All Forum Posts by: Brien OConnor

Just got back on BP.  Don't go into Austin.  Go further north.  I've got 4 doors (3 homes and a garage apt) in Lampasas.  My homes cost $77K, $93K, and $80K and all cash flow very well.  Very few rentals and you get Killeen (Ft Hood) people as well.  

Thanks all for your replies (@Andrew Postell, @Jaysen Medhurst and @Antoine Martel).  Honestly, I may not have enough equity built up in the homes to get any cash out.  Lamapas is not a boom market, but a steady growth market.  And very little rental property even available.  Without selling outright, I may not be able to get what I've put into the homes just yet.

I do have a local banker who I know quite well.  We've had some initial talks, but I will get more clarification from him.

We bought our first SFR last year (a 2-1,1930s craftsman style) and have had it rented to outstanding tenants for over a year. We paid $77K for it. Put 20% down and then spent about $38K rehabbing it. Our total mortgage payment is $540/month (tax/insurance) and receive $900 rent. APR is @4.25 fixed.

We then bought a 1940s SFR (3-2) for $93K and again put 20% down and spent close to $40K making it a nice house. Our monthly note is $630 and rent is $1150. There is a garage apartment with this house and we are rehabbing it right now. The cost will be @$25K and rent will be $750/month. APR is @4.5 30 year fixed.

So as you can see, they're cash flowing nicely.  We probably put too much into improving the properties but I prefer to have a safe house to rent and one that can attract a better tenant, and so far we're 2 for 2.  

QUESTION - I need some advice on how to get our money out of these houses.  Since they're with two different mortgage companies, I would assume I need a lender who would pay those off and provide me funding to get my money back at least on the rehab portion.  I believe that's the THIRD R - "refinance".  The second tenant will be in the house for year in February.  From what I've read, banks want to see at least one year of steady rent payments.  If that's the case, then I guess I can only look to have the first house refinanced.  Is that correct?  OR should I wait until next year and do both at the same time.

Advice and suggestions are greatly welcomed. 

Welcome to Bigger Pockets @Daniel Cejas and fellow Texan.  You'll find a wealth of knowledge on line here or on the Pod Casts.  I always recommend listening to the pod cast when you can (driving to/from work) and picking up a few of their books.  Regarding credit score.  Yes, bankers will always run a credit report on anyone buying property.  But in the mean time, having enough cash to start is also important.  So keep your bills current; stash some cash away; and keep up with ideas presented on here.  I love the FW area -but have not invested up there.  I travel that way for work. I'd suggest looking "around" FW perhaps west and NW/SW in Azle, Springtown, Benbrook.  Only because I'm sure the costs are less than in FW proper.  That's what I did.  I live in Austin but purchased two homes in Lampasas.  When you have questions and are looking on here for answers - try to be as specific about them as possible and you'll have people help you!

Good morning Troupe.  As I have suggested before, start listening to the Pod Casts and definitely invest in a few books.  I drive a lot in my work as an insurance agent (I have customers state-wide) so I find them informative and sometimes entertaining.  The quality has gotten better over the last 4 years.

I live in Austin as well.  My wife and I looked for several months in and around Austin - north to Hutto and Pflugerville and out to Taylor.  Austin just seems to be overpriced.  And the Hutto area homes were all in the $200K range, identical, and "little houses on the prairie".  

We have found two homes in the Lampasas area.  One hour northwest and you'll find great homes all reasonably priced.  We found local contractors to help with the remodels and are very pleased with our cash flows.  However, I'll admit I tend to put more into the houses than I should.  I keep repeating "its a rent house...it's a rent house" but I end up making it like I'll be living in it.

OK...TMI.  Good luck to you!  Let me know if I can be of any help.

Welcome fellow Texan - @Jason Simon!  I always recommend listening the podcasts.  I literally started with the first one and since I drive a lot, I've gone through most of them.  Their books are pretty good as well.  You'll find most everyone on here is helpful.  Be sure when you ask a question to make it pretty specific and you'll get better responses.  I'm investing in towns outside of Austin since the pricing here is crazy.  I've had very good luck doing that.

GOOD LUCK to you!

Welcome fellow Texan @Kelly Le.  I recommend listening to as many podcasts as you can.  They're great while driving.  The books they peddle are also very good.  If you ever have a question, try to make it a very specific one vs in general.  People on here will always jump in to help.

Morning @Paul Ewing  The umbrella for a State Farm policy is less than $200/year.  I would suggest you speak to your Farmer's agent.  I'm an agent myself, but only deal with commercial insurance.  However, all umbrellas assume your underlying insurance coverages are at certain levels before they kick in.  Example, your Farmer's policies may have $250,000 general liability (slip/fall) limits.  But your Foremost policy may require $500,000 before it kicks in.  You therefore have a $250,000 GAP which YOU pay before Foremost.  In short, it's best to have all your coverages with ONE company.  Hope that's clear!

Regardless in which carrier you choose, be sure to increase your liability limits to $1M. You'll find that the cost is nominal. Then be sure to have an umbrella to pick up the potential additional exposure. Believe it or not, I use State Farm. My rentals cost about $800/year and the umbrella is around $200. You can usually insure up to four SFR on a personal umbrella. After that, you need to obtain a commercial policy.

As an insurance agent, yes, you only need to buy coverage for your property.  Costs can vary from company to company but the rates @Jason Bott and @Chad McClain are providing are pretty accurate. I can't speak for the costs going down substantially with more locations. All locations are rated separately. I recently closed on a 1930s (or there about) home which needs new wiring and plumbing. I'm paying about $1100 a year. It's a 3-2 SFR with 1750 sf. It will be lower once I give my company proof of the new wiring and plumbing, but only maybe $100-$200/year.

And yes, definitely require your tenants to purchase Renters Insurance and provide proof.  That's relatively inexpensive and is important for them (and you).