All Forum Posts by: Bart H.

Be careful with flipping. Unless you have prior experience in construction and/or access to capital, flipping can  be one of the more dangerous things to do.  To make money on a flip, you have to get a great buy, you have to hit the rehab exactly right, and you need to be able to get the property sold and walk away with making money. 

The market in DFW is super competitive for flipping, you have a lot of outside money moving to this area and the more experienced flippers are doing deals at 80%+ of ARV. (minus rehab). Plus you have companies like Zillow and some PE just paying silly money to buy property.

On our first flip we had the purchase using a regular loan, we had some reserves from a prior property sale, and some healthy credit line as well as decent paying day jobs and we had to tighten our belt a bit.

On your first flip, plan on taking twice as long to do as you expect, plan on spending twice as much as you expect and plan for it to be on the market for 6-8 months.  Then ask yourself how does the deal look?  What are your outs?  can you get more money if the flip costs more to finish?  or what happens if the market declines while you are doing the flip?  can you at least break even? 

I think the best advice is if you are tight on capital and looking to get started in real estate, find someone else who is in the business and offer to help, or maybe look at a live in house hack/flip as a way to get started.

Best of luck to you.

For us it would depend on the rest of the deal.  Is it a property that is in an up and coming neighborhood where its essentially a capital appreciation play?  are there other opportunities with say something like multi family, or commercial development in the future?  How much equity would you end up with?  Is this your first deal?  How tight are your numbers?

Do you have other ways to make money if the BRR doesnt work?  ie flipping the property?  or house hacking?

In general, I think $76/month of cash flow unless there was a lot of equity or long term capital appreciation, I think I would pass.  The risk reward isnt there.  I mean one foundation issue, or electrical or plumbing or unexpected roof, or if the property doesnt appraise and that +76/month goes negative in a big way.

 I'd look near Kids Springs park/Bishop Arts, or near lower Greenville (I think that might be tough), M streets (also tough).

Those are the places I 'd probably start with.

Adrienne, I think you are way to low on cap ex and repairs.  My guess is over the long haul you will be at 30-40% of revenue on expenses.  Ay minimum I would be at 10-15% for each of repairs and capital.

Something simple like a turn between tenants can run you a month, a months rent to lease and $1,000-1,200 for painting, floor repairs, cleaning, new locks, filter, smoke detectors etc.

We generally don't run metrics unless we are getting the property at the 1% rule, or can do some minor rehab to improve the rent/ARv of 1% or better.  Then we look at other things like do the numbers work, is this property in an appreciating market etc etc.

I wouldn't say we have a huge portfolio, not by BP standards at least.  But we have a few properties.  

Here is the thing, our philosophy is to go slow and steady, with the goal of having a portfolio essentially paid off by the time we hit retirement.  

Compared to most on these boards, we are risk averse.  And compared to most we can be patient since my wife and I have full time day jobs, we don't absolutely need to keep doing deals to put food on the table.

By design our business model is to have properties with fully amortizing debt. We look at keeping moderate leverage, and like to BRRR, But we also focus on areas of the city that we think are up and coming. We also want to be all in after rehab for about $150K-$180, with an ARV of $200K+ in a property that can rent for $1,800-$2,000. In a trendy/up and coming neighborhood.

We might move those numbers up a little if it was as an additional out, or some other upside, for example if it was zoned MF-2, or was good for a college or medical District rental. OR could be redeveloped in the future.

My main point is that I think there are better places for out of state investors to invest.  Its a common theme that Dallas is a great market.  I think those getting here now are getting here late in the game, It looks to me as though Dallas is slowing 

Now @Kenneth McKeown and myself have met in person and we have looked at a few properites together over the last couple of years.  We haven't bought anything from him yet, but it will happen one of these days.  

Kenneth busts his butt as a real estate investor and realtor and he is able to buy a few deals by using his commissions to fund the next down payment.  HE also has a lot more years than my wife and I do.  He can afford to be more aggressive than we can.  Its just a slightly different business model .

Look, I think its possible to find deals in any market.  My wife and I generally prefer to invest close to home. (Fort Worth is too far for us), and within the areas we are looking there have been very few if any deals that fit our criteria.  So we will wait it out

IMo if you have long term time horizon, I am sure you will do ok,  If you are looking at Dallas as a super high cash flow market over the next couple of years, I think there will be some disappointment.

I respectfully will have to disagree on the property taxes.

Bought a house in 2014 for 230K, property taxes were $2,400.

2018 property taxes on the same house $7,000, 

Another property I have 180K 2015, taxes $2,400, current taxes $7,900 and doing this from memory but 2019 they will be right at $10K.

I fully believe in certain areas the taxing authorities are trying to stick it to anyone who has a SFH and whose property resides in areas otherwise of interest to MF developers. I think thats a dynamic that someone from out of state would not recognize. And its not obvious on the taxes when you are running the numbers.



 

 You have to mitigate losses in Texas as well.  Agreed, the best thing you can do is get them out as soon as possible, and try and recover as much as possible.

Get a lease termination, determine what you can get to release them, help them move out asap, and move on and find a new tenant.

At minimum i'd keep the damage deposit.  Likely argue for a months rent to break the lease.

Regardless, keeping someone who cant pay in your property isn't going to help you any.  Holding them to their lease is only going to cost you money.  Because the tenant isn't going to pay.

I may be in the minority, but I don't think DFW is all that great of a market to invest.

Dallas specifically has a huge shortage of police and there has been a huge spike in crime.  Property values have stagnated and rents are not keeping up with massive increases in property taxes.

I am sure there are individuals who have found deals, but for the most part we aren't seeing anything worth investing in, and I don't know that it is a very good market for out of towners.

Originally posted by @Silvia Ochoa:

So I'm looking into a house in Dallas and I'm stumped as to what these panels and wires are for. Possibly for solar panels? Anyone know? 

Some of them are.

It looks like some things have been pulled out.  I agree with another poster, it looks like some switchgear and breakers for a solar panel.  Betting you have of at one time had solar power and that's the electric circuits that switch the utility and solar power on and off to the home.

Be REALLY careful those wires that are loose on the top right (the one with red tape) are the size of the wires that come from the utilities side of the pole. Assume they are hot, and if they are, those would be incredibly dangerous.

If you aren't entirely sure what you are looking at, I wouldn't touch a thing, none of the conduit anything, who knows why all of those wires have been pulled, whats hot, what is being back fed.