All Forum Posts by: Hattie Dizmond

What's next is you really need to slow down and get educated.  

Do you know how to evaluate a deal?  Do you know what your investment/exit strategy is?

Unless your simply looking for a residence, there's a lot more to this than just getting a list of properties from a realtor.  However, perhaps your realtor has worked with investors and can give you some help.  Otherwise, you've got some concepts to learn.

I'm not terribly familiar with San Antonio.  It's about 4.5 hrs from DFW, depending on the traffic and the volume of never ending construction on I-35.  But, property taxes will increase, unless there is a huge decline in property values in the area.  When and how much is determined by the local taxing authority.  In the case of San Antonio, check the Bexar Country Tax District's website and information.  Here in Dallas County, most properties are being revalued annually or bi-annually.  And, since most properties are seeing some level of appreciation, taxes are increasing annually or at least bi-annually.

I use the Dallas County Appraisal District (DCAD) site to look at properties in specific areas and see what the current appraisal is, when they were last revalued, how long it had been since their previous valuation and what the previous valuation was.  This gives me a pretty good indicator of what the current appreciation rate is, at least from a tax appraisal standpoint, and how often I should anticipate being revalued.  The information is all available online.  I don't know specifically about Bexar County, but all the major counties around Dallas have their data available for free download.  The DCAD main file contains 860k records.  Fun times!

That tactic is "suggested" by several of the gurus in their "free" events.  I've heard it multiple times, and it is sleazy.  However, it is always possible someone on BP said it, but I've never heard it here.

Hello @Jay Hinrichs.  It's good to be back.  And, you are exactly correct about taxes and rental values.  We still haven't moved back into buy & hold, because - in the areas we are focused - property values have far outpaced rental rates.  It will balance out, but it hasn't yet.  And, property taxes are exactly why I don't believe the 1% rule works A/B areas in DFW.  Dallas County has been incredibly aggressive in revaluation.  10-years ago they were revaluing most properties every 3 to 5 years.  Class A areas now appear to being revalued every year.  Pretty much everything is being revalued every 2 years, and the valuation model is resting at or very near 100%, unless you have exemptions.  I will never advocate for a state income tax.  However, I would like to see a move toward slightly higher sales taxes, which would force EVERYONE to participate more in funding services, rather than placing so much of the burden on property owners.

I agree with Joe. Regardless of the hangup, it still comes down to the numbers. Get the roof inspected and get a quote. I don't know where the property is located, but here in North Texas, 5-years is a long time for a roof, because a single hail event can wipe that roof out every year, and then it becomes the insurance company's issue. But, you should be accounting for CapEx repairs in your cash flow model. And, as a CapEx expense the roof would give you depreciation benefits on your taxes. See if you can get additional concessions from the sell, once you have an inspection report. But, don't walk away just because you can't. Run the numbers and let the numbers guide you.

Most of the recent acceleration in DFW can be tied directly back to the missed appreciation, during the period from 2008 to around the middle of 2012 to mid-2013.  We have seen appreciation significantly above the usual steady, but unremarkable, historical rates for DFW.  However, I believe it is mostly driven by a lack of inventory.  Not only did 2008 - 2013's clamp down on lending severely depress home acquisitions, it also killed development.  In fact, here in DFW development almost completely shut down, during that time period.  We have so little inventory and so many people moving into the area or trying to move into home ownership that it is pushing prices.  

The good news is that new development has begun to catch up with demand.  As far as cycles, Texas is a really big state.  Houston saw several significant cycles, usually tied to severe downturns in the energy sectors.  However, after the last big bust in the 1980's, Houston began taking significant steps to diversify their economy.  DFW has always maintained a very diversified economy and has proven to be resistant to major economic swings.  I do expect to see a softening - hopeful a significant softening - of the DFW market, but that should only bring the market back into balance.  Bottom line is that normal ebbs and flows may prove to be cyclical, but they hardly represent bubbles. 

I think our biggest issues right now stem from a combination of lack of inventory and migrations from states like CA.  Properties in highly desirable areas are selling above what I would consider market to people moving in from states like CA, because the prices still seem low to those folks.  It's making it really difficult for investors to uncover deals in those areas.  Again, I expect a minor correction, but I don't see a bubble bursting here.

24 hrs is generally considered acceptable.  And, by-the-way, your lease probably also gives you the right to enter the property for other reasons - repairs, inspections, etc.  My suspicion is this tenant doesn't want you to see something, so I'd go in for an inspection anyway.  As far as the showings are concerned, stop asking and start telling.  Give them at least 24 hours notice, but simply tell them when you are coming in and that it isn't negotiable.

I'm laughing and yes...they will make great renters!

If you're using your $25k HELOC to supply your down payments, you're not going to get very far, when having to put at least 20% down on each property. Even if you're picking these properties up for $50k each, you'll only be able to get 2 of them. And, as investment properties, you're unlikely to get financing nearly as favorable as you would as an owner occupied. However, if you strike a nice balance by finding the best property you can find with the highest cash flow and occupy the property, while renting out the property providing the HELOC, you can put your normal monthly budget for housing into paying down the HELOC and then repeat.

Yes.  They do.  I'm just fairly sure most of them won't still be there in 2-years, with or without a bubble.  Most of these folks have swallowed the marketing whole and believe it's the simplest thing in the world.  They haven't figured out yet that it's hard work and, yeah, you probably do need some of your own money!