All Forum Posts by: Alex G.

@Joe Scaparra It’s one duplex per legal lot. If you have one large lot with a duplex on it that you subdivide into two, then the 2nd (new) legal lot can hold 1 more duplex - assuming it’s large enough in size. Talk to a land development consultant or engineer.

If you have a large deep lot on a corner, you may be able to subdivide your existing lot by chopping off a rear portion. When you subdivide, you keep the same zoning. The second lot would have to be over 5750sf+  to build A/B condo regime of 2 units, or if it’s 7000 sf+ you can build another duplex.

Both CADs, Wilco and Travis, have the current tax rates and assessed values posted on their respective sites. Just look up your target property on the site by the address and multiply the assessed value by the tax rate. And that’s your current property tax.

@Danny Webber  Thanks for the link, Danny! 

@Matt Camilliere 
I'm unclear if you got any experience in buying and flipping properties.
If you don't:
You've got an uphill battle. Your only source of money might be family and friends. These are the only folks who know you for the trustworthy person you are. 

The alternative is - you wholesale your current deal to another investor and make enough for a 15% down + fees & costs. Or you may have to wholesale a couple of deals before you have enough cash to take down your own. If you can't sell your deal before your closing, perhaps, it's not such a sure fire deal that you thought you got. 

You may work out a deal with an experienced investor who'd buy it, will pay you a finder's fee and you'd be shadowing the whole process to learn how to do it right.

If you do have experience:
1. You can find a lender who will fund everything, ie., 100% of the deal + costs. This could be either a hard money lender or a private individual. Be prepared to pay a premium for the risk they take.
Jason Payne with ISB Capital used to do 100% financing at below 70% ARV (pre- coronavirus). It's been a while since I talked to him but it's worth checking with him.

2. You can find a partner who'll fund a 100% of the deal for a profit split. 

For 1 and 2 it better be a sure fire deal. If an experienced lender or investor won't fund it or won't do a JV deal with you, chances are you don't have a deal.

Re: second part of your post.

You are OK with paying what roughly amounts to 13+% to a hard money lender who is well secured in the 1st lien position. Yet you plan on offering 8-10% to a private lender in a secondary position who will be taking all the financial risks in your transation while you have none.

To call this "make an easy 8-10% on their money" is just plain silly. If you looked at the list of foreclosure postings in Travis and Williamson county, you'd find a good number of these hard money & construction loans being foreclosed every month. Probably well over a hundred bodies could be found at the foreclosure cemetery over last 3-4 years of the rehab boom in Austin.

A friend, who is an experienced rehabber, was sued by the buyer who bought his remodeled home. He subsequently spent 2.5 years in court and paid tens of thousands in legal fees to his lawyer to defend himself. He was eventually forced to buy the house back and give the buyer all his money.

There are no easy rehabs. Risks of multiple kind are a-plenty in every one of them.

Our last finished rehab went under contract in 18 days in early June. Most other homes in the same subdivision (far South Austin, 78748) seem to be going under contract in under a week now.

We were priced about 10% higher than anything else of the same size because of the extensive rehab. It took a bit longer to get a picky buyer willing to spend more than most to get the updates we put in. And we had a full price back-up offer from another buyer signed and in escrow. 

On the opposite end of the spectrum, the same floor plan sold for $70,000 less. The house was untouched since 2004 when the subdivision was built.

Pretty darn good market if you're selling.

I would think long and hard about it. You got lucky here. MF-3 is a premium zoning (medium density) that allows 36 units per acre and 75% FAR. That means, you can have up to 8-9 units (depending on exact sq.ft. of your lot), and 7,500sf of residential dwellings.

Surely, the property value created with income from your extra unit(s) will far exceed the consideration you can give to getting a bit cheaper 1-4 family FNMA financing than commercial and having a pool of 1-4 family buyers vs commerial buyers. 

At some not so distant point, I'm sure the value of the land will far exceed the value of your current building, and your building will be a tear-down candidate to build new 8-9 units. These could be run as rentals or sold as condos.

I would consult with a civic engineer who understands land development and can review & explain to you the full potential of what you bought.

The simplest / quickest way to look up the zoning is on the Travis CAD site, see attach pic. You'd still want to confirm it with the City. 

Fourplexes are often zoned MF-2. If that's your zoning, see attached image for what can be built on your lot. This is from City of Austin Zoning Guide. Just search for your zoning type.

https://www.austintexas.gov/sites/default/files/files/Planning/zoning_guide.pdf

** Do you mind sharing what you paid for the 4plex and what the rents are at full occupancy? I'm trying to keep tabs on what investors are paying price-to-rent for 2-4 units these days. It's changing so fast. 

I closed many subject to deals at seller’s kitchen table when I was a budding investor. This was  before I learned the many ways in which the title can be screwed up... And same for your future profits. 

 Closing at the seller’s kitchen table is foolish, as you won’t get title policy. Unless you’re a pro level title examiner you won’t personally be able to discover various issues with the title. Moreover, to establish seller’s correct title vesting, the title company has sellers sign a variety of additional affidavits and statements about family history, liens and such at closing.  Should an issue come up later, they’ll go after the sellers legally. 

If their search has a mistake, their policy will cover you. If your search is messed up, you’ll have to pay to clear out the issues yourself. 

Where to find title companies willing to close subject to is another matter. There has been a big push on title company underwriters from FHA/VA/conventional lenders to stop closing subject to deals. I used to close them at Independence Title and TNT (John Pleuthner's office), but they have advised they stopped closing them. Patten Law firm that caters to investors in Texas still closes them and issues the title policy, at least that's my understanding.