All Forum Posts by: Byron Hunter

Hello BP family. I am a REALTOR in Dallas and own 2 rentals. I'd like to know y'alls opinion about what property values could do starting in January. 

My understanding is in January, unless things change, tenants can start being evicted for no rent paid, banks can foreclose for no mortgage paid, and mortgage payments will go up for those who skipped mortgage payments but did not think to still contribute to their escrow account for property taxes. 

Is this going to flood the market with inventory and drop prices? Rates will still be reasonably low; will this inventory be offset with high demand from people who were "forced out"?

Thoughts?

Thank you for all the contributions.  I am a privately owned landlord with 2 rentals in Dallas.  We were proactive in talking with both tenants to find out what their situation was.  With modifications, all our rents have been paid.  I know these modifications are very generous, but we feel we have been blessed and wanted to pass that on to our tenants and their families.

1) one tenant is a small business owner electrician who struggled with income.  Because I filed for forbearance, we set his rent equal the mortgage payment for 3 months.  I still make the escrow payment.  Only 1 month did has ask to split the rent payment on the first week and the third week of the month.

2) this tenant was laid off.  We filed for forbearance and decreased the rent equal to the escrow payment for 3 months.  Everything was paid early.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $148,000
Cash invested: $20,000

When a gentleman from our church found out we were Real Estate investors, he asked my wife and I to purchase his home so he and his wife could move in with their daughter. He insisted on selling us the property for the same price he paid for it in 2002. The property was renovated over the next 2.5 months when we began renting it out.

What made you interested in investing in this type of deal?

Our goal is to accumulate rental properties to fund our financial Independence and retirement. We already had 1 comparable rental in the area that was successful, so when this deal presented itself, we acted on it.

How did you find this deal and how did you negotiate it?

The seller was a good friend, neighbor, and church member. When he helped us pack our moving truck, he asked about the "buyers" of our house we were moving from. I told him we were actually renting it out. 1 month later, he asked my wife and I to purchase his property.

We got lucky on the negotiation. He insisted on selling it for the original price he paid in 2002. I offered to pay more, but he would not accept it.

How did you finance this deal?

I used hard money lending (expensive) for a 12% interest only loan for 6 months. I invested $10k of our own money and also asked for a $10k loan from my in-laws credit line. In Texas, we have to wait 6 months in order to do a cash out refi. We did a refi for $195k which gave us $10k cash back for a 30 yr term at a 4.875% APR.

How did you add value to the deal?

I hired 2 young men from my church to help clear out all the trash and junk left behind (2 trailer loads worth). Hired out a contractor to paint, reface cabinets, and replace flooring. Another company to replace 1 of the A/C units. I personally replaced the garbage disposal, all light fixtures, outlets/switches, toilets, and garage door springs.

What was the outcome?

The outcome is a $265k valued rental with $60k in equity.

Lessons learned? Challenges?

Scope creep is a real thing! The original renovation budget was $15k. Once we started, we realized that was way too little. We increased the budget to $25k. By the end, we spent $35k on renovations. This was influenced because a lot of finishes we chose were what we would have picked for our own house.

Investment Info:

Single-family residence buy & hold investment in Dallas.

Purchase price: $243,000
Cash invested: $13,000

4 bed 2.5 bath SF 2 story. This was our first property purchase and our primary residence for 1 year before we moved and turned it into a rental.

What made you interested in investing in this type of deal?

In the beginning, my wife would not let me invest in real estate until we moved out of our 1 bedroom apartment. So we bought this house with a 2 person income. We got pregnant, she became stay at home mom, so we moved/downsized, turning this into a rental.

How did you find this deal and how did you negotiate it?

Found a real estate agent on Biggerpockets. Offered the asking price of $257k. Appraisal came back at $243k. We adjusted our offer equal to appraisal and they accepted.

How did you finance this deal?

Primary residence first time home buyer 30 yr fixed conventional 5% down 4.1% APR

How did you add value to the deal?

Sellers needed out quick due to divorce. We offered very quick closing because of conventional lending and strong financial position.

What was the outcome?

1 year later, we moved, giving us our first rental, $400/mo in rent over mortgage. Tenants just renewed for a 12 month lease.

Lessons learned? Challenges?

We learned so much. But to keep this brief, I learned I had a passion for real estate, which has led me to quit my corporate 8-5 (... More like 7:00-6:30), and become a real estate agent.

wow, too much criticism! I appreciate the post and happy to learn how others are approaching this.

Since I only own 2 rentals, I simply texted my tenants. Instead of bringing up the topic of rent, I asked questions like their health, their needs, and if their basics are being met. I let them choose what they share with me. 

Both were open with me saying their employment is still okay. 1 even texted me today (6 days before rent is due saying he has a check ready for me to pick up). 

Because I screened my tenants well, I can be personable/real with them and they with me... Without them abusing that relationship. 

Thanks for the post.