All Forum Posts by: Andrew Herrig

@Account Closed Congrats for taking action. In some respects, this is a "fake it til you make it" business - figure out the next step and take action before going beyond that. However, you are also dealing with people in some tough situations with probably the biggest asset they own. You owe it to them to treat them with respect and integrity. If you don't know an answer to a question, don't make it up. Be honest with them about your intentions (you don't have to use the word "wholesale", but you need to explain that you have partners/investors/etc that will close on the deal, not you, and they have to agree with your assumptions and numbers).

That said, to answer your specific questions...

1. In the TREC contract, the option period is your out clause. Generally a 7-10 day option for $100 is acceptable, but you can negotiate whatever you want. You need EMD to make it a valid contract. It does not need to be notarized. In Texas, contracts are assignable unless they specifically say they aren't.

2. Technically the seller will always get cash at the closing table regardless of the source of the funds. Generally when you advertise this you are saying you will close in cash or hard money (i.e. not go through a 30-60 day financing process where the bank has endless opportunity to kill the deal). If you intend to get conventional financing, don't advertise you can pay cash.

3. You need a separate assignment agreement signed by you and the end buyer.

4. You should be paid out of the closing funds by the title company.

I would highly encourage you to find a mentor in your area for your first few deals. There are wholesalers literally everywhere in DFW. First things first though - find a deal. If you think you've found a deal, run it by your mentor and make sure it's a deal before putting it under contract. If at that point you don't have a mentor, PM me with the details and I can at least try to point you in the right direction. I am in Dallas, but fairly familiar with Arlington area.

@Cole James To find any type of consistent lead stream, you need to be marketing, which means you need to be spending money. On average it should cost $3000-5000 in marketing per deal in the DFW area. Maybe a little less if you focus further north of where you live.

@Account Closed I've used Jerry Padilla (he's on BP, can't tag him for some reason) for a few cash out refis recently.

75% LTV, 4.75% interest. Not a portfolio loan, it's fully conforming. The only downside to that I can think of is in most cases you would need to wait 6 months after purchase to pull out more than initial purchase price.

@Zane M. Welcome to BP! If you are looking for another meetup, I go to one in Richardson. Most of the those that attend invest in the Dallas/Collin County area, but some Denton as well.

@Dana Chun organizes the meetup. Next meeting is tomorrow (10/24).

@Michael Nieves Sounds like you are looking more for a passive investment and don't have much of an interest in being an active real estate entrepreneur.

If that's the case and you want to diversify your investment portfolio with real estate holdings, I would look into commercial real estate syndications. There are a lot of opportunities out there, and with the relaxed SEC regulations, they are easier to find through crowd funding platforms (if you are an accredited investor).

@Jacob R. My PITI is around $1400 per month, and if you add in another $250 per month for maintenance/capex, that's $1650. I could realistically probably rent this house for $1700/mo.

On the surface it's a wash, until you realize I have a whopping $80k in cash stuck in the property. I could probably refinance and pull half of it out, but assuming I am a halfway decent investor, I should be able to get at least a 10% return on my cash. So that's another $300-600 per month in opportunity cost.

Plus when you own a house, there is always a project to do that isn't related to capex/maintenance. We've done quite a bit of remodeling already, which is something you wouldn't be tempted to spend money on if you were renting :)

Just as an aside, I would be financially better off if I rented the house I live in rather than own it. And I don't live in an expensive house (~$250k in Dallas).

I own my primary residence for other, non-financial reasons. Not everything is purely about the numbers. You have to decide what is important to you.

@Jacob R. Do you want to live in an area where SFRs sell for $150k or less? If so, I think your strategy is a viable one. If not, I would rethink your goals.

As a general rule (i.e. unless you find a crazy good deal), houses that have a market value over $150k are not going to cash flow well. You can maybe stretch that to $200k in some areas of DFW. Because of the high taxes here, you've got to hit the 1% rule just to break even once you account for all of your expenses.

There are plenty of areas where this will work, but if you don't want to live in one of those areas, I would focus on a different strategy:

1. Buy a small multifamily that meets the 1% rule - hard to find but not impossible.

2. Keep renting yourself, but buy an investment property where the numbers make sense.

3. If you want to live in a higher priced property, consider running the numbers as a live-in flip rather than conversion to rental. There are tax benefits to selling your primary residence vs. a normal flip if you live in it long enough (I think 2 years).

4. Buy an SFR as a primary residence with your 0% VA loan and live where you want to live with a payment you're comfortable with. Use your savings to also buy a rental property with 20-25% down.

@Jerry Thompson Good luck on your journey! Look forward to seeing your progress. I am somewhat jealous of the young, single investors just starting out as you have an incredible opportunity to set a foundation for future wealth with creative house hacking that gets more difficult once you add a family to the mix.

@Adam Beasley I think you have two goals for this property that are not compatible -

1. Find a cash flowing buy and hold property
2. In one of the most expensive areas of Dallas

You are going to have to sacrifice one or the other. If you want your primary residence to also be a good long term buy and hold, you need to look further out (possibly some of the inner-ring suburbs such as Farmers Branch, Garland, etc.) or East Dallas (probably East/Southeast of White Rock Lake).

If you absolutely must live in this area, I would suggest you rent your primary residence with your roommates and go buy an investment house elsewhere.