All Forum Posts by: Bart H.

@Kris Wong  Welcome to BP.

You sound a lot like my wife and I, we began in 2012/2013.  We are going at a slower pace, trying to manage risk by absorbing a deal or two a year.  And each year we expand slightly expand our comfort zone.

We are in the Dallas market, if you ever have any questions about possible investments in this area, shoot me a note.

Everyone has their own criteria for a good deal.

I would say this, very few deals that are under the 1% criteria (monthly rent/Purchase price) will provide either cash flow or a ROI. if you are at $2,200/$250,000=0.9%.

I think you will find most people living in Frisco, at least at the top end of the rental market will expect a rental that isnt dated.  You may be closer to the low side than the high side.

Also still being a relative newbie ourselves having gotten into the game in the 2012/2013 time frame, I can tell you it will be a challenge to do a rehab and manage the property remotely.  Unless you have construction in

I will say this, Frisco is a vibrant growing community in the DFW area, the center of the metro area continues to move northward.  I am sure Frisco properties will continue to appreciate, but I think the deal as you outlined it will at best be cash flow neutral, and likely will be cash flow negative while you bet on price appreciation to create a return on your investment.

Originally posted by @Account Closed:

@Marc C.    I think the Dallas market is building itself into a multifamily price correction.  Of course, that will have a trickle down effect on single family.

How long does it take to absorb 40,000 multifamily units?   I am thinking a little longer than the builders are expecting. 

 Maybe.....I think DFW may end up being a tale of two cities.  Dallas proper I think is overbuilding with generic 5 story class A apartments in Uptown/Knox Henderson/Bishop Arts/Trinity Groves etc.  There are a ton of units there.

When millennial decide to get married, they want to move to better schools and want to eventually own SFH's. When that happens, they are moving north, ex Frisco, Denton, Plano, McKinney etc etc.

I think the prices for SFH hold up even if there is a multi family downturn because there are a lot of companies, hence workers moving to the DFW metro area. There is a real shortage of SFH's.

Lastly I think there are some specific risks to the city of Dallas, 1) the schools for the most part are terrible.  2) there are some real issues that may force the city itself into bankruptcy with regard to the Police and fire pension, its not clear how that could play out for property owners, but I have to think its not a good sign with higher taxes/fewer services/higher fees etc. 3) there are some major issues within the city of Dallas with regard to governance, use of federal funds etc.

Word of mouth. We worked with some realtors who have done investing. They have helped us a lot with contractors. Word of mouth from there. Also if you get a good contractor who is working on your project, they often have friends or worked with other trades that they can recommend. We have had really good success with those folks. I would also suggest keeping a spreadsheet of different trades, you will want two or three options for bids etc.

You most likely will have issues if money shows up in your account. We typically have had to show 90 days of statements for our last couple of loans. And in the past have had to sign statements about any large deposit.

My plan, and I believe it follows the IRS guidelines is that your max is actually (Lmax = $50K -highest prior loan balance in the prior 12 months.)

I had a real estate tell me of a time she had a reasonably high end house in the Dallas area ($500K-$600K+) where the seller wanted a lease back.  

Her client granted the lease back for a couple of weeks. When they took possession of the house after the lease back, there was massive damage, broken sinks, destroyed hardwoods etc.

And as I understand in most of these cases, you arent given a damage deposit, they are paying a daily rate equal to the mortgage and are in the situation if they dont move out that you have to go thru the eviction process.

I am not saying you shouldnt do it under and circumstance, but I think its important to recognize you are taking on risk.

@Evan Doan welcome to Bigger Pockets, my wife and I are also investors in the area. 

Sounds like you are off to a great start.

 I believe a 401K loan can be no more than 50% of your funds with a max of $50K total. 

 If you do a withdrawal, they will withhold taxes of like 25% along with another 15% penalty.  So basically the will hold out 40%+ of anything you have in the account.

I dont know if you would be able to qualify for a conforming loan at a 59% DTI. I thought the max was something like 43%.

Personally, may I suggest you start this game debt free, or at least at a much lower DTI ratio? I know we personally have no other debts and imo we are able to make better long term decisions about tenants, about rehab or repairs etc when we have some money to pay for things that come up.

@Matu Ambaye May I suggest that be prepared for either.  I suspect most people who flip houses over an extended period of time have ended up with a rental, or vice versa, I bet most people who want to buy and hold end up doing some form of flipping/major rehab at one point or another.

Having just completed my first rehab, with relatively little experience in the construction trades, flipping is much harder and much more hands on than being just a landlord.  You will want to have a stable of contractors that will do work for you.  You might find it easier to do a few small rehab jobs on a rental property to see how you like running a rehab project.  The risk is a lot less imo.