All Forum Posts by: Elliot Grochal

Good article I just found if you're considering this route too: https://www.biggerpockets.com/renewsblog/rent-to-o...

My biggest takeaway from this is in a seller's market (what we have right now), it might not be the best method to implement. Do you guys think it would be information overload to offer both options (normal rent or RTO) on the listing?

Side note: Have we created a new BRR-T-OR method;)?

On quick glance I did not see any, but with something like this I'd say its worth the few hundred bucks to have a local attorney do it right, and do it to local laws/codes. @John Underwood would you mind sharing your LC as a reference for us newbies? Thanks!

Thank you @John Underwood, this sounds like a solid plan. I'll reach out to my attorney to see about a Land Contract for TX.

Thanks guys! I ran the quick mortgage calc again for 215k of debt and the rate would need to be 7.5% to match the $1500 monthly payment. So assuming the rents are indeed that for the area and the house is in fact worth 225k, I could offer something like a 7.5% rate, with a 20k down payment? I'm guessing you're going to say the down payment needs to be much lower...?

Hey BP, I've got a 2 bed, 2 bath SFH that I am nearly finished fully renovating (new foundation, hvac, plumbing, electric, finishes, etc.). I'm planning to BRRR once complete and take out a large chunk of equity to allow me to find another one. By my research I think it will rent for $1500/mo as a typical rental. I've had a few investors tell me to consider putting the home up as a rent-to-own, or lease-to-own. Let's say today's retail value of this rehabbed house is $215,000. If I were to offer a lease-to-own option, what would you ask for down payment and monthly to make it more competitive than a normal rental? I am intrigued about the tenants having ownership so that the property is better maintained and I am less involved as a manager (hopefully). I ran a quick mortgage calc on that value house @ 215k, and came up with appx. a $1000/mo payment for 10% down and 4.75% 30-yr note, which makes me think keeping it as a $1500/mo rental is the better choice. What would you do?

Hi Stephanie, congrats on getting ahead of the Austin wave! I moved there in 2015 from NYC and quickly realized I missed the boat on cash flow properties there. I had to pivot and after 4 months, landed in San Antonio. I currently own 4 properties (8 doors) and am feeling the cash flow opportunities dry up here too. I wonder if it's those Austinites swooping in;)  Anyway, perhaps its the overall state of the market, but I'm now beginning to look outside of San Antonio, similar to what Dave Schulwitz said, into less 'hot' markets, where immediate returns are possible. Perhaps SA will be good for appreciation, as it pulls some of the attention from unaffordable Austin, but my goal, similar to yours is to get to 10K/month cash flow. That said I'm looking to refi/sell my holdings this year and grab a 25+ unit multi-fam somewhere. If you need any tips on SA, I'd be happy to share, I have some good contractors I'm working with right now, but it feels like they either don't stay good forever or they get too good and go elsewhere. Best of luck!

Hey Kevin, you put in an incredible amount of research and thought here, congrats on that! I just rehabbed a 1920 property in San Antonio that had considerable foundation issues, so it wasn't really an option for me. We ended up putting in 40 new concrete piers and about 160 LF of treated beam. We are still closing up walls, so I don't have a finished product to share with you yet. In response to your 4 questions:

1. Would the average person buy a 1920s house that hadn't had the foundation updated? If it's not too bad, I'm sure someone would especially in our hot market, but like Jared said it would be a shame to do a bunch of work and then run into issues down the road.
2. Will the home inspector get under the foundation and ask for an engineer's report? Quite likely. Though if you have a foundation company that says the foundation is in ok shape, perhaps you get a letter from them to show a potential buyer it has been looked at by a company?
3. If we did nothing, I'm concerned about having to perform the foundation repair on the back end and whether that would screw over the new drywall/painting, re-hung doors/windows, and bathroom tile work all just done to the home? Yes, see question 1.
4. How would you handle this foundation repair? Very much depends on what you intend to do with the house. Trying to sell right away? Holding and renting? Also depends how much other work you are doing to the house, and what your sold comps are. Happy to talk further if you like. Good luck!

@Andrew Campbell Spot on post. Very inspirational and precisely what I am following. Thank you for sharing. We're closing on our 4th buy and hold property this month and looking to scale up just as you have done. I am also an investor friendly licensed architect in San Antonio, should you ever begin to venture into new construction or major remodels! Cheers,

Great posts, I have been wondering the same things. I instinctively want to pay off the loans quicker, and pay less interest to the banks (15-yr), however I think everyone in favor of the 30 year mortgage is correct; you may pay more over the long run, but you also increase your cash flow which is key to bringing in more properties into your portfolio. This investor did some quick calcs. 3 options: 

1. Pay all cash
2. Finance with 25% down and pay off
3. Finance with 25% down without paying off

Of these 3 options, the 3rd gives you the greatest cash flow. That's why I'm sticking with the 30-yr for now. Always good to look at your ultimate investing goals, and then try out 3 different scenarios in a spreadsheet to see what the best strategy is. The best option may be counterintuitive to what you expect.

Welcome to BP Lance! Lance helped me out with a last minute home inspection and he was great. Highly recommend.