All Forum Posts by: Brad Gibson

Just got a call from my tenant.  The my rental house was broken into while the tenant was away for a brief vacation.  Some of his stuff was stolen: XBOX, guns, etc.

Any quick advice on what to do?

Here's what I'm thinking...Secure the point of entry (window), check with insurance to see what might be covered on the break in.

Anything else that folks would recommend?

Thanks in advance.

I would pass on this one if I were you. I have 3 SFR in Midland/Odessa & I think you can do a better deal on the price/equity side of things.

The rent seems about right to me & things are taking off again in the oil patch, so the demand will be there. 

I just think you can find a better deal that'll give you a higher ROI. It may require renovation, but you should get a big discount on the price due to the condition.

My advice would be to keep looking. 

Good luck. 

I've used David Black with Community National Bank with good success.  He has been willing to look at several different financing products to meet my needs as an investor.  He was also able to work easily with my income which is solid, but sporadic due to the nature of my work.

Give him a call and see if he can lend you a hand: David Black -- Community National Bank

My experience is that rents are also somewhat lower in Odessa, do keep that in mind as you run your numbers & make investment decisions. 

@Anson Young  Thank you for the response.  I think I'm on target for goal...its just going to take time.

The goal is to get to about 100k income with buy and hold investments that cash flow.  I hope that I will eventually reach a point (maybe 10 houses) where I can begin a debt snowball that would allow me to pay off each mortgage in succession once I've got a pretty nice cash reserve built for repairs & capex.

10 paid off houses cash flowing $500-$600 a month with 100% equity in each would allow me to generate about 72k before taxes on an annual basis.  It wouldn't be but a short leap to getting a few more homes to hit the 100k annual cash flow goal.

After that, the sky is the limit. I know many are eschewing SFR for MFR due to the economy of scale in having more doors available for only slightly larger capital outlay. There just aren't that many duplexes, triplexes, and fourplexes in my home market and those that are here are sky high due to the rebounding oil industry in Midland, TX which makes this market behave like a boomtown.

Sorry for the baseball reference for those who don't like America's past time.

I'm a new investor and after putting in some time with books, blogs, this site, and Bigger Pockets podcasts, I took the plunge and since August have closed on 3 deals with a potential 4th in the works.  With a moment to reflect and the opportunity for some hindsight, I don't think I would call any one of my deals thus far a complete home run with respect to gaining immediate equity or monster cash flow.

My first deal is probably the laggard of the bunch.  I bought a 4 BR 2 BA in a college town about 2 hours away.  The home is/was in immaculate shape and in a very desirable school district.  The home is probably worth approximately 140k while I paid 127k not including closing.  There were no rehab expenses.  It rented on the day I closed for $1325 (approximately $150 less than I'd hoped), but the tenant is a good one that takes care of the property.  Monthly cash flow is $213 after management and expenses including repair & capex.  Perhaps not a strike out, but not a home run.  Maybe a single.

Deal number 2 I closed on in December.  It is a 2BR 1 BA that I got for 77k that is probably worth around 85k with some possible significant appreciation this year due to a heating up housing market.  I had to sink in about 5k in rehab to get it rent ready.  It rented on January 1st for what I asked -- $1050 per month & cash flows approximately $385 a month after all expenses including management (I'm self managing, but budgeting for management expenses).  Again, maybe a single.

Deal number 3, I closed on a couple of weeks ago.  It is a 3BR 1.5 BA that I paid 82.5k that is probably worth 119k after repairs.  This one was in rougher shape and is requiring approximately 10k in repairs and renovation to get rent ready.  I'm hoping to rent it for approximately $1300 per month and think it'll cash flow around $400 per month after all expenses.  Again, I'm self managing this one, but budgeting for management expenses.  Perhaps a double if it rents for what I expect.

I've got deal number four in the works, but will likely have to pause for 6 months or so to save up for another down payment and be sure I can meet the requirements for loan #5 (I have a mortgage on my current home).

So the point of the matter is... can you get there by hitting singles & doubles?  None of my deals are ones that are earth shaking.  A little equity & some cash flow each month.  Am I just being impatient & need to revise expectations?  Is it OK to be a light hitting second baseman rather than a power hitting left fielder?

Just out of curiousity, what coverage does your landlord insurance policy provide. You might also check on his renter's policy if he has one as well. 

Perhaps all you & he might be out is the cost of the deductible. 

If you're facing some stiff competition in the neighborhood, you might consider cutting the amount you're asking.  It could give you an edge over the competition to get a qualified tenant.

It is not ideal to take less rent, but you could set it up on a 6 month lease, so when it comes time to renew or terminate, it'd be mid-summer which is when many moves take place & you could net full market value then.

Best of luck.

The current & previous tax bills are a matter of public record.  You can go here: http://www.lubbockcad.org/Appraisal/PublicAccess/ and do a property address search(s) to see what the current appraised valuation is set at and how much the tax bill was for at least the last 5 years.

Then to be safe, take the sales price (likely larger than the appraised value, but not always) and multiply it by the tax rate listed on the bill for that property.  That will put you right on top of the number you'll need to know.

Since this is a Multi, you don't need to watch out for the homestead exemptions or senior citizen exemptions like you do with SFR. Those can make for a very nasty surprise when removed after sale.

On a deal this large, with this much investment, I would look at as many hard numbers as possible.  In addition, TTU and the students there drive the rent.  Close proximity to the University means pricing power.  The rest of the market is generally softer than near the University unless it is unique (school attendance zones, hard to find features, etc.)

Best of luck.

@Bart H. The drilling rigs are higher now than at anytime since 2013.  In fact, there are more active rigs in the Permian Basin than the rest of the nation combined.  The vast majority of those are right around Midland County and Reeves County.  Two different plays.  Read about the one in and around Reeves County.  That one is called the Delaware.  

If anyone owns or can buy properties in Pecos, Toyah, or Balmorhea...then you'll be in unbelievable shape.  Man camps have already popped up to meet housing demand.