All Forum Posts by: Henry J.

@Jay Hinrichs

I only wish I came this site earlier, and knew about TX property tax and wind and hail before investing.  Also learned the hard way to always run rent comp before renewal so when property tax rises I can hopefully recoup some money.

We just sold one of our Dallas properties after holding it for 4.5 years.  The last 2 years had been painful - with on going repairs, horrible tenant with late payments and pets that pee'd on the carpet...  After the last tenant moved out we had to spend more money for the repair and make ready.  We were lucky that our held 2 months of rent as deposit to help pay for some of these repair expenses.

So here are the past 4.5 years financial for those who's looking into OOS investment.  I'm not an accountant so please don't scrutinize the buckets.  I didn't include the travel / visit cost since we have multiple properties there, but the these are actual expense amount for this property. 

This was sold through our PM from another investor.  The PM has managed this property for a year prior to us buying it.

Property location - Burleson, TX

Floor size - 2,300 sqft

Lot size - 7,400 sqft

Year built - 2003

3 bed rooms / 2 baths / 2 stories with 2 car garage.  

Purchased Price - $125K

Down payment - 25% / $31.25K

Purchase related expense - $5.3K

Sales Price - $189K

Sales expenses (including concession / commissions / etc) - $17.5K

I think we made $34K after (before tax) after 3 years worth of losses. The IRR is around 11%.

Lessons that we learned over these few years from this house -

1. Have reserves.  You can't control the weather so be prepared when there is wind / hail / water damages.  Heck - we even got a broken pipe while the house was on the market.  Luckily it's outside at the front yard.

2. Tenant quality is important.  There are families out there who don't take care of their children and pets.

3. Timing is important - if there is no appreciation we would not have got out of this house with any gain.

4. We need scale to even out the odds.  We would have had a harder time if we didn't have 3 other properties easing the pain to pay for AC / fences / repairs.

I wish we sold the house last year instead of renewing the lease with this last family.  The repair $ should have been much less but not sure if the timing would have worked for us due to Fall lease renewal.

Thanks.

Henry

Mark S. add on to what Curt wrote - be mindful that tax assessor has been reassessing property value so what you will pay next year may be different from your current estimate. I don't know for sure of the frequency but it seems to be yearly - I've received a notice every year since my purchase. Can someone confirm this? Thanks. Henry

Sean Thompson Did you have a relationship with a lender / broker? If not, the 1st thing would be establishing one - either through someone you trust, or good referral, that you know can stay on top of things on your behalf. That's what their job is... Thanks. Henry

August Faustino Do a search on BP and also include Marathon management company and see what you can find. Marathon is the PM arm of Memphis Cash Flow. Good luck on your research. Henry

@Jim O. - Did I read it right?  $50/page notary?!  If you don't mind sharing, how much did you have to pay for the refi paperwork just on notary?  I supposed there aren't that many pages you need notary signatures?

Thanks!

Henry

Matt Romano Your rate seems a little high for owner occupy, but that can change based on your credit. Have you asked couple of lenders for their current rate? I don't have 1st hand FHA experience before but I thought they only charge PMI when you have less than 20% equity. Again, I would suggest you to check with another lender to see.

Andrey Y. I'm only 5 yrs into my RE investment so I will be following this thread to see how others have done. Be mindful that like S&P 500 (and stocks) it all depends on when people buy / sell the property so performance will vary. The only good thing about RE is that you can't sell quickly so there is no panic selling or machine trading like flash crash. :) Diane G. I think Memphis Invest has been around for more than 8 years but I don't think those owners are active on BP. Thanks. Henry

@Nick B.

I don't see any upside unless someone is trying to marry into the family and the requirement is to buy 50% of the family asset - then the upside is your significant other.  :)

Andrew Jordan Do you have a lot of assets / $ under your name? Do you need to hide your assets from people for any reason? If not, then you probably don't need to have a LLC when you start. You can always move properties under LLC later, but there will be a trail people can follow... There will be more expenses when you have a LLC but that shouldn't be the only reason for not starting one. If you want to build business credit then I think it will make sense to start early. Good luck figuring it out! Henry