All Forum Posts by: Brian Pellerin

Billy Rogers, Robert M., David T. Thanks for filling in the gaps. If someone could provide me with a write-up similar to what I've provided, I'll edit the original post and include it. I'd like for the content to be similar and contain: Founders, cost, style of meetings, group size and energy, content and ties to back-end businesses, URLs and any other notes.

And David, with Haltom City... They meet weekly? Must be a deal-making exchange. It would be interesting to hear more about what they do in that club.

Anthony Aguillard Both Dallas venues, Addison and Richardson are located close to Plano.

I see many new investors on this thread. There are quite a few REIAs in Dallas that you might want to consider. I created a new topic here: http://www.biggerpockets.com/forums/48/topics/95691-dallas-fort-worth---dfw-list-of-reias

After seeing the interest in the DFW BP meetup and noticing many new investors clamoring for a place to meet, I figured it might be worthwhile to post a collective list of the DFW REIAs that I'm familiar with and a little note on their value. As a full-time investor, I believe in education and networking. I've learned something new at almost every event I've attended. Sometimes its trivial and sometimes its huge. I learn from BP everyday as well. Most of these REIAs attract plenty of noobs, especially when they are free, but each also has a small core of experienced investors attending regularly. I have no connection or interest in any of these REIAs beyond having been an attendee at each. This is a LONG note.

I think its important to realize that each REIA is independently owned and is run as a business. They are generally not philanthropic by nature, however, this isn't necessarily bad. Some use the REIA as a loss leader to attract business to their core operation, such as a law firm, mentoring, wholesaling, or deal funding. Some are free and some charge dues. Below, you will find a list of REIAs in no particular order, along with my opinion, a website link and their costs. I'm not an expert on these groups, so I encourage others to fill in the gaps and forgive me for any minor errors.

1) Grand Prairie - "The Real Estate Investors Training Club" http://www.meetup.com/realestate-1155/
Founded by Greg Bell, his club meets regularly and appears to offer good introductory training. He seems to have good attendance. He tends to offer more advanced fee-based training at reasonable pricing. The meetings have great energy, but networking is a challenge in his packed restaurant venue. His regular meetings are free with the purchase of a yummy BBQ dinner. I believe that Greg's core business is mentoring and training. No high-pressure tactics - do what works for you.

2) Arlington - "Arlington Real Estate Association" (AREA) http://www.meetup.com/realestate-445/
Founded by Dennis Henson, his club meets regularly and appears to offer good introductory training, however IMO, he hosts quite a few too many gurus and pitches these via email heavily. He seems to have good attendance. His meetings are free and the meetings have great energy. He's even done day long Saturday classes for free and the content was quality. I believe that Dennis core business is mentoring along with deal funding / profit sharing. He'll help you get your deal done for a cut. No high-pressure tactics (aside from a healthy email stream and your typical guru, if there) - do what works for you.

3) Addison - "Roddy Roundup" http://www.meetup.com/RoddyRoundUpDFW/
Founded by George Roddy, his club meets monthly and offers good introductory training and since he attracts mostly noobs, its often basic training. But, George and his family are experienced investors and throw out good nuggets at times. His meetings are both free and filling - his vendors cater in Subway sandwiches for dinner. The meetings have great energy and George does a great thing to encourage networking. He has a mini-training topic, followed by 45 minutes of networking and vendor meeting, followed by the main topic followed by a prize raffle. This event is a family operation, so it has two core businesses: Roddy Lists of foreclosures, vacant homes and other leads as well as the Roddy Real Estate Investing Academy. No high-pressure tactics - do what works for you.

4) Richardson - "North Texas Association of Real Estate Investors" http://www.ntarei.com
Founded by Roger Hodkin, his club meets monthly. It is a fee-based ($20/meeting or annual) club and as such, its meetings tend to have more seasoned investors than the others. The energy level of the meetings is moderate to low-key. It starts with networking followed by a presentation. The presentations have a good mix of business topics along with some how-to's. For instance, he'll bring in the foremost state attorney to discuss current law topics, or a Justice of the Peace to offer practical landlording information and a random guru on occasion. He hosts a number of other fee-based training meetings that hit on a specific how-to. However, this club is quite different from the rest in that the fees are very reasonable. We're talking typically $20 for members, sometimes higher. No high-pressure tactics. Period. Roger's main business does not bleed over into his club, unless you specifically ask him about it. The club does not appear to be feeding a main business.

