All Forum Posts by: Bart H.

I had my offer on my first investment property accepted this week! Location is in far north Dallas suburbs (Frisco/Prosper/McKinney). Should throw off slightly positive cash flow if I self manage, and also banking on solid appreciation. I intend to hold for long term.

Any advice from others on the forum about key things I need to be doing?

I'm planning to heavily leverage technology to handle marketing, applications, scheduling showings, collecting rent, etc. so would also appreciate property mgmt software recommendations.

Thank you in advance!

We pay a realtor to do the marketing and showings. Once a tenant has signed the lease, we take over.

We typically push our tenants to pay via venmo.

IF we got to a larger volume of properties, we would do something else. Honestly we are at the edge of the number of properties we are willing to manage ourselves.

I think the biggest piece of advice is don't expect massive cash flow early on. IT usually takes 18-24 months for us to get dialed into what we can get in rent, get good solid tenants and to get our properties repaired.

I can say from experience, expect to spend a couple thousand dollars getting the property rent ready the first time. Doesn't matter how clean the property is, there is always painting, a little work to do on the floor and I swear a random appliance that needs to be replaced.

1 Vote

Dallas, Texas

Originally posted by @Daniel Porter:

howdy, from dallas tx.

i'm a full time professional musician, and my income fluctuates seasonally, as well as being all 1099s. i've been approved for around $150k on a bank statement loan at 8%, 30yrs fixed, with a minimum loan amount of $100k. so i'm stuck between houses around $115-$150. i'm leaning towards the lower end of that. My strategy is to rent out room by room, which can usually net more for the house in larger 4-6 room houses. i've been searching for my first house hack for 6 months now. i've had three properties under contract, which have all fallen through at some point or another. one was about 8 weeks. i've put in quite a few offers on houses, but usually lose to cash offers.

my problem is, the houses need to qualify for the conventional lending standards, and almost nothing will qualify in my price range. i lost that 8 week contract because the siding was damaged. i had about $1000 in that deal, just to get a bad appraisal that the seller wouldn't budge on. the other problem is, at 8% financing, that pretty much eats up quite a bit of the cash flow, and i'm just trying to cover the PITI every month. so of the few deals i can make offers on according to the numbers, i've gotta always negotiate, and its just a weak offer that has led me to my 0/3 deal score. haha.

all this to say, would it be better to try to BRRRR? it would obviously give me an edge as a buyer, which i am more than ready for. but i'm also a first time buyer and am absolutely clueless as to the details of it. i understand the basics of brrrr, but my biggest issue is my self employed income. i made about $5000 on paper last year after taking every possible legal deduction and sheltering as much as i could in my S Corp. i don't know if any lenders will do a cash out refi for me. even if they do, what's the point of refinancing if my interest rate is 8%?! obviously id have to, to pay off the hard money, but there's gotta be a better way to do this. Are there lenders who will offer long term financing for self employed ppl? espeecially if i can show a current Debt Service Coverage ratio of 1.25? i have been waiting to get into the real estate game for so long, and this is my current problem i'm trying to solve.

any and all help would be appreciated!

all the best,

dan

If I were you, I would try and start with a house hack. Buy a modestly priced house and rent multiple rooms out.

0 Votes

Originally posted by @Tyler Speelman:

@Brandon Sturgill

Yes, gas furnaces for all other units except for 3rd unit.

All great points. My understanding was that a heat pump with back up heat strips would be best option as opposed to baseboard heat + window Ac unit because heat pump would heat and cool more efficiently.

I appreciate your recommendations and tips. I will consider adding insulation and will have to look up R-value.

Heat pumps will be your most efficient heating/cooling source. However, there is a theoretical limit based on the thermodynamic cycle as to how much they can heat a house when the outside temperature drops. That's why in northern climates they are rarely used unless there is baseboard heating or geothermal heat pumps.

If you have gas at the house, I would see if you have enough gas supply to put a gas furnace in, and either go with a traditional AC unit or else put a new heat pump in and supplement it with bas or baseboard heater.

1 Vote

Originally posted by @Kathleen McCabe:

Hi BP fam!

