All Forum Posts by: Jimmy Wilson

Very good response Hattie!  I recently went back and re-read the Millionaire Real Estate Investor by Gary Keller.  I believe this book was published a couple of years before the great economy meltdown.  In almost every example he uses, he optimistically uses the .08 rule for basing his investment choices on.  I believe a good majority of those were referencing parts of Texas too.  Now we are talking about must haves with the 2% rule and 1% rule.  The 2% rule disappeared in DFW around 2012, when the foreclosures list started coming down.  The 1% rule is still very achievable in DFW if you look in the right places and stick to the C to C+ and B- suburb areas.  I get excited every day when I pull up the new listings for a local county, and see those gorgeous little starter homes built after 2000 priced great, in great shape, only to see that they all zone to the Crowley school district.   Then I quickly move on to the next target.

 I would take this as a true investor's wake up call for action.  Wait a few months for the Houston market to cool off, inventory to build back up beyond a 4 month's supply, and then start picking off the ones that fit a 20% discount (or more) and meet my criteria.

That is, if I were interested in Houston.  Since DFW is exposed to the energy markets in a very small way, this makes me a bit more nervous.  Those that have moved  to Houston in the past several years and never realized this fact might get the idea to pack up and move up the road a few hundred miles, because of the non-effect that the energy industry has on the DFW metroplex. 

The DFW market has less than a 2 month inventory.  Extremely bad for investors as too much outside money coming in and making the prices stupid crazy.  We need a good 4-6 months inventory just to make sense in acquiring rentals.

Just to chime in a little here.  

Californians seem invest in RE heavily in Texas.  You can throw a rock here in DFW and hit 2-3 Californian owned rental properties.  However, I have never really seen Texans asking about investing in RE in California.    I wonder why that is?

Welcome to BP!  You live in one of the best markets in the US to invest in.  Before spending any money on 'learning,' you should probably start with these guys:

http://www.biggerpockets.com/forums/521/topics/165...

This is your back yard!  Subscribe to the Bigger Pockets podcast (free) and start at #1 and start listening to them every time you are in the car.  Set up keyword alerts, such as:  DFW, Fort Worth, etc. on the forums.  Start going through the forums and learning.  

Flipping is a job.  Wholesaling is a job.  Granted, good pay comes along with the hard work and persistence.  However, just jumping right in and throwing money around is usually a recipe for smaller pockets in the long run.  As they say, lessons cost.  Good lessons cost lots!  This site is full of lessons and can be learned for free, with the investment of your time.  Good luck on getting out there and getting started.  

@Jeffrey McKee Look over in Princeton, TX on College ave.

If statistically there is one true lunatic per square mile, looks like your house just got some really good karma.  I saw the reporters on the news last night while interviewing the neighbors.  Looks like a great neighborhood in a great city for buy and hold rentals in Denton County.  Real class A to B+ situation there.  Unless there are other reasons that you are questioning in moving forward with the deal, this reason is a true non-factor.  

By the way, I immediately went last night and was looking up this lunatic's house to see what the future might hold with it.  Keeping an eye on it, because I have have a good feeling that it will be quite distressed very soon!

@Bill Gulley You wrote:

The other contingence is the home inspection, same common acceptance aspects, and we want particular attention paid to the HVAC, foundation and attic space. Most of that is just need or want to know. ( A 2 year old roof on a 10 year old property tells me there must have been damage or leaks, I want the insulation and under roof decking checked). 

More to this point about knowing your local market.  We get lots of hail storms here in the DFW area and getting a new roof every few years is very common.  If you find a roof over 10 years old, you really need to look hard at the property.  Most people discover that the standard 2% insurance deductible that the insurance guys will sell you and you never even think about, is going to cost you when you do have to replace that roof due to hail damage.  Pay the extra little amount for the 1% deductible so that you likely won't have to come out of pocket when you do need to get that roof replaced.  Again, to your point - local knowledge that most people would never know.

While listening to a Guru selling dreams, I heard something that really caught my interest.  Here is the situation described:

1.  Investor X has 5 rental houses that he has acquired over the last 15 years and is ready to retire.  All 10 houses have gobs of depreciation stank all over them and he wishes to 1031 exchange them into the next property.

2.  Investor X decides to sell all 5 houses at the same time, and uses a 1031 fiduciary to retain all proceeds from sell.  Investor X then goes out and identifies 3 nice properties in Vail, Colorado that he wishes to purchase within the 45 day period.  The purpose of the properties he has identified will be used as a vacation rental.  

3.  Investor X buys the ski property in Vail, Colorado for 499K with his proceeds from the 5 houses he sold from the 1031 exchanges (within the 180 day window) and sets up the vacation rental and starts renting it out for 3 years.

4.   Investor X then decides that after 3 years, he wants to move into the Vail property and make it his primary residence.  He does this, and lives there for 3 years and 1 day.  Then, he decides to sell the property for 498K.  He lost 1k on the whole deal :(  

This is the part that got a little muddled for me.  Investor X sells the property in Vail and all of the depreciation stank from the 1031 magically dissolves itself under the 121 code, thus allowing him to end the trail that would normally go to a stepped up basis upon his death.  

What is missing here?    

Upon further research, it seems that TX is one of the only states that will not allow a cash out (up to 100% for VA loans) refi for VA loans. I am not sure how this effects the scope here. Meaning, if you came out of pocket to make up the difference between the 70% ARV for hard money, and then had, say, $40k out of pocket for the rehab, pulling your difference (the $$$ you forked out for closing costs and the rehab) out after refi to a VA loan might be a big issue for someone in TX.

Or, maybe I am just not thinking in the optimal *creative* way that might make this work.  Any ideas?