All Forum Posts by: Chad Brady

@Del Crockett I am a broker in New Braunfels. I personally have 6 single-family rental units that I have done very well on. I have several investor clients who have been very happy with their performance in New Braunfels. One of those investors lives in Austin, but prefers New Braunfels rentals. I will say it is hard to find a home run here, but my clients and I are in it for the long haul so we are pretty happy with just a few solid doubles. Interest rates being so low is making it a lot easier to cash flow properties now than 2 years ago. Let me know if you have any questions about specific neighborhoods in New Braunfels.

Thanks, now I am thinking more big picture and trying to increase my cash on cash return by minimizing my initial investment. 

Investment Info:

Single-family residence buy & hold investment in New Braunfels.

Purchase price: $245,000
Cash invested: $47,000

This is a solid rental in a very desirable school district. It rented in less than 24 hrs.

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

This one had a lot of potential for some minor upgrades. This was one of the builders basic packages in their larger floor plans. The home has a half-bath that could easily be converted into a full bathroom. My plan is to convert one of the living rooms into another bedroom/media room and add a tub/shower combo to the half bath taking this from a 4 bed 2.5 bath to a 5 bed 3 bath before I sell it in a few years.

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

I found it on the MLS. I was able to negotiate the price down because I found out the owner had a bad experience with her previous tenants and wanted to be done with real estate investing.

How did you finance this deal?

Conv 30yr fixed with 20% down. I used the equity from another rental and was able to defer taxes with a 1031 exchange.

How did you add value to the deal?

I allowed the tenants to install ceiling fans and paint. I purchased the materials and they did the work. They enjoyed getting to pick out the fixtures and make it feel more like home.

What was the outcome?

This ended up being one of my strongest cash flowing properties with less down than some of my other rentals.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Nick Drake

I moved to a different city and had hired a friend to manage the property for me. He is a great friend but not the best property manager. He ended up changing careers and someone else took over the management. He had not checked on the property since the tenants paid rent on time every month. They totally trashed the place. I had to repaint the whole interior and replace all the appliances before I put it on the market. I was in a time crunch because I had 2 other properties under contract that were contingent on this one selling. I was using a 1031 Tax exchange so I had a lot riding on the first house selling. This put me in a bit of a bind so I took the first offer that came in because it was a cash offer that was a quick close. I probably could have sold it for more if I was not under the gun with the 1031 Tax Exchange.

Investment Info:

Single-family residence buy & hold investment in New Braunfels.

Purchase price: $211,000
Cash invested: $45,000

This was the 3rd rental for our portfolio. I purchased this one with tenants and a 10 month lease in place.

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

I was interested in this one because it already had tenants that had been in the home for a year and had just extended their lease for another year.

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

I found it on the MLS. My main focus was to minimize my initial investment so I focused on getting closing costs paid for.

How did you finance this deal?

Conv 30yr Fixed rate with 20% down.

How did you add value to the deal?

No value added.

What was the outcome?

It was fun closing on the 30th and walking out the door with a check from the owner for the deposit as well as getting the rent check the very next day.

Lessons learned? Challenges?

I learned that it is nice to buy an investment that already has a tenant and lease. The drawback is that this lease is written slightly differently than my usual leases so I have to remember that the grace period and other things are not the same as my normal leases. I also didn't get to screen the tenants so I don't have a relationship with them like I usually do with my tenants.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Nick Drake

Investment Info:

Single-family residence buy & hold investment in New Braunfels.

Purchase price: $189,000
Cash invested: $47,250

This was my second rental investment.

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

I was looking to add to our portfolio and this one was slightly priced below market value and was in a good rental market.

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

Found it on the MLS I was able to negotiate a little bit lower of a sales price because I was willing to close quickly. I was focused more on cash flow than overall price.

How did you finance this deal?

Conv 30yr fixed with 25% Down.

How did you add value to the deal?

This was !00% turn key. I was able to lease it 2 weeks after closing.

What was the outcome?

I was able to cashflow about $150 more than I had originally expected.

Lessons learned? Challenges?

I learned that a larger monthly cashflow sounds nice, but it ties up more capital if you do 25% down instead of 20%. The extra cash flow is nice until tax season. Now I try to make sure my cash flow is closer to the yearly depreciation amount to minimize my tax burden and allows me to acquire more rental properties.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Nick Drake was my lender. He is an amazing loan officer if you are looking for someone to finance a hold strategy

Investment Info:

Single-family residence buy & hold investment in Lubbock.

Purchase price: $105,000
Cash invested: $35,000
Sale price: $161,000

This was the first rental that started me down the path of building a portfolio of rentals. I used a 1031 tax exchange to move my equity to New Braunfels so I could self manage and increase my cashflow. My main focus on this one was strong cashflow with minimal renovations.

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

It was priced well and would cashflow very well.

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

I found it before it hit the market by riding along with another agent in my office. I only negotiated a little because the home was already under market value and I didn't want to get in my own way when I found a solid deal.

How did you finance this deal?

Conv 30 fixed rate with 30% down. We had to put more down because we didn't have any credit score. I learned from this point on it was going to be important to maintain good credit to be able to be successful in this industry.

How did you add value to the deal?

We had both of the bathrooms renovated. After the first set of clients, we replaced the old carpet with vinyl plank flooring since it was cost-effective and longer-lasting.

What was the outcome?

We were able to cashflow on this rental for several years and allowed it to increase in value with appreciation. I used a 1031 tax exchange to move the equity into two rental homes in the town I currently live and focus on.

Lessons learned? Challenges?

I learned the importance of having a very good property manager if I was not going to be managing it myself. I prefer to self manage my properties and select properties that are within my area of expertise. My property manager did not do a good job of selecting and checking on my last set of tenants and they trashed the place. We had to repaint the whole interior and replace all of the appliances.