I’m a new investor, and I’m wondering if it’s possible / worth it to do a “half” brrrr. Im David Greene’s book, he is pretty insistent on saving enough money to do your first brrrr in all cash in order refi and get your nest egg back. I have about 40k saved, which is not enough to do a full brrrr in my area (Dallas). What if I did the following: traditional financing for my down payment , so 25k down on a 100k home that just needs cosmetic fixes (smaller rehab) for 15 grand.... and I boost the property value maybe to $125. Can I refi the money I put into it out of it (40k)?

Again, this is just a simplified example, of course. I’m trying to get into the game quickly, but should I wait to do a brrrr when I have all the cash?

Yes, I’m open to using hard money, just a bit nervous because I’ve never done full rehab before, figured this could be the more conservative option on a first investment.

Looking forward to hearing your replies! Thanks in advance.

-Katie

On a first investment, unless you have really deep pockets, or have experience in construction (or something similar), I would NOT do a large rehab.

The problem is your first rehab will cost you 2-3x's what you expected, and it will take you twice as long. Imo on your first deal, just hit a single, get something essentially turnkey ready. At most do some painting, maybe refinish the floors, change out the locks and call it a day.

The first investment really is like your learners permit. ITs the property where you learn how to find tenants, how you will handle calls, what contract you will use, etc etc.

Use later properties to learn the rehab business.

Because honestly your biggest risk on your first property is that you begin a full guy job rehab and you run out of cash halfway thru and end up having a house that you cant rent and dont have the money to finish.

Honestly, we have been investing in the Dallas area for a few years now, and lately, most of what I see being listed as "wholesale properties" are essentially being listed for retail prices, there is little to no margin for the person doing rehab. At that point you are better off going with a turnkey property/retail property to start off with.

Lastly for a conventional loan it used to be 6 months between the initial loan and refinancing your BRRRR. I do think its wise to stay away from hard money until you feel really comfortable with estimating rehab costs, and ARV's.

Best of luck to you, let me know if where is something I can do to help. I know a few of the neighborhoods in Dallas if you would like to run a property by me, feel free.

2 Votes

Originally posted by @Hai-Dang Tran:

I live in Dallas, Texas and recently just moved out of my apartment. The property had several changes in property management. I used to live in a one bed room apartment with $750 security deposit then transfer to a 2 bedroom apartment, therefore my security deposit should transfer to the new unit with an additional $250 in order to add up to the first month rent which is $1000. The current PM claim that they only have the record of my new unit with the $250 deposit (where I received non back after all the fees) and they don't have access to any of the record of my previous unit. So now I'm losing $750 which doesn't make any sense at all. I don't have my lease contract since I have live there for over 6 years. What is my option in this case? Thank you.

Did you give them a forwarding address? I would do that with a certified letter.

If so, have they sent you an itemized list of what they are keeping?

They have (30 days?, I forget the exact number) after move out, AND you providing a forwarding address, to provide an itemized list AND to return the remaining damage deposit., IF they haven't done that, they by rights owe you treble damages.

I haven't had to go in front of a Dallas judge, but I have heard they are pretty tough on landlords.

0 Votes

Originally posted by @Mike Khalil:

Would like to know what networks my fellow BP experts use to advertise your single family rentals. Any free websites ?

I’m in Dallas, TX

We use a realtor to market our properties, and they end up putting it on the MLS and other services like Zillow.

I suspect it depends on the neighborhood and price point as well, we generally put our properties near the top of the market.

0 Votes

Originally posted by @Melissa Williams:

@Rick Pozos I hear you on that and love your comment! I have not completed any deals and have actually held off on pursuing them because I thought I needed the entity setup for financing preapprovals etc.

I work in commercial construction with a national GC, and my personal project management experience ranges from a few thousand up to $185M. I've considered getting into real-estate for over 10 years, so in my mind it's a great time to make strides toward building wealth.

A brand new entity with no history wont have the ability to get loans.

Unless you have a ton of wealth outside your personal house, there isnt much for a lawsuit to go after, at least initially.

I think you will find that a good umbrella policy is your best strategy until you can get some deals under your belt.

I would keep it simple until you have substantial assets to protect. Then consider dropping those houses into LLC's.

