All Forum Posts by: Jason Turgeon

Southeast Texas, aka Golden triangle 

Nice work! I'm working on a 22-unit class C deal in Texas, hoping to get close to your numbers. 

Congrats! Do you factor vacancies and maintenance into your cash flow figure?

I wouldn't want to be in the business of furnished rentals for college kids. They aren't going to take care of your stuff and you'll have headaches. Here in Boston where we have literally hundreds of thousands of college kids living off campus, rentals are almost never furnished. The kids are smart enough to get into college, they'll be smart enough to figure out their own furniture. 

As for the historic district, they're a PIA from an owner's perspective. You have to get permission to do things to the exterior. The big ones are replacing windows (historic district people go absolutely insane for old-style single pane windows), replacing roofs and siding, and doing any kind of addition. But there can also be stuff like paint colors.  But on the plus side, all these restrictions limit new development and can make the neighborhood more desirable. Constant supply + increasing demand = appreciating house prices and increasing rents. So you might not want to fight too hard if you aren't planning on putting in cheap windows or ugly vinyl siding anytime soon. Make your house look like a historic gem and reap the benefits in a few years.

Man, $495k of forced appreciation is amazing! I'm about to put a 22-unit complex in SETX under contract but I don't expect anywhere near that kind of forced appreciation. 

Was that $295k cash you had sitting around, or did you sell a smaller property to free that up via 1031 once you found this deal? And what kind of relationship with a broker brings a deal like that? Apparently I need to be taking some brokers out to dinner...

Sounds like a great investment! I am considering accepting Section 8 and/or other vouchers in a property I'm looking into in Texas. Would love to hear more about your experiences as both PM for the authority and a landlord.

@Christian Hutchinson I spent a lot of time this summer learning about Detroit and came to the same conclusions you laid out. Lots of scammers, lots of dreamers, lots of very low-quality flips on buildings that needed way more than cosmetics, difficult city permitting environment, and an absolutely crazy mix of valuations from $300 to $300k almost on the same block that make it really hard to tell from a distance what a property is worth. I'm sure people are succeeding with out of state investing, but everything I see there tells me that you need to be hands on and on the ground to really make it work. And since moving to Detroit isn't really an option for me, I'm going to wait. But if you ever want to get together on a deal, I'm still fascinated by the city and would love to be part of what might just be the great American comeback story.

IMHO, Austin is overpriced and too many people are trying to invest there. It's superheated, just like the big coastal cities. And that hot, hot market has a big tax implication in Texas, where property taxes are higher than some of us are used to in other parts of the country. I have a friend whose dad owns 20-something doors there and even though he built some of them 25 years ago when land was dirt cheap, he's struggling to get them to cash flow positive when faced with annual $300-400 per door tax increases. He just can't shove all those increases on to the tenants without creating vacancies that tank his cash flow from the other end. 

It's a market where people are banking on appreciation vs. cash flow (aka a bubble) and I wouldn't put money there unless it was an exceptional deal. Not that there aren't exceptional deals in every market, but it's unlikely that long distance investors new to the market are getting access to them. 

That said, I'm working on two deals outside of Houston. Numbers seem to be much better there, the people I've been dealing with have been friendly and professional, and it's in that sweet spot between hot-hot-hot and completely stagnant.

You're 24. House prices are nuts, and you work in a field with a ton of job volatility. You could be working downtown now and buy a place in JP with a manageable commute, then find yourself working in Kendall Square in 2 years and have a miserable commute, then get lured to the west coast in 2 more years and find yourself being a long-distance landlord. 

A friend/client of mine had this exact thing happen to him. He was working for TripAdvisor and living cheaply with a bunch of roommates. He saved up and bought a house I helped him find in Roxbury, nicely rehabbed by a quality local developer. He filled it with roommates and just when he was getting unpacked got offered a great job working for Facebook...in California. So he rented out his room and went back to being a renter himself in the Bay Area. 

Fast forward a few years. He's never come back to Boston. His career path took him beyond Facebook. Now he's living in Germany and trying to manage this place long distance. The original people he chose as roommates have largely moved out and it's not clear the people they picked to replace themselves with are all that responsible and respectful to his nicely rehabbed house. I get a couple of texts a year from him asking for help finding service providers who will fix various things. Yes, he's making money on the house - a little bit of cash flow and probably OK appreciation. But is it worth it? If he'd just stuck that cash in an index fund, he would probably have done just about as well with way less headache. And I have to guess that the stock or other bonuses he got from TripAdvisor and Facebook far outweigh the appreciation he is making on his SFH.

My advice for someone in your shoes: keep living cheaply with a bunch of roommates, save up as much cash as you can, and wait a couple of years. Maybe there will be a dip in the economy, in which case having a war chest will help you grab a deal. You'll almost certainly switch jobs, in which case being able to just up and move once your lease is up will be a huge benefit. There's no sense rushing into something right now. Just be patient. In 3-5 years you'll have a much better sense of your long-term career prospect and a much larger pile of cash to deploy, and that combination will help you make a better decision.

It depends on your motivation. I originally got my license to help me scout out my first 2 family home for myself. I wanted to look at everything and take my time and get full access to the MLS. A few months after I got my license my then girlfriend (now wife) and I were able to capitalize on that dream (it was 2008, so we didn't have competition like buyers do now).

I didn't do much with the license for a few years, but I made sure to get daily emails for several neighborhoods from the MLS and I got really good at quickly evaluating deals. I would note certain properties and guess if they would fly off the market or would sit and rot, and I got pretty good at it. But I didn't have access to financing and hadn't discovered BP and had to sit and watch as great deals all around me went to other people. I was also running my own single rental property and giving advice to friends who were interested in buying.

When the tide started to turn in 2012 I was the knowledgeable one in my peer group. I was licensed, had my own rental, had done renovations on my own property, and knew the market. I was hardly an expert, but I was way ahead of everyone else. 

I purposefully don't beg my friends for their business. I tell everyone that their friendship is worth more to me than a commission, and I mean it. But I have worked with about a dozen friends over the last few years and converted about 2/3 of them to sales. I have learned who to say yes to and who to gently steer away. Added up, it's probably close to $100k in commission income spread out over the last 7 years. Nice side money, but not getting rich off it. 

Being an agent also helped me get into my second 2 family a few years ago, and to sell that first property just a few weeks ago. 

Being an agent part time works for me because I use it to further my own goals. I would never want to do it every weekend, though. It will burn you out in a hurry. It's a super demanding job that requires you to be available all the time and is really hard to balance with another day job. You can waste months working with the wrong buyer or seller. You rarely get paychecks, and when you do your brokerage takes a huge cut. 

I say you go for it. The classes are not that bad and the test is also not bad. You'll learn a ton working with people and looking at properties, even if you never make a sale. And if you decide you hate it, you've only invested a little bit of time and very little money. But figure out what it is you want out of the license early on. If your goal is to get rich, you are unlikely to do it. There are a handful of top agents and a huge number who never go anywhere. Then there are people like me who use it as part of my broader strategy and intentionally limit our activity.