5) Fort Worth - Personally, I don't know of anything there. Anyone?

6) Irving - "Lifestyles Unlimited" http://www.lifestylesunlimited.com
Founded by Del Wamlsley, this is not a REIA. It is a business, but since it has REIA like tendencies, and because it's hugely marketed, it's worth covering. I'll likely offend someone with this assessment, but I hope it helps others. These are my opinions only. They are THE real estate investor marketing machine in DFW. They have a weekly radio show and offer sound advice. They churn in many folks to their free "Case Study" seminars. They pack the house! Their goal at this meeting is converting the audience into buying their $500 yearly membership which lets you attend a 2 day class that teaches you "everything you need to know" to be a wholesaler, buy and hold or flipper or apartment investor. You'll not learn much at all, if your plan is to take a run on your own, but will get a good introduction to various RE topics such as basic ROI analysis, what is wholesaling, etc. Then at the 2 day meeting, you will be offered a chance to join for $5-6K for SF buy-and-hold mentoring or $12K for MF mentoring. If you need hand-holding and want to do buy-and-hold, they will push you to get it done. They collect RE agent fees on your MLS purchases. The MF side mostly ends up as source for passive investors, but some really push and become leads on MF deals. They offer free monthly vendor pitch-fests where 3 vendors will pitch their wares and offer advice as well. You have experts talking on topics, so you can learn there. While you can network anywhere, their regular monthly meetings are so focused on getting new members to join, its not worth attending. Some of their members are wildly successful. They are not high pressure, but like to build up the rah-rah so that you want to say yes. If you know what you are getting into and it's a fit for your personality, then consider joining.

7) Dallas - "Texas Real Estate Investor's Circle" (TXREIC) http://www.meetup.com/Texasrealestateinvestorscircle-com/
Founded by Ian Day and Gaylene Lonegran, this club meets monthly. It is fee-based ($15/meeting or annual). The meetings are sometimes lightly attended. The energy level is moderate. The meeting topics are on random RE investment topics, such as Subject 2, cash flow, insurance, self-storage, etc. They also have a Women's only sub-group. Generally, networking can be done before the main presentation. Some vendors are present. Ian is a RE investor and mentor and Gaylene is a RE lawyer, but neither push their business hard. Because of the fee, they appear to attract folks with some RE experience, but the topics covered don't tend to attract heavy experience. They simply appear as any other vendor in the venue. No high-pressure tactics. Some of their speakers will occasionally offer day long courses for a reasonable fee. The best thing about TXREIC is that they have a HUGE and active mailing list that allows you to communicate with your fellow investors. Great local advice and feedback.

8) Dallas - "The Dallas Real Estate Investment Association" (Dallas REIA) http://reiadallas.com/
This is Dallas' newest REIA, founded by Cathy Crowe and Shenoah Grove (wife of PHill Grove). It started in June 2013 and offers monthly meetings with high energy. It seemed to have attracted a good mix of experienced investors and noobs alike. The first 2 meetings were free and the subsequent ones are fee based, but they offer a coupon for a free initial meeting. I don't yet know the monthly pricing. For some reason, I think this REIA will take off given the personalities and dynamics of it's founders. They are looking to offer market knowledge, deal hawking, topic of the month and networking. Shenoah (and Phill) offer RE deal funding (for a cut of the profits), website and training and Cathy offers wholesaling. Their businesses are presented like any other vendor in the room, with short introductions. Shenoah and Phill run a large and active REIA in Austin. The REIA maintains a bulletin board for Q&A, but it currently has little activity.

Each of the above have something to offer. Join, learn and contribute! I may see you at one of these events!

Navi Veski I hope this doesn't come off too negative, but let me point out some worry points for you... And some good ones too...

1) Great deals are snapped up fast. If your deal has been sitting for a while, you should question your analysis. ARV too high? DOMs? Repairs not enough? If it remains positive, then jump on it. Don't get stuck in analysis paralysis though. You'll lose out on plenty of deals (consider it practice) while you play analysis, but when you get good, you can strike fast.

