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All Forum Posts by: Christopher Gilbert

Christopher Gilbert has started 5 posts and replied 136 times.

Post: Seller financing-Defaulting on the loan

Christopher GilbertPosted
  • Investor
  • Pflugerville, TX
  • Posts 141
  • Votes 85

Make sure the owner finance loan paperwork has the seller as the primary lien position and that no other lien may be put on the property (land) without their written permission.  This way they can ensure that no one else can foreclose on any additions to the land without getting the seller paid first.  Like @Account Closed said, if it is attached to the land than the seller gets it back during foreclosure.  A mobile home with another note would not be considered part of the land but a barn or other structure with a permanent foundation would. 

The only downside for the buyer is that not many places will do construction or other loans if there is a superior lien on the land, but usually they can find a mobile home to put on there.

Post: Looking for a Tax/CPU individual near San Marcos Texas

Christopher GilbertPosted
  • Investor
  • Pflugerville, TX
  • Posts 141
  • Votes 85

We have used Godwin and Associates in Austin for years.  They are really good at both real estate and our company taxes and we have learned about many deductions as well as how to track everything in QuickBooks. 

We interviewed probably half a dozen CPA's before picking one and was surprised at how few could actually answer any of the questions that we had about depreciation and which costs can be deducted on our rental properties and house flips.  Most of them seemed like basic personal tax type that was good at stocks and income and that was about it.

Post: Drywall contractor shoddy work

Christopher GilbertPosted
  • Investor
  • Pflugerville, TX
  • Posts 141
  • Votes 85

What does your contract spell out for material and warranty?  Unfortunately this may be the point where you learn a hard lesson and start using contracts with your contractors.  Without a contract you have little to no recourse other than to not use them again.  If you have a quote that spells out material used you may be able to go after them for that.  The contract should be simple but contain the scope, rough cost, payment schedule, material specifications and ramifications of missing deadlines or warranty period.  There are plenty of other things you could add to it but it tends to scare away contractors if it gets too long.

You may be able to go after them for breach of contract but only if you have something in writing (contract, quote, receipt with different material than quoted, etc.) but it will cost you as much in legal fees and they do not help you collect even with a judgment. 

A licensed contractor is a good direction to start with but even then you still need a solid contract.  Anyone that won't sign a reasonable contract is your first red flag.  Pay a few bucks more and use a good contractor.

Post: Ceiling fans on remote or wall switch control

Christopher GilbertPosted
  • Investor
  • Pflugerville, TX
  • Posts 141
  • Votes 85

I stopped putting ceiling fans in my rentals altogether.  They are one of the higher maintenance items and seem to only last a few years before being loud, wobbly or needing replacement.  If the tenant wants a fan they can buy a floor model and take it with them when they leave.  Put in a decent quality three or four bulb light in larger rooms and two bulb in smaller office/bedrooms.

Think about the math, if you have 10 rentals with ceiling fans in all the living rooms and bedrooms.  That's possibly 40 fans you have to maintain and the chances of several a year needing replacement are very high.  If you like to have a ceiling fan in your house get whatever you want and take it down when you convert it to a rental.

Post: Should I do my own taxes

Christopher GilbertPosted
  • Investor
  • Pflugerville, TX
  • Posts 141
  • Votes 85

We used turbo tax for many years up until we started realizing that it does not allow you to do some of the important things when putting a rental property into its first year of service. If I remember correctly, it does not do much for depreciation, allowing expenses at closing (off of the HUD) or initial repairs. You have to find ways to manually "fudge" the costs into the correct box as it never asks the questions needed to enter the data. There were expenses that we knew were allowed and when we contacted Turbo Tax support to figure out how to enter them, they said we were too advanced of a user and the software was not intended to function that way.

We went to a CPA and have never looked back.  The CPA will take care of all the deductions that you are eligible for and usually find a few that you did not know existed.  They take care of your depreciation tables and cost basis so you always have it documented.  It was taking us 80+ hours per year to do our taxes and now we just spend a few hours getting our documentation to the CPA which is worth every penny.  We save more each year in deductions than the cost of the service so it pays for itself.