0 Votes

Originally posted by @Shaquan Webster:

Good Day Bigger Pockets Fam,

I'm 24 years old. I currently own 1 property (that I live in) in Virginia Beach, Virginia. I;m new to Bigger Pockets and I'm new to real estate in general. I want to invest in rental properties that cash flow in this area. I've been doing a lot of research over the past couple months about real estate and more specifically rentals. With all this talk about the market being out of control with high prices and the upcoming recession, do you feel its best for me (as a "newbie") to wait until then? Should I just keep growing my knowledge and saving so that I can buy more when/if the recession hits?

P.S: If you're in the Virginia Beach area or anywhere in the 757, send me a message I'd love to connect with you!

Thank You

I wouldnt let an impending recession or anything else determine whether I bought or not. IMO its the wrong question.

1) For one real estate prices have historically gone up over time. If you are in a growing market, values will go up over time. 10 years from now almost whatever you buy will be worth more than it is now.

2) There are always deals in every market. You wont know what a deal looks like unless you are looking.

IMO the question you should ask yourself is what is your criteria? What are your goals? Do you want capital appreciation? cash flow? SF? MF? condos? commercial? Industrial? Air B&B? Vacation rentals? flips? BRRR?....etc.

In our case we look for houses that we can BRRRR in neighborhoods near the path of progress. We target around the 1% rule, with a general goal of 10%+ or ROI as a rental, and positive cash flow after ALL expenses (capital, repairs, property management etc) and rehab is done. We look for a property that can be rented by middle to lower middle income individuals, ie for Dallas we try to target rents around or below 1,700-2,000.

We love properties with multiple exit strategies, ie can we rent, flip, rehab, tear down and rebuild etc etc. If we can find one of those we would go a little higher. Our strategy is to have long term amortizing loans that are paid off as we enter retirement. In the future we will likely move to small multifamily or commercial properties.

Now we had been buying a couple of properties a year, but of late we havent found anything that meets our criteria, so we havent bought in a long time (for us). So to some extent we are holding off buying because of a potential downturn, but not because we are worried about investing. If we find something that meets our criteria, we would buy tomorrow.

If I was trying to get into the real estate game for the first time, and had a 10+ year time horizon, I would buy today and learn the business.

0 Votes

Originally posted by @Nicholas Aiola:

@Bart H.

1) $600+

2) It depends on the specific facts and circumstances but case law on the subject (specifically, Gates v. Commissioner) tells us that the situation you describe would result in taxable gain - in other words, none of the gain would be excludable under Section 121.

Hey this is a really nice and helpful thing you are doing for the Bigger Pockets community. I appreciate the answers, it helps us to formulate what we might do in the future with the house we live in. Sounds like we cant do the tear down method to avoid capital gains.

1 Vote

Originally posted by @Nicholas Aiola:

Hey, guys!

I've been on BP for about 7 months now and I have quickly learned two things:

There is no better place than BP to talk real estate
The wealth of information on BP is immeasurable

I've read and learned quite a lot while scrolling through this site, and figured I'd create an open forum to (hopefully) offer some help and advice back to the BP community.

I'm a CPA in New York with a passion for real estate and I'd be happy to answer any tax questions I can!

I am late to the party but I have two questions that I don't think I really know the answer, and I don't seem to be able to get a definitive answer when I have looked at it.

1) When do we need to issue 1099's to contractors? We are private individuals (not an LLC, no employees) having work done on our rentals. We traditionally have issued 1099's on anyone who does $400+ in work for us. Is that correct?

2) We have a house we have lived in for more than 2 year now. We are thinking about tearing it down and building on the lot. IF we did tear it down, rebuilt it and sold it (without living in it again) for say a $100K gain, would that gain be taxable under the 2/5 year personal exemption?

0 Votes

All Forum Posts by: Bart H.

Bart H. has started 11 posts and replied 1129 times.

Post: Help: First Investment Property in north Dallas suburbs

Post: Competitive Long Term Lending for Self-Employed Investors: BRRRR?

Post: Heat pump on the ground to heat/cool third floor, dumb idea?

Post: Can you do a half brrrr?

Post: New Property Management Doesn't Have Record of My Deposit

Post: Best place to list your rental home ?

Post: Advised to Start LLC not TX Series LLC

Post: Buy Now or Wait for the much talked about recession?

Post: Ask me (a CPA) anything about taxes relating to real estate

Post: Ask me (a CPA) anything about taxes relating to real estate