phones with a data plan and some sort of P2P payment app or pay online with a credit card.

@Federico Gutierrez I just want to clarify that what I’m doing isn’t a wrap mortgage. That is a specific type of creative financing used to acquire a distressed property to avoid triggering the sellers due on sale clause. Whereas I’m cross collateralizing properties to consolidate them under a single mortgage loan. I’ve also heard this referred to a blanket mortgage.

Andrew, for what it's worth and you have rentals here in Houston, the Texas Property Code also requires that unleased tenants and even squatters go through the same eviction process as a tenant with a valid lease.

I plan on attending.

In addition to what Justin said in regards to stucco being brittle, it can and frequently does crack from thermal cycles. Stucco and wood expand or contract at different rates when exposed to the same temperatures so it's not surprising to see cracks in similar locations you would for brick cladded homes, near corners and framed openings like doors and windows. These are typically the weakest areas of stick build construction so if it's localized to these areas and doesn't seem to have gaps that you can see through, you should be fine.

One exception to this would be the presence of rust along the crack edges. If that is present it is an indication that the crack has exposed the wire mesh that the scratch/base coat is applied over and is getting in exposed to moisture (rain, dew, sprinklers, etc). If that isn't fixed correctly, the corrosion will get worse over time until you get to the point that the mesh no longer serves its purpose and begins to detach from the house.

I love that product so far because I can use any washer or dryer with it. I pick mine up used off facebook market place between $60-80 each. Most are from upper middleclass neighborhood and households that upgraded to bigger units after they started having kids so they are fairly new and in good shape without much wear on them. With the abuse W&D's get in the unit, being able to swap them out for cheaper than a warranty service call makes my life easier. Also, that particular product on the laundry appliances can be converted to an electronic payment system now for the residential version. I think that just dropped in the last few weeks, so that's something I'm looking into upgrading so I don't have to collect the change when I replace the AC filters every month. It's also less hassle for the kids since they often don't have quarters readily available, but they ALL have apple pay or Venmo on their phones.

Yes, each room only has a dead bolt. I considered electronic access but they are much more expensive to install and maintain from what my research found. When the batteries in them die, which they frequently will on the exterior entry doors, and your tenant(s) gets locked out, they're SOL until the PM gets there to change the batteries. It's more a novelty item than practical for this niche.

I also offer my units fully furnished. I provide common area (big sectional couch and dining room table & chairs) and bedroom furnishings (full mattress, box, and frame with dresser) to make the price easier to handle for the parents. If mom and dad don't have to move Jr. in and out over the span of 3 months during the summer because everything they NEED is already there, the convenience factor from turnkey living gets them on board as well.

@Trent Arey I use dead bolts only on the bedroom doors. This makes it impossible to accidentally lock themselves out of their room unless they lost their key or made a copy to give someone.

I also included utilities in my rent price but I also installed these https://www.limitedresources.us/store/p31/Washer_Coin_Laundry_Conversion_120_volt_-_RESIDENTIAL.html#/

to discourage having everyone and their mother come over to the house to do their laundry for free. It also creates another revenue stream. I’m use cozy.co for rent payments and maintenance requests. I like the credit card feature they have because the fee is paid by the payer and can be done by anyone not just the tenant.

@Andrew Postell gave you a good road map to start off with and general framework to work within. What I would add to it are the alternate avenues in which some things he mentioned can work. I only know this from my personal deals I'm currently doing and don't intend for these circumstances to be taken as the standard. Andrew is spot on with the $200k ARV being a typical ceiling because most places in Houston don't rent for over $2k a month and the ones that do aren't investor friendly on the buy side. However, I'm under contract now on a 4/2 1,800 sf SFR that's a converted duplex. It's in amazing condition that I could rent out from day one but am repainting, putting new appliances in and changing the floor plan so that the floor plan is more single family friendly than it currently is. The market rent in the area is $1.20/sf which would put it around $2,150 a month and has an ARV of $220k. This is a gentrifying area inside the loop that's 7 minutes from downtown and has a strong pool of HHA voucher holders looking for 4+ bedrooms homes to rent, so the high cost is largely offset by the housing assistance voucher. Seriously, the pictures below are the kitchen and living room areas. This thing is a unicorn in terms of condition/location/price.

I'm buying it for $150k with 10% down and have a $12.5k rehab. The unique situation here is that the high ARV helps me because my refinance exit is going to wrap my other 3 properties into a single mortgage so that I have only 1 payment. The gross rents from all of the properties still has positive cash flow (albeit smaller) but the higher LTV allows me to pull out significantly more equity (higher total value and larger LTV) to deploy into my next deal. Contrary to initial reaction, my lender actually preferred doing it this way because it becomes almost like an apartment building loan. Vacancy in one unit can be absorbed by another and the loan itself is backed by more than one asset which makes it a safer deal for them. IF you are able to package properties and get favorable terms, this is something to consider after you have a few properties.

@Michael Barry you inadvertently hit on a topic/strategy issue when you spoke about being afraid of a property in the Houston metro area because of a foundation issue. You are not unique in this mindset but I recommend you start rethinking this. Retail buyers run from foundation issues because they want a perfect/near perfect condition home so it's move in ready for their family and don't have a lingering fear that the house will break in half and fall on them suddenly one night while everyone is sleeping. That said, if you want to be an investor I would recommend you use that irrational fear and capitalize on it since most of the time it will limit the competition for purchase. I'm not an experienced investor that's done dozens of homes with foundation problems, but I do have the educational background to know what's going on and how to fix it so that its not a fear of the unknown but a budget issue. Most pier and beam foundation homes can be leveled in a couple of days for less than $4,500 and a concrete pier foundation specialist can do the same for a slab on grade with the price getting up to maybe $7,500 depending on the extent of damage and number of piers needed. But guess what happens next? You now have a house with a repaired foundation that will come with a lifetime transferable warranty to make your buyer/tenant feel nice and safe/secure. So long as the buy price accounts for this work or your ARV and cashflow analysis support the overall rehab with the foundation work, you'll come out ahead every time.

That said, if you come across a slab on grade home that has greater than 6" of deflection from one side of the house to the other you absolutely need to call a plumber to TV the sanitary mainline to make sure it hasn't been compromised. Typical construction for slab homes is 6", not counting the perimeter footer or grade beams under the interior load bearing walls for two-story homes, so any measurement equal or greater than 6" should trigger an additional checklist in your head of additional due diligence to damage or becomes the go/no-go point on buying or walking on a foundation issue house. FYI, many of the concrete pier companies will come out and do free inspections and quotes.

@Turner Wright, I would follow what @Vijaianand Thirunageswaram recommended on waiting for the LLC til you're further down the path in REI. The only thing that got me to create one right off the bat was the bank that did my first refi wanted the title to be transferred to a company/commercial entity to classify a single family home as a commercial portfolio loan. If it wasn't for that, I would have waited longer to form one.