All Forum Posts by: Jessica G.

3/2 end-unit condo in nice B area (across the street from A+ area), good schools, HOA docs and situation are satisfactory. Unit is about 1,200 sf. DFW area.

Currently rented at $935/mo

Lease ends June 1

Unit in good shape but after the current tenant leaves, I could possibly improve flooring ($1,500) and counters ($500), which would increase rent to around $1,025+

HOA fees of $275 (water, trash, insurance, exterior maintenance)

Landlord insurance $70/mo

Property taxes $80/mo

We would finance 80 percent at 4.8 percent (bank has OK'd low loans)

So what would you pay for this?

The DFW market is insane right now, completely different now than it was even three or four months ago. Inventory is extremely low and prices are getting higher weekly in nice middle-class neighborhoods. Everything decent is selling immediately with multiple offers and over asking price. I have a friend who got eight offers in 36 hours on her $140,000 home in a good school district.

However, when dealing with appraisers and some RE agents, I feel like I'm taking crazy pills. Are they not aware of what's happening around them? Am I just not realistic?

ISSUE NO. 1

I emailed a Realtor last month to see what she thought a 1,440 sf SFR we own would sell for in mid-May when the lease is up and we put in new flooring, appliances, and counters. She replied with a list of comps from our subdivision, all from 2013. The oldest was a year old and the newest was four months old. (Houses just aren't getting listed lately.)

She said our house was worth $95 per square foot and she would love to list it for us at $138,000. I replied that that seemed low, considering very similar 3/2s within 1/4-1/2 mile of us (different subdivisions, but extremely comparable) had been selling for about $108 per sf in the last couple of months.

She sent a very indignant reply, saying she would list it for whatever we wanted, but the appraiser would look at the same comps as she did and then our buyer wouldn't be able to get financing.

I was pretty annoyed and haven't replied to her yet. In the meantime, houses in and near our subdivision are selling in days with multiple offers Listings for 50-year-old houses with no updating are at $108+ per sf.

ISSUE NO. 2

Our personal residence is a 2,200 sf 4/3/2 in a nice neighborhood with great schools. We bought it in 2011 as a short sale for $150,000. The average comps from the last three months in our subdivision (about seven houses) are $91-$100 per sf, which puts us comfortably over $200,000.

We decided to refinance because we could pull some cash out while still lowering our payment with a better interest rate.

The appraisal came in at $180,000. The appraiser said he based the appraisal mostly on a house with the same floorplan on the same street, which sold in AUGUST 2013 while listed at $185,000 (he dropped us $5,000 because we don't have a pool).

He noted that he called the listing agents for recently sold comps, and they all told him they sold within days with multiple offers for above listing price. (They didn't give him a sold price because Texas is a non-disclosure state.)

On the very next page, he noted that prices in our neighborhood are "stable" so he felt comfortable using the August 2013 comp.

So what's going on? Any advice? I'm feeling really nervous about selling the house now if appraisers are this out of touch with what's happening in DFW.

@Jon Klaus

@Michaela G.

@Brian Mathews

@Paul Wurster

@Cal C.

@Mike M.

@Walt Payne

@Jean Bolger

@Jimmy Watson

@Matthew Paul

I want to thank all of you for helping me make a decision! I am really excited -- we're having a lawyer draw up the documents now.

Finding this deal was lucky, but I worked so hard putting it together. I'm crossing my fingers for everything to continue to work out. If it does, pretty soon we'll have bought a wonderful investment property for an initial outlay (legal fees and inspection) of about $1,500.

I took my husband to see the property this weekend, and I realized it's in much better shape than I had first thought. (It's just really, really, REALLY dirty.) The flooring is actually fine for now, and only one or two small walls need painting.

Throw in another thousand or so for carpet cleaning, spot painting, drywall patching, dead tree removal, and new toilets, and it'll be ready to rent. We'll make the other fixes over time.

I'm so happy. This is just the beginning -- maybe we'll be able to send my kids to college after all! Thank you all for being a part of this amazing resource.

Built in 1985. P&I is $650. Escrow (property taxes/insurance) is $370. PMI is $50. I would probably refinance when the loan balance reached 80% of the value.

Here is a clone of the house (same floorplan/neighborhood) that just went under contract. I think they purposely priced it low to get multiple offers:

http://www.zillow.com/homedetails/1531-Mayflower-Dr-Allen-TX-75002/26635623_zpid/

Note: I'm very new at this. I've been renting out my former residence for three years, but this would be my first house purchase specifically as an investment.

I'm in the middle of acquiring a sub2 (taking over existing financing). The seller just wants out. The house is worth $130-$140K in a a tiny pocket of affordable houses in a very affluent suburb of Dallas with excellent schools. Houses in this neighborhood are ALL going under contract immediately with multiple offers right now (and in most good areas of DFW too). Loan is a FHA at 5% with $114,000 remaining. Rent comps are at least $1350. Seller doesn't want any money to change hands between us. I'm paying for the inspection and legal costs.

