All Forum Posts by: Hattie Dizmond

@P.J. Mellana The simplest thing would be a self-created LLC. Based upon the amount of initial investment, you would hold 70% of the "shares" and your partner the remaining 30%. I'm not sure what the rules governing LLCs are in CA. But, here in Texas we have Series LLCs, which means I can have multiple LLCs nested within a parent. The benefit is that the terms of the deals can change. So, if the first 3 deals were all 70/30, then your partner came up with additional capital for the 4th deal, I could spin up a new Series, and that series could have its shares held in a different split. As for saving all the cash flow, that's one approach. And, if you are sinking all your capital into the purchase, it's not a bad approach. But, remember, your basic assumptions should have a reserve for OpEx (routine maintenance stuff) and CapEx (larger ticket items that are depreciable). So, assuming you don't have any deferred maintenance items that might hit you before those funds build up, I don't know that I would sink all the cash flow back into the property. Bottom line, that's a personal decision for you and your partner based upon your financial positions.

@Jye O'Brien let's see if we can invoke an expert. @Engelo Rumora can you help out a fellow Aussie with his question?

@Sean Doherty Contact Tom Kyle at Keller Williams. He doesn't do MF, but he's a great guy, off the charts on integrity and honesty, and has been there forever. He will definitely be able to point you to a high quality resource. Tell him I said hello.

Originally posted by @Tyler Hodgson:

I agree with @Hattie Dizmond’s suggestions and reasoning. I’d also point out the Lewisville and Carrollton have strong rent demand and good investment numbers. Denton has some good pockets if you want to look further north. 

Agreed.  Denton is a strong area.  My only caution there is to make sure you are comfortable dealing with the college crowd, because Denton is a college town.

@Franky Davis

First...You miss out on 100% of deals you don't make an offer on.  So, great job making an offer, even if it was low.  

Second...Even better job making an offer that met YOUR financial criteria.  Don't ever change your numbers just to make the deal work.  If the numbers don't work, then it isn't a deal.

Third...Don't be embarrassed.  This guy is an investor, not a homeowner.  Don't worry about offending him.  Your offer was low, and the lack of a cash down payment probably closed the door, but your offer wasn't insulting.  He's an investor.  He may have felt like he wasted some time, but he wasn't offended.  Now, the fact that he is an investor means you may have put a little too much emphasis on his "motivation".  He said he is hoping to move to FL, but did he say he needed to sell the properties to make that happen?  Look at this from his perspective.  These are paid for, and it doesn't sound like he's putting a lot of money into their upkeep.  So, he could just turn these over to a PM and keep getting a monthly check.  Did you check the tax rolls to see if he owns other properties in the area?  It might give you an idea of how tethered he is to the area.

Regardless, I still applaud you for putting together a proposal using some creative thought.  But, what you were proposing to the seller doesn't get him any more than he can get by just turning the properties over to a PM for at least 5 years.  Maybe if you were financing out of the deal in 1 or 2 years?

Good job.  Keep thinking outside the box and keep making insane offers.

There may be some here who will disagree with me, but I'm a fan of borrowing from the 401k for something like paying off credit cards and here's why.  It is unlikely you're earning anywhere near the interest rate you're paying on your credit cards.  If you pay off your cards, then turn around and put the money you were paying each month on the CC's toward paying off the 401k, then you're probably going to be ahead in the ballgame, with the added benefit of raising your credit score.  I completely agree with Dave Ramsey's debt snowball approach, but that is generally for people with loads of CC debt who also have no other liquid or semi-liquid assets.  With an accessible 401k, you have semi-liquid funds.

Originally posted by @Rita Lo:

@Hattie Dizmond appreciate the input! Any particular justification as to why North of Arlington is a better choice?

Also, would you have any insights into Euless and Frisco as investing areas? A few websites I've researched pegged Frisco as a good location to buy a property. Euless meanwhile is pretty cheap, but I am not sure how rentable properties there are.

Thanks!