2) Locally, I'd consider this a deal ($350K ARV, $190K Purchase, $50K Rehab) to have 15% profit, using HM - about $53K, net of all costs with 5 months of carry. Your costs, fees and investment model will vary. This tells you that your repairs can be off by $53K or your ARV can be over by $53K, or some combination. You have plenty of margin for error. You quickly need to find out if you already have error in the equation. Option period, if you can, and get actual rehab estimates quickly.

3) Hard Money Funding costs - Assuming 3 points and 14% interest, with 5 months of interest carry, your funding costs are approximately $7K + $15K for a total of $22K. Considering #2 above, you have $53K net profits + $22K funding costs or $75K gross profit before funding costs.

4) Funding source - This is an important question for you. Do you just need money? Or do you need money and mentoring?

If you just need money, use HM and budget $22K. Done. You do need to understand Cash flow, down payment, closing costs, etc, so figure that out.

Do you need help / mentoring? If so, a 50/50 split of the profits is cheap for what you'll get. $37.5K-$22K (for expensive interest) is only a $15.5K training fee. By breaking down your funding costs, you can better evaluate these two options. Make sure you find someone that adds value to you and not just money. You want something in return, in fact, lots of experience. Even if this goes lopsided and you give up more for your first deal (40/60 or worse), you still win. Invest in your first deal and profit in your second.

5) What level of rehab is needed for a $350K house in your area? If it's top notch, then you will not get $350K if you do a lesser rehab. Comps means comparable. So, rehab is comparable and ARV is comparable. Make sure that your $50K budget gets you to the ARV that you are seeking. I've seen a number of investors lose lots of money by ignoring or not understanding this point.

It's so easy for a rehab to backfire on you, when you aren't familiar with the numbers. I like the profit split model because your experienced investor will run from a stinky deal. If he does, follow him quickly. :-) HM guys just want their money and return back. They don't care about your profits or losses. They will not lend on horrible deals, but might on marginal ones. (They aren't evil, but their business model doesn't depend on your success. Repeat business yes, a little).

If your GC buddy is legit and willing to commit to a proper rehab for your project with those numbers, then I'd use HM and keep all of the profit. Good luck!

Lastly, quit agonizing over the little numbers. You have plenty of room in this deal if the big numbers are right. Get your first deal done even if it's a smaller profit, as long as it's a profit! Good Luck!

P.S. Since you are still agonizing over the little numbers, here you go: $350K ARV - $190K purchase - $22K interest - $50K Rehab - $53K Profit = $35K for realtor commissions, other carrying costs and other horrible fees. Adjust profit if this isn't enough.

Carrie Herrmann

You have a number of things to worry about and them leaving is the lesser of the evils.

1) Deposits - Were you given credit for those? You might want to confirm that you and the tenants are in agreement with the amount on file. If you are in disagreement, then I'd return here and ask for specific advice on next steps. Ask the previous landlord what their deposits are even if he didn't give it to you, even if it's only from memory.

2) Property condition - Again, ask the previous landlord about the starting property condition. See if he can walk the units with you and give you an assessment of its current state. When they finally do move out and want their security deposit back, where is your written starting property condition sheet? Certainly establish the current property condition assuming they stay on.

Jon Holdman

Bingo! Look, here's a receipt that he gave me! (He? My brother-in-law, but to you, the previous landlord).

Bonus to you... You can use the tenant reactions to reasonable requests to decide whether or not you want to renew their month-to-month leases. Talk to them and decide their fate, then present a lease if so desired. In either case, rent goes up $500 and only comes down if they sign a lease. You will likely need to explain the concept of a default month-to-month lease when no written lease exists. If you don't present them with a new lease, then they have a cost incentive to move. Ask if they are prepared to pay up or move? If they don't plan to move out, then plan for eviction. Gentle persuasion, with a fast plan to ratchet it up if nice doesn't work. And of course, following your local tenant laws along the way.