I just had the inspection done and my head is spinning and my husband is suddenly less on board than I thought he was. The owner has not done any maintenance (or cleaning) over the four years he has owned the home, so it's in "rough" shape. But I still think it's a good acquisition for us. However, we can only put a few thousand dollars into getting it into shape and holding costs for rental.

Inspector's observations

Roof over outdoor deck is not to code and is therefore "unsafe" per inspector.

Roofing is "amateurish" and has some buckled shingles (no leaks)

Missing flashing on roof & other areas

Missing sealing on windows and doors

Rafters separated from adjoining rafters; purlins undersized

Attic needs more ventilation

Toilets need replacing

House is filthy

Several smaller issues like water heater and washer/dryer not raised 18" off floor

The good news -- the foundation looks great. :)

Personal observations

Flooring needs replacing ($1,000 -- will use vinyl plank/carpet)

Walls need painting ($500)

Dead tree in front yard needs removing ($300)

Fence needs repair ($500)

Hole in drywall needs repair ($300)

My question -- do you see any dealbreakers here? I don't believe everything on the inspector's list needs to be fixed before I can start renting the house out -- am I wrong? Let me know if you need more information.

Edit: Also, there's this: "The grounding of the electrical service appears to be ineffective." What does that mean?

@Dorothy York

@Rolanda Eldridge

@Bryan H.

Thanks for the input everyone! I am not too worried about it sitting on the market. Homes are going under contract in less than a week around here in DFW -- sometimes the same day -- if they are priced correctly, so I just don't want to put in more money than I can recoup when we sell.

We're about to put a house on the market. It has been a rental for three years, so it needs paint and new flooring. Most of the house is carpet, with some laminate and tile. I think the tile is still in OK shape, while the carpet and laminate looks awful.

The house is a 1960 3/2/2 in a nice middle-income neighborhood. I think it will sell for $150-$160K. The market is insane right now and prices are rising by the day.

The house was totally remodeled in 2006 by a flipper. The finishes are not cheap but not luxurious. We added really nice double-paned windows and expanded the kitchen. Other sales in the neighborhood that have been remodeled generally have granite, stainless steel appliances, and laminate flooring.

We have Formica counters, which I'm really not willing to upgrade because the counters were new in 2006-2010 and there is a TON of counter space for a small house, which would make replacing it prohibitively expensive. The appliances are white and 8 years old. Again, not really willing to replace perfectly good appliances with stainless steel unless I have to.

My main question is about the floors. I can put down vinyl plank flooring myself (peel-and-stick or glue-down) for less than $1,500. OR I can have laminate installed for $3,000-$4,000, or engineered hardwood for about $5,000.

Which is the best return on investment? I think the vinyl plank would look good enough to get it sold, but is it a huge turnoff for buyers? (I personally think it's a great product, and am considering putting it in my own house and definitely my rentals.) Is the draw of having real (engineered) wood enough to recoup $5,000?

@Jean Bolger

Thanks for the heads up -- capital gains is a big concern. We put so much money into improving the property, though, that I don't know how much we'll end up owing.

@Jimmy Watson

Ha! Actually, the property I'm discussing is in Farmers Branch. We now live happily in Richardson.

@Cal C.

@Mike Hurney

@Account Closed

@Gautam Venkatesan

@Trevor K.

The neighbors are just inconsiderate. They have barking dogs, keep junk in their yard, let their kids roam wild to the point that none of the other parents would let them come play anymore. We literally had code enforcement on speed dial and they were one of the reasons we moved (school district was the main one, though).

If I knew then what I know now, I never would have bought the house. Too much anxiety, money, and heartache between the foundation issues, the school district switcharoo, and the neighbors.

I guess that's my answer. Thanks for putting it in perspective, everyone.

We are just starting out in real estate investing, so I would appreciate input on our situation.

We have used our former home as a rental for the last three years. We've been using a property management company who rents it far below market and whom we're unhappy with for other reasons.

We can either sell this spring/summer when the lease runs out, or keep it as a rental and manage it ourselves.

We bought it in 2006 (sigh) for $130K. We owe $110K and could probably sell it for at least $155K if the DFW market stays strong.

Selling = $35,000 after making repairs and realtor fees

Rental = $1400-$1,500/mo (I am pretty confident that this is a conservative amount after months of stalking craigslist and MLS) with entire payment of mortgage, taxes, insurance of $1080

Cons: The house has had recurrent foundation troubles (we paid $17,000 to fix it with a lifetime transferrable warranty, though), trashy next-door neighbors (they are really bad), and is not in a good school district. Pros: It's in a great central location with easy access to all the best parts of Dallas, part of a nice neighborhood overall, and is a lovely, solid house.

If we sold it, we would save some of the money, use some of it to improve our own home, and use some of it to reinvest in real estate. (Probably $20,000 toward 20% down on another investment property.)

The property management company we're using has never had a lease renewed in the three years they've had it. I'm not sure if that's because of their crappy management, or because of the problems I mentioned above. I have overall been pretty unhappy with the quality of the tenants.

The house itself soooort of fits into our business plan -- it's a 3/2/2 in a nice middle-class neighborhood -- but I'd really like to focus in the future on houses zoned for better school districts.