All Forum Posts by: Charles Goetz

@Dustin Lang I would agree with everything @Bruce Lynn said. I'm working on a house in north Carrollton that was built in the late '70s and we're in the process of replacing all the cast iron sewer lines. This is due to the iron pipe corroding and this is surprisingly common on homes of this age in this area. The foundations are also an issue, but really most houses around here have had issues with foundations or will have due to the soil, so it's just part of the deal. Another thing I would look for is aluminum wiring. The late '60s and early '70s homes were built using aluminum and it can be a real problem. 

This isn't to say that all houses from this time or area are bad. Personally I would spend the money and have a sewer inspection done by a plumber along with the home inspection. I'm paying around $250-350 to get one done and it could save you in the long run. We're paying 29k to get the sewer replaced at the house I'm working at.

@Eric Long

Eric, The Dallas/Ft. Worth metro area has around 7.5 million people and the city of Fort Worth has about a million so it's not really that small. Size-wise, it's about like combining Rhode Island and Connecticut and then some.

Like any area, some pockets are good and some not so much. As others on here have said, you can find properties. It may be harder buying off MLS. You would need to get a good feel for the area and look at the different parts of town. This area is so spread out because there is room for expansion in all directions. That's why it can grow in population like it does and still be fairly reasonable. Size-wise, it's about like combining Rhode Island and Connecticut and then some.

@Eric Long

I used the 200k number just to give an example of what the tax bill would be. As @Jason Taliaferro mentioned, the higher tax rate here is a small price to pay for all the positive things the area has going for it. The number of people who move into the Dallas/ Ft. Worth area a day is unbelievable so the growth is there. The job base is really diversified. Texas is very investor-friendly as was mentioned. The no income tax plays a role also in the fact that people want to live in places like Texas. Companies want to move here and the state promotes that. 

All that sounds great, but finding a property where the numbers work is getting pretty hard. Not impossible, but tougher. The home values shot up a few years back when the hedge funds were buying up a lot of the houses on the market. This created a ton of rentals so now I see that the rents are not increasing with the values and tax rate. You most likely would need to find something off-market to make numbers work. The 1% rule that is talked about would be hard to achieve. Personally I like other smaller markets with lower prices, but the trade-off is they don't have the growth or stability found here, but the cash flow is better. 

There's a lot of people here that make it work, so it can be done. It's just not as easy as it once was. 

@Eric Long

Eric,

Texas does have a higher tax rate than some areas. The no income tax thing is great, but there's a trade-off. In a lot of areas, especially the larger cities,  there is growth and a more stable economy than other areas.

For example, Tarrant County, where Fort Worth is has a tax rate of 2.16% of the value. The national average is around 1.08%

Your taxes on a $200K house would be about $4300. The national average is around $2100.

@Reed Meyer

I believe the Ken McElroy book is really good. Even though he does larger deals, I felt like the book was geared more toward smaller buildings. There's a lot of good information in there. He has a way of making the complicated stuff sound easy. 

John Schaub has a book called "Building wealth one house at a time" that I thought was pretty good. He breaks everything down. Everything. It came out in the early part of 2000, but it's still relevant I think.

@Joel Reed

Joel, while this sounds good on paper, it may not be the easiest thing to do. Depending on the city you live in, they may restrict what you put there. I have an RV that my city won't let me park at my house for more than four hours. Also, you would need power, water, and sewer if you were going to have someone there very long. You can't just plug into an outlet from the house. 

I have seen where people with some space to spare will lease some of the POD units, stick those on their property and rent them as storage. You would need no utilities and may not have the issues with the city. If you are in a more rural area or where the city is alright with it, you could rent it to someone to store a trailer or car. 

I pay to park an RV and construction trailers so I know there is always a need for people to store their stuff.   

@Eric Andersen

Eric, It's hard to tell from the photos what's going on, but I can say from having done a bunch of houses that needed foundation repairs you will be better off having a structural engineer look at it rather than a repair company. Where I'm at they cost around $500-750 but if you think there may be a problem, it's good to get an engineer to look at it. I have found that's it's better to pay the price than to rely on the foundation repair company.

As for the electrical, if it is in fact knob and tube wiring still in use than for sure I would have that looked at by an electrician. From what I can see from the picture, it looks like there is Romex wire spliced in. I personally would feel better having it completely checked out. If it needs to be completely rewired it could be costly. They may see that it alright.

I would have a couple of people look at it and see if the seller will work with you.

@Taylor Robinson

I am familiar with that area having worked around there on homes that were bank foreclosures although I don't know that particular neighborhood. 

My thoughts are that being you are out of the area and don't really plan on seeing the property yourself, you should be very cautious. Mobile homes are a lot different than stick-built homes and come with a whole different set of issues. I believe @Andrew Postell brought up some very good points. You may want to make sure you can get funding before you get too far along. Personally, I would contact the city to see if you are able to put a new mobile on the land if you ever needed to. You may never want to do that, but the house won't last forever, but you'll still own the land. Some areas around here are no longer allowing mobile homes although I don't think that would be a problem there.

I would hire an inspector that has experience with mobile homes that is independent of your PM. It looks from the photos like there was some cosmetic work done and you need to make sure of any potential problems. It looks like the home may have been in pretty bad shape at one time so you want to be sure things are sound because ongoing repairs will eat any profits quick. Make sure the underside of the trailer is intact for one. That's a common problem with mobile homes. The metal shower would be a concern to me. You need to know why they did that. A water leak in a mobile home can do a lot more damage than a regular home.

The schools are rated well do largely to other homes in the area. There are some nice properties around. That particular area can be iffy. Although I would not call it bad. I would also not say it's good. If you look at Google and explore the street, you will see a few well-kept places, but you will also see some that look like junkyards.  I would increase your 5% vacancy number. The people you will attract for that may not be the most stable and it may take longer to rent to a qualified tenant than other areas.

I don't want to sound negative. You can make this work just don't buy the place solely based on some photos or the word of a PM. Getting the place in good, stable condition may require more work than you think if you want to attract good tenants. Assuming that you can. Also, I would first offer less. The time on the market is a lot for around here. I'm not saying low ball them, but they have already come off the original price and it's still available for a reason.  

Good luck with it.

@Brett Sullivan I personally would not spend any more money doing repairs. If its that bad, more leaks will happen next week, next month or whenever. I would get more bids to replace it. Also, talk to the guy who did the repairs and see if he will work with you on price. Probably won't credit you the whole $600 but it's worth asking.

I also would stick with gas. The cost to change everything out would be more than the line replacement cost. If the place is older, it probably doesn't have the capacity to handle all electric appliances and mechanical plus you would need a new furnace, water heater, etc. 

This is no fun, but better to find it out now than when someone is living there.

@Tremaine Daughtry When I see stuff like this my thought before I consider fixing it is how did it happen. It doesn't look like there are any plumbing in the area, so could it have come from flooding or poor drainage? The cause and prevention of it happening again should be something to think about so you don't keep running into this. It looks like from the pictures it's all in one area. 

As for cost, I'm not sure where you're at, but If it were me, I would have the foundation repair and the floor repair bid seperatly even if it's by the same company. That way when you compare prices you'll get a better idea. Also on the bids, ask exactally what they will be doing. Also, leveling a pier and beam foundation is so much easier than a concrete slab so you can compare better if everything is spelled out.

I have done this before and it's not too tough to repair the broken joists, but the water damaged wood could be a problem depending on how much damage is there that you can't see. Like the subfloor. If it's a deal or not is hard to say, but I would get more information before you decide.