A $400K house in Dallas should have a garage and as you know, this is an expensive house for the area which usually means the homeowner has nice cars that feel better in a garage. Sometimes, it gets a bit warm here. Most rehabbers that I know will convert the garage back in a heartbeat. However, the challenge that many garage conversions have is whether or not the captured space is functional and flows well with the house. Space that doesn't feel right, IMO, is not valued by the buyers, even though it is there on paper. Most garage conversions that I've seen don't flow properly, even when they are expertly constructed.

Because garages are expected here, we typically value garage conversions as contributing $0/sqft (which is a big hit to your ARV) and in some cases, go more negative than that. And budget $$ the rehab to correct the problem. You get a double-whammy hit because you may have overpaid for that space in the first place, if you gave the seller credit for this "bonus" space in your offer price.

As I'm scanning the MLS for deals, we always pull up garage conversions because the standout as underpriced for the neighborhood. Then once we figure out what it is, and recalculate its value, its no longer a deal. Here's the interesting part. We'll pull up that same house multiple times over because they appear to sit on the market much longer (many months), again, IMO because the homeowners have over-valued this extra space.

Having said that, I was in a house this week, which was a 2/1 with a single car garage. I got there and found a 3/1 with a 2 car detached garage. Since detached garage seemed to work and the space captured was functional, I think it actually added value to this house. But, in this case, it was a low priced house ($65K ARV) that went from 1000 sqft to 1200 sqft. So, I gave it almost (due to detached) full value and estimated $75K ARV.

A few weeks back, I bypassed an incompetent realtor and found a homeowner with a 4200 sqft house that wasn't selling. From the pictures, I could tell why it was on MLS for > 1 year. After previewing the house, I explained that his wonderful 1200 sqft addition, which included a recording studio, was actually adding negative value to his house because the space wasn't functional and it was eating up too much of the yard. His price/sqft was a bargain for the neighborhood, only if you included all of the space. A bargain? but, no takers. We talked for a while and I was sure that I was going to close the deal, as I gave him honest, thoughtful feedback that his realtor never mentioned, only to find a huge reverse mortgage. He made out like a bandit on that reverse mortgage as they mistakenly over-valued his square footage and paid him handsomely.

I recommend putting the garage back in, (unless carports are standard in this neighborhood). Good luck!

Chat with Arnie at Texas Tax Sale Resource Group (http://www.txtaxsales.com/). I do know that they sell lead sheets and hold regular meetings. They have their next meetup on July 23 in Plano. I don't play this game, so I can't offer you anything further than this pointer.

Torn, eh? How about this?

I see many "inexpensive" lots for sale, that I wouldn't touch. In many areas, you can buy and rehab for less than it costs to build. Some areas won't even support a rehab. Turn that around and it means that you will NOT recoup your build costs in such an area. It will appraise for less than you spent and you will sell it at a loss. The only winner here is the tax man. He makes out like a bandit whether or not you build.

Here's where it gets dicey (unless you are paying all cash).... Once you buy the lot and then get an architect to whip up a set of plans, you'll be able to approach the bank for a construction loan. They can and will desk and drive-by appraise your project before loaning the money and subject your LTV to their appraisal. (Banks don't often over-appraise anymore) You'll likely need a BIG down-payment if you take out a loan. Again, you'll get hit when you refinance into a permanent loan. 75% of a smaller number than you may have spent.

Since you are not planning to sell, you just need to know if you can live with the final valuation and costs to build. Now, it's a standard rental analysis. Also, ask yourself, if you could buy two SFH's for the same or less money and weigh the options.

I recommend that get to know your numbers before spending a dime or signing a contract.

Good luck! If it passes your deal analysis, go for it!

The TAR lease and the Texas Apartment Association leases are the two most popular. Further, Dallas JP Judge Al Cerone has lectured on the benefits of using one of these two well known leases. He said that if you are using one of these two leases, he doesn't even need to read it. He's seen it a million times. He recommended against home-grown leases (but didn't say you couldn't use them).

The TAA lease requires membership to get and use it's forms. You may like it better than the TAR lease and can find a watermarked copy by googling it. But, you're looking at $200 annually to join.

Are you saying that it takes up words of a week or month to file a deed? Our deed recording is much quicker. If I go thru a double close, we won't fund until we have a recorded deed from the first closing. As long as the first close is done early, everything can be done and funded in one day.

If so, could you pay expediting fees? Consider that your gap insurance.