All Forum Posts by: Casey S.

I have some current rentals but they are what I would call low risk low short term return (college student houseing in good longterm hoods)with high appreciation potential. I manage these myself on top of a 40 hour job and it really isnt too bad. These have been great so far and they usually give me back about $100 a month each above cost. From a numbers standpoint everything I have read here would scream stay away from these.

I just had an offer accepted for a 4-plex in an area that is about one step above a warzone. Their asking price was $75,000 and I got them down to $64,000. There are currently four leases signed at $500 each (realistic rent in the area is $450). It has 3 of the 4 A/C units new. It needs a new roof. The insides are good considering who lives there and the age of the building (1980). My monthly utility cost will run $180-$240 per month. The current property manager is getting $250 a month for the building and has a good history of keeping them rented. Ill be financing for 15 years at 6%.

Does this look like a property that you pros would jump on? I think the numbers are there but I'm not sure if the type of tenant is worth it.

Thanks!

Sorry, I should have been more specific. I am looking for approximate dollar amounts for common issues. I need to return deposits and I expect some foks are not going to be very happy. In Texas if they take you to court and you loose they are entitled to 3x the deposit amount in settlement.

Does anyone have a rough list of deposit deductions that are typical to withhold? Not needing large item repairs but things like basic cleaning, burned out light bulbs, dirty air filters, replacing stove burner trays, cleaning a filthy fridge or oven, etc.

Thanks!

So my last tenant moved out Sunday. I got the keys from her and looked around the place and the bathroom floor was soaked. She said "oh I think that toilet is leaking". Upon closer inspection the A/C drain was clogged and had been that way for a while by the looks of the MOLD all over the baseboards and sheetrock. Luckily it drained towards the tile in the bathroom and not a carpeted bedroom. I know it is my responsibility to make sure the A/C drain isnt plugged but what financial responsibility does she have to report a very obvious problem that caused damage due to her not reporting it? Do I have a legal right to deduct money from her deposit? We have the standard Texas lease that most foks use which states under 17.A.(13) promptly notify landlord, in writing, of all needed repairs.

My rule on bad locations is the only time I will go with a bad location is if the cash flow is there AND I think it has good longterm potential for a turn around. These are usually properties that have proximity to something that will maintain its draw longterm but the hood itself has become dated and down. Propertys that may be close to a major univ, close to or on water, near down town in a healthy growing city, etc.... Its IDing the up and coming neighborhoods before they are up and coming. If you cant find any reason why the area will draw better and more people in the future then stay away.

So I guess we have to wait and see.

I'm not as much nervous about my propertys themselves as I am the loans on some of them. Local bank, 5 year with 1 year ballons on 15 years. The bank says they have never called a note at the end of 5 years but they have the right to. If rates shoot up they will follow suit and if rent doesnt come up I could end up going from making money each month to losing money each month.

I havent been around long enough to see high interest rates. How much does it usually affect house prices? Common sense says that when rates go up prices go down but what could we expect to see happen if rates went up to 15% in next 5-10 years? What would we expect to see happen to rental rates?

Any comments from people who were in the game when rates were up in the past would be much appreciated.

I havent mentioned it to my wife yet which will probably be the toughest part. I could see her trying to crunch a kickarse deal because she doesnt like something about the house.

I already have 4 properties but coming up with down payments is getting tough. With the 80/20 loans on primary residences I was thinking this would be a way to buy rentals without the heavy down payment.

There are a number of local foreclosures that would make good rentals. These homes are newer than my current home and as large or larger. I am considering buying one to move into and renting out my current house. Waiting a little bit and doing it again. The main advantage would be the financing since each purhase would be for a primary residence instead of investment property. What will the major mortgage companys say about me doing this? Is there an amount of time I would need to stay in one before buying the next? Any other thoughts I should consider besides moving being a giant pain in the rear? Thanks!

My market is small enough that if this neighborhood tanked it would mean the whole town tanked in what is consistently listed as one of the most stable/ undervalued markets in the country. We have not seen any reduction in price throughout the whole real estate issue. If we took that kind of dive all of us would likely have much bigger problems. Not to say it couldn’t happen though with the way things are today.

I guess when I think about it one of the things that I am looking at as motivation in this thought is that with a property like this in 15 years I could own a 20 year old $210,00-250,000 house with minimum headache and a little money out of pocket or I could buy a 30 year old fixer upper, spend a month rehabbing it, spend free time fixing petty crap, profit $200 a month after cost, and after 15 years I have a 45 year old property that may be worth $100,000 if the neighborhood didn’t go to crap in the mean time. Initial cost for the fixer upper wouldn’t be much different after down payment and rehab cost.

The diversifier in me also sees having properties in multiple mini-markets as much better than having a bunch of one type of property renting to the same people in the same hood.

Maybe I am stretching a little too far and trying to do something that should simply not be done.