Turbo Tax is great for income and stocks but once you get into real estate or if you do any business activity it falls short quickly.

Post: Texas Eviction Process

Christopher GilbertPosted
  • Investor
  • Pflugerville, TX
  • Posts 141
  • Votes 85

You can also call some local property management companies.  They may offer the services or put you in contact with some folks that take care of evictions.  Usually they will do them for a flat rate for each step of the process.  The process is not that difficult but you do have to make sure you do everything the right way, otherwise the judge will possibly make you go back and follow the process, which can add several weeks onto the timeline.

Keep the court date and proceed until you have the cash in hand, you can always cancel the court date or show up and say it has been resolved.  Also give 30 day notice stating that the lease will not go month-to-month and you will not be renewing it.  Most tenants will move out once you serve notice but I wouldn't expect to ever see that money owed.  Once you get a judgment from the court they still usually have two weeks to appeal it.  An appeal costs them a little bit of money so they usually won't.  After that you have to schedule with the Sherriff to force eviction, usually takes a week or so to get on their schedule.  If the tenant is not out by then, you have to meet the sheriff at the property and bring a moving crew to haul all their stuff to the curb.  Change locks immediately and start the make-ready process. 

Keep in mind the judgment only shows the debt on paper, they do not do anything to help you collect it.  Good luck.

Post: Realistic Expectations for Tax Deed Auctions

Christopher GilbertPosted
  • Investor
  • Pflugerville, TX
  • Posts 141
  • Votes 85

We do both tax and foreclosure sales in Austin and surrounding counties. Typically 70% of the houses get pulled before or on the day of the auction and never go up. Some come back within a few months but most get either tied up in legal action or the owner finds a way to pay it off. At tax auctions the ones that make it are the ones that do not have clear ownership or their is no heir for the property. For a $200k house you might be able to get it for $160k if it is in the surrounding area but commutable to Austin proper. Throw in repairs, the two year mandatory holding period on a homestead and sales costs, flipping isn't really an option on tax auction properties. The past few years all of the California money has been coming to the auctions and they have been paying 75-85% ARV on all these houses. Any house that is decent gets bought by these funds and they turn it into a rental since the returns are not there to flip any more.

Land is still doable at tax auctions but 99% of what goes to auction are drainage ditches, floodplain, cliffs or landlocked with no usable easement.

Take a look at the mortgage foreclosure auctions instead as these usually only have 90 day hold periods and no redemption rights. Again, expect to pay 75-85% ARV and you might be able to find a few rental properties out of it but not many flips.

Post: Have four properties, what next?

Christopher GilbertPosted
  • Investor
  • Pflugerville, TX
  • Posts 141
  • Votes 85

We did a 1031 exchange last year and traded one single family house for two, which worked out OK but due to the time constraints on the exchange I felt like we did not get as good of a deal as we would have liked and had to settle for what was available. 

If you are selling one property and buying another in the same area I am not sure that the 1031 is all that great because you may sell in an up market but will also have to buy in one.  I recommend if you go the 1031 exchange route, sell your property and look at another area (city, state, etc.) and see if you can leverage your equity better. 

Selling a high-dollar single family house may be able to get you multiple opportunities in another area and that is how you can build your cash flow faster.  If you want to go multifamily, you might be able to get one that is twice the number of units and probably a better cap rate as well.

I usually go with GE, Whirlpool or Frigidaire as at least one of them always seems to be in stock or on sale.  In the past I always bought my appliances through a wholesale distributer since they had slightly better pricing but after having a microwave fail after a few months I had to go back through the manufacturer for service.  Long story short, it was easier to just buy a new one. 

Going forward I will be purchasing appliances through one of the big box stores that I can just bring it back and swap out if needed and let them deal with the manufacturer.