Rita, it isn't necessarily that North Arlington is better, just that I would avoid the eastern part of Arlington, particularly between I-30 & I-20.  That area is sketchy.  There are "deals" to be found in that area, but the schools are poor, and your rental rates will be low.  Not to mention I believe the tenants you'll find in those areas are the kind that will just be problems.  North Arlington just doesn't really have a large swath that suffers from the same problem.  Once you past Center Street, headed west, the problem mostly resolves for the area between I-30 & I-20.  Southwest Arlington, particularly between south of Arkansas Ln & north of I-20 and west of Woodside/Kelly Elliot, is a good area.  The schools are excellent and there is a nice mix of property types.  

Euless is an interesting area.  It's part of a trio of cities Hurst-Euless-Bedford (aka...HEB) that are situated along Hwy 183, and are separated from Irving by DFW Airport.  Those 3 cities share a consolidated school district.  There are some strong areas in there, but there are also some seriously dumpy areas.  And, it isn't nearly as clear cut as Arlington as to where those are.  I will do deals in HEB, but I'm very careful with them.

Frisco is the tale of 2 cities.  The old part of Frisco has been around forever, and it is now starting to re-gentrify.  I personally think there's value in the older part of the city.  Most of the city is relatively new development.  If you can find a deal there, I'd definitely gobble it up.  It probably has some of the strongest rental demands in the north part of the Dallas side of things.  Although, West Plano is good as well.  

As you may have noticed from this response, the DFW area is simply huge, and there isn't one answer that will suffice for all of it or even one city in most cases.  Arlington itself is near 500k people.  You have to speak in term of sub-markets and macro areas here.

I'd be happy to talk, if you want additional information.  My contact information is in my profile.

There is always an advantage to looking at the areas around the new companies that are moving into the area.  No real surprise there.  As for cash flowing areas, it's a total crap shoot.  And, just like with anything else the numbers have to make sense.  Arlington is solid, but the rental rates have tended to be a little lower, so you have to find a deal.  And, I would strongly recommend the western side of Arlington, say Center Street and west toward Ft Worth, if you're south of I-30.  North of I-30 is pretty much fine across the city.  Unless you are sinking a lot of capital into it to force cash flow, I would suggest you keeping the property under $150k.  You're going to be hard pressed to much that will cash flow above that level.  Also, be aware that Texas property taxes are higher than you might expect, and they increase every 1-2 years.  You have to figure that into your deal evaluation, because a property that cash flows this year may not next year.  It shouldn't scare you away, but you definitely want to take it into consideration.

Let me know if there is anything I can help you with.

@Morgan Hoke, the market in DFW is great.  It's been insane for at least the last 4-years.  Experts agree that a "balanced market" (meaning it's neither a buyer's nor seller's market) should have an inventory of 6-months.  Well, the desirable areas around here have been under 1-month of inventory for the last 4+ years.  My personal observation is that it may be starting to soften a bit.  We've got 3 houses on the market in Richardson.  They've been on the market for about 6-weeks, in an area where we are seeing less than 1-week on the market, with houses going above market value.  One of these properties was a flip, and I expect they have it priced too high, but 2-years ago I wouldn't have mattered.

Bottom line is that there are deals, but they are hard to find right now, and you're unlikely to find them on the MLS. You need to have boots on the ground, and you'll need to be prepared to move almost immediately, when a true deal presents itself. We have worked with several out of market investors who wanted to leverage the steady appreciation in this market with buy and hold properties. If you have a dependable team, it's very doable to invest remotely.

I just recently downloaded the entire data set from the Dallas County Appraisal District.  There are a lot of DAV exemptions on record now.  I was shocked, because I wasn't even aware those exemptions were in play.  Once you get the exemption here in Texas, it isn't likely you're going to lose it.  I encounter plenty of circumstances where properties are still receiving Homestead exemptions, even though they are rental properties.  Unless the deed actually transfers, there is little way for the County Assessors to know anything has changed.