All Forum Posts by: Alex G.

@James Lindsey I've been investing in Austin for nearly 25 years, so got a bit of perspective. When I started in the early 90s prices were low, it was a cashflow town. You can buy a single family, duplex, 4plx and they all had positive cashflows after PITI, management and maintenance.

My 5th property was a 4plex I bought in '92 for $128K in Lamplight Village area with a 3% down FHA owner-occupant loan. All units were small 3bed/2bath. It rented at $525/side to section 8 tenants. It was a beat up C property in a C+ location. The market just started to recover from the bust of late 80s.

I moved into 1 side, I was collecting almost 1600/mo while paying some $1200/mo PITI on a mortgage. So immediately I was living free plus generating some positive cash flow. As I gradually cleaned up 3 other units and replaced tenants my cashflow figures improved further.

... This was then. In the last 8-10 years Austin has become an appreciation town. Prices have been climbing up at unprecedented rates. Even though rents have kept going up at high rates, you can hardly  find an opportunity to buy a 4plx building in town where the numbers will work as well as they did for me in the early 90s.

However, you can still probably find a 4plx building that still works because the interest rates are at 1/2 of what they were when I was financing that building. Today you would pay about $400K+ for a building like this. Your PI on $400K loan at 4.25% will be about $2K/mo. Your PITI would be about $3K/mo. You can rent 3 units for about $3,000/mo total and live in the 4th.

While you won't have a positive cash flow, you'll come close to a break even - minus maintenance. Over time as rents grow you will pass that break even point and turn it into a positive cashflow building.

... All that said, I'm actually just flipping houses right now, not buying anything to hold. The margins are crazy good, IF you can find properties to buy at large discounts.

Happy Bargain Hunting!

I'm with @K. Marie Poe on this. The combo of the estate situation and some timeline pressure in a form of a pending mortgage or tax foreclosure action is the most potent. I am making a small fortune from these. My favorites are non-probated estates, they are usually a lot messier than when a family hires an attorney and goes through legal steps to perfect the title and establish who has the power to sell.

The kickers are when the heirs are out of area, there are more than one heir, and they have undefined between them responsibility to take care of the house. The end result is - the house often sits empty with no mortgage and/or tax payments made by anyone. Or one of the heirs lives there who is supposed to take care of financial obligations, but he doesn't without letting others know.

We have dealt with heirs who are serving time in prison, don't have IDs to sign docs, hate each other to the point when they want the house to be lost to a foreclosure to spite the others, etc.  The messier it is, the more likely the competition won't have a clue how to touch this deal.  The margins are often a lot better too on these than on a "clean deal".

That said, my biggest wholesale flip profit (6 figures) came from a filed probate case. It took over 6 months of follow up with an executor but it was well worth it.

I'm looking for a partner in Houston market who is an experienced rehabber with financial means to buy and fix up properties. I.e., able to get hands on cash, credit lines, HML, other loans -- to finance deals and has a track record of successfully remodeling properties for resale.

I'm based in Austin and flipping houses here. Would like to expand into Houston market and have ways to generate good quality, high equity leads for purchasing and rehabbing houses.

Please PM if that's you.

I'm not sure why you are so preoccupied with things like what he should be doing, how much money he has at risk with HUD, whether he is making a killing when he should only be making $2K, and he only just signing some papers, etc, etc.

It's really nobody's business how much effort or time he has put in a deal, how much money he has at risk, what he should be asking for the property or what profit he should be making.

There is absolutely nothing wrong with spending 10 min of one's time to tie up a property on a contract at a great below market price with as little as $10, then turn around and flip that contract for $50K, $100K or even more.... As long as the market supports that price.

Market is the only true equalizer that will either make him money or teach him a lesson. There are 3 scenarios possible for him:

1) He sells the property before he has to close with HUD. The market could be hot enough to produce a buyer willing to pay what he asks. Or as it gets closer to the deadline he might adjust his demands down to under $50k or other price where it might be attractive enough for a buyer.

2) He doesn't want to negotiate much. He wants to try waters at a high price. But he has the money to close and that's what he intends to do.

3) He can't sell, he doesn't have the money to close.... He loses the deal and his EM.

There are a lot of people who call themselves wholesalers but don't understand the price points the market will buy at. We can huff and puff about it, but the only way they'll learn is - when the market teaches them.

The good ones will learn to find, contract and deliver properties to cash buyers at prices that generate real excitement and competition from buyers. The ones that don't learn, won't stay in the business long.