All Forum Posts by: Bart H.

 Hi Daniel, welcome to DFW!!!
We are having trouble finding properties in our areas. We have gone our longest period without buying in years.  Now perhaps we are getting a little more conservative because of where we are at in the cycle.

My sense is that the market might be a little better in the secondary markets, Fort Worth or possibly one of the suburbs.  Its just not an area we know or have worked in.


A couple of things, have you thought about a house hack?  That might be a way to get started in a low risk way.  And house hack deals can actually make sense at a lower return than other investors.

Also if you are looking at a straight rental, pick a small neighborhood. Maybe a 2Mile x2Mile square. Drive the streets, set up a search either Zillow, an MLS search from a real estate agent or similar on every property that comes up for sale. GO to every open house. Get to where you can look at the picture of a house in that little area and know what the market is.

That way, when you get a deal that comes up, you will know exactly how good of a deal it is and you are confident in your bid.

Also, I would recommend you identify your criteria.  What are you looking for?  how are you creating your model to determine what you would pay for a house? Use that criteria to evaluate the properties you are thinking about buying.  Then don't chase.  If a property fits your criteria, make an offer, otherwise, pass.

Best of luck to you!!!

I hope my next statement comes across in the constructive way I mean it.  But let the deal go.

IMO, just reading your post it sounds like you are getting a little bit of house fever.  IF its your first flip, go slow, get your cash/financing in place.  Then come back to the next deal.  I just think that in this time of the market, its best to go really slow into a deal.  I am afraid if you go with leverage, if anything goes wrong during the rehab, or sales cycle it could really hurt you.

Our first flip we finished during the last week of November, and it didn't sell until the spring.  I am very glad we did the whole deal with a very minimal loan, and were able to cash flow the unanticipated carrying costs.

One thing you might consider is can you find an equity partner?  

Welcome to BP!!!

What we did with our house hack (duplex where we lived on one side) was to model it as though we were buying a SFH. We picked a price that was in line with what we could afford if we were just buying a house on its own. That way if we hated being landlords, we could just stop renting the other unit, and we didn't absolutely have to keep the other unit rented if the tenant paid.

Look for a property that is a decent deal.  It doesn't have to be a fantastically great deal.  Remember you are buying a house to live in.  The property should continue to appreciate and rents should continue to go up as you live there.

Also consider houses that are in the path of progress.  and if the down payment is a big problem, consider a deal with 5% down. 

Best of luck, thats how we began, I think you are headed the right direction!!!

Here is my big question about multi family, an area up until now we haven't invested (but would like to in the future).  It seems like most of these MF syndications are value add deals where you go in, fix up some of the units, improve the management systems, increase the rent and then sell it in 3-5 years.

The actual deal without the ability to increase rents is not particularly good as cap rates are really compressed.  

But the biggest concern is as I understand it a very large portion of these deals rely on the ability to cash out.  And the initial financing in most of these syndications are giver or take 3-5 years in duration.

IF we hit a nasty recession, its going to be impossible to sell, and banks may shut down their lending, and if you cant sell, you are forced to refinance.    So it might be tough if not impossible to refinance. 

And the elephant in the room, that everyone seems to have forgotten, is IF interest rates kick up to 2-3% from where they are now, that buyers will look for higher cap rates. 

I really think we have gotten complacent with low interest rates, if you have long term financing, IMO increased inflation is great for you. If you don't, you could be forced to sell into a beat market.  

 I would slow play it, I don't believe for a moment that they magically got 2 offers.

Honestly, I don't know if these houses are worth anything.  My guess is if the wholesaler is having problems selling it, others who have looked at the deal are either nervous about the price of the rehab, or finding decent comps, or are worried about the ability to find tenants, or all three.

I think it will be really difficult to do a full rehab for 30K.  Just the kitchen will probably run you 20K, a bathroom will cost you 5-6K.  4-5K for AC, a few thousand dollars if the electrical and or plumbing need to be redone, and call it 3-4K for new flooring, and a couple of grand for paint, and trim.  Is the roof & foundation ok?  those can run you 4-5K each.

Throw in taxes, and its tough to make any money at $500-600/M in rent.  If by the time you add insurance and property taxes.

 Don't renew their lease?  We wont deal with habitually late tenants.

Seriously for us, we might let the first one go with a warning that we can collect late fees.  The next one we would charge, and we would be calling until the rent was paid WITH the late fee.  IF that doesn't work we would file.

If the tenant is over their heads we might offer to let them out of their lease.

We have found that paying online, or via credit card (with the tenant paying the cc fee) seems to help in some cases.

But end of the day you and/or your property manager have set the expectation that paying rent late is acceptable.  Train your tenants or get the out if they don't pay on time.

Ignoring it or accepting it makes it worse.

 The fact that the PM was trying to hide this income imo would be grounds enough for me to immediately look for a new property manager.

I would have a fit that the property manager decided to take their "late fee" out of the rent.  Because it means that they really haven't collected the late fee.

Lastly, I have some issues with the property manager making extra money on late fees.  IF you think about it, they need to do their job by screening the tenant and setting expectations that the rent is paid on time.  IF they haven't set themselves up to collect the rent on time, then they kind of aren't doing their job.

I mean, if they find the right tenants with everything paid on time, then there isn't any extra effort needed to collect the late fees.  I am not a fan of incentivizing the property manager to make more money by having more late fees.

Find a house to buy, live in it and rent rooms as a house hack.

As others have said don't go in undercapitalized.  One mistake and you are toast.

 Someone who has built correct me if I am way off. Here is the problem, you are 30-50K for the lot.  120/sqft give or take for construction, call it $156K for construction. That puts you at 180k-200K for the house (with no subsidies).

And most of the places you are at in South Dallas at those prices youd get at best 1,500-1,800/month at most. (in south dallas).
If you bought near the medical district, the lots are going to run you 250-300K .  M Streets, $380-400K+ just for the lot.

Maybe multi family, or one of the suburbs the economics might work better.

IMO if you are a newbie trying to get into the game, why not buy a property you live in and either house hack or rent the house behind you?