All Forum Posts by: Jake West

Tomas it seems like finding zoning for any duplex-fourplex is a challenge anywhere overall.  Shallowater intrigued me when I learned they were going to build the Hemp factory but it isn't my first choice so I will continue the search.  Thanks for the insight!  As far as utilities are concerned, I'm mainly concerned about internet providers.  There is a good chance we will build a robust solar system and also a well/septic system.

I live in Lubbock and invest here.  Lubbock is very unique in the sense that it has its own little economic bubble that shields it from outside influences. There isn't one dominate industry that causes fluctuations like most cities.  Lubbock thrives off several industries ranging from Texas Tech, the medical field, cotton, oil & gas, and a few others.  When one takes hit the rest are there to pick up the slack.  The appreciation continues and the infrastructure is expanding.  Having said all that, it is definitely a sellers market at the moment.  Prices have not inflated to much, however properties sell extremely fast lately.  I have flipped a few houses and rented a few but my strategy is evolving.  I am working on building 4 plexes in nicer areas such as the southwest side of town or perhaps in Shallowater (a smaller town just minutes northwest of Lubbock).  I am currently on the hunt for land that will fit the development and interested in perhaps finding a partner to split the land if anyone is interested. 

I have not found a single bank that will not require at least 20% down to refinance a rental property. Their answer is, no matter how much equity you have, the down payment is based on the purchase price. 

The example above did not include this.

54k from mom, 20k from grandpa, 6k from you.  Appraised for $100k, loan for $80k.  Well, if the bank requires 20% down that's another $16k.....where does the $16k come from?

Hi Brian,

    Welcome and glad to see your enthusiasm.  I live in Lubbock and I have a property in one of those zip codes (79416).  3/2/2 built in 1978 with 1460 sq ft.  Property is distressed and makes a good candidate for a rental or flip.  Message me if you'd like more details.

There are a lot of members in Lubbock, many with great experience and knowledge.  Best of luck and keep us updated on your progress.

Cheers!!

AJ Chairez just curious if this worked out for you and what your experience was like with them. I am also searching for a good title company here in Lubbock.  Thanks!

Hi Susan, I think you have an excellent strategy. I am curious, what type of loan did you use to purchase the duplex? FHA? Also, did you sell your previous home prior to buying the duplex? Or did you get a bridge loan? My wife and I also plan on using the same strategy in about a year but we would like to get a 4 plex if possible. How long do you plan on living in the duplex and what type of property will you acquire next? I am not a seasoned investor but I think the pros will have more questions about your time frame and strategy to help you further.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $124,000
Cash invested: $5,300
Sale price: $150,000

Bought this house before first child was born. Lived in it for several years and then turned it into a rental. We invested very little and made $400 in cash flow for a few years before cashing out to fund our new home which was a foreclosure. New home purchased for $161,000, now worth $290,000.

What made you interested in investing in this type of deal?

Great neighborhood and good schools. This was a starter home for us. We later turned into a rental.

How did you find this deal and how did you negotiate it?

We were renting a house on the same block. Seller listed without a realtor. Initial listing was $134,000. Overal home was in great shape, just needed carpet and paint. We negotiated as sales price of $127,000 with a $3,500 carpet allowance and seller paid closing costs.

How did you finance this deal?

FHA with 3.5% down

How did you add value to the deal?

We added an enclosed sunroom with AC ducting, which counted as 50% sq footage. It added approximately $12,000 in equity and only cost me some long evenings. We upgraded the fireplace, carpet and paint.

What was the outcome?

We managed to get about $400 per month in cash flow for a few years and when we sold we made about $30,000 with no capital gains tax.

Lessons learned? Challenges?

Just because a buyer is willing to pay over asking price in a hot market, does not mean the home will appraise for the sales price. We lost $5,000 because the buyer was using a VA loan and had nothing to put down.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Sold it on my own.

Purchase price $52,000

Square Feet 1460

Year built 1978

Comps in the area sell between $105,000 (All original) - $145,000 (Completely remodeled

My mother in law recently retired and is in a bad situation. She owes about $47,000 on a house in my local market, Lubbock, TX.

She and her partner are hoarders. On a scale from 1-10 they are definitely a 10.

They recently moved in with their oldest daughter when the pandemic hit and because the house is no longer livable. My wife and I are considering stepping in to help them as well as help our own family. We have had estimates to clean and sanitize for up to $10,000. Once the clean up is complete we will analyze how much repair is needed. We estimate repairs to range from $35,000-$60,000.

The company who gave us estimates to clean, made an offer on the house of $30,000 and say a remodel would cost up to $80,000.

I am curious what you would do and why.

Options:

1.   Clean up the mess and find an investor? Asking price $70k-$78k. Pay mother in law $5k above what is owed. Minus expenses I estimate about $6k-$12k profit
2.   Flip it – Maybe a $10k-$30 profit
3.   Keep it and rent it – Rents for $1,100-$1,200 – House payment of $890-$960

Things to consider:

All renovation money will come from private funding (this would be my first short term flip). I would not be willing to pay a hard money lender considering my inexperience. I am interested in long term and we currently have plans to sell our home in 1-2 years. We have about $150,000 in equity and the plan is to build a 4 plex with our FHA loan. We would live in it for about a year while we build our permanent home.

I am sure there is more pertinent information needed and I’d be happy to elaborate on the details.

So….What would you do and why?