All Forum Posts by: John Chapman

Gotta agree with @Andrew Postell and @Neil Aggarwal.  If you have a decent product product at a decent price, it will fly off the shelf.  There are so many people looking to rent homes (as opposed to apartments) that even my pain-in-the-butt houses are renting almost instantly.  Also, tough to give advice without address.  I have a couple in that zip code (one I rented recently in a couple of days)  Decent amount of blue collar workers in that zip code (particularly Blue Mound) so it may be you're overpriced.  

To answer your original questions, though, there is nothing wrong with that market as far as I'm aware.  It's a hot market and I'd buy more there if the numbers made sense.

I'll offer a countervailing/anecdotal view on this one.  I just rented a house in what I would submit was record time.   It's a weird house and is the lemon in my portfolio.  Always takes a little time to rent and it's tough to get good tenants.  (I've wanted to dump it for years but haven't gotten around to it.)  Rented in less than 48 hours to an exceptionally strong candidate.  I was drowning in interest and applications, which I've never experienced in 9 years.  Pretty sure I did not misprice it.  I think that renters are still looking to move for all the normal reasons and, on top of that, you've got a whole new market of apartment dwellers who are going nuts in quarantine and finding apartments are not the best for weathering a drawn out pandemic.  (Heard that a number of times from applicants)  Realize it's just one data point and it's too early to tell how it will all shake out, but it was interesting.

I'm from Dallas, and I'm not sure I agree with @Joseph Cacciapaglia that Dallas is not that diversified or too heavily reliant on the finance industry. (We've got pretty much every type of industry.) However, I do agree with him that it is a pricier market, and it would likely make sense for you to look to San Antonio or a smaller type market first. (Not as familiar with the market, but I hear good things about it.) Prices in Dallas are way up and I don't see alot of opportunity for out-of-state investors to make good return absent boots on the ground and access to off-market (real) deals. It's very hard to make SFR rentals work right now in Dallas, at least in decent areas.

$1 million in liability coverage really seems to be the magical number, which is why I love umbrella insurance.  (I say this as a lawyer who has done personal injury and wrongful death cases across the country.)  That type of coverage will almost certainly protect you from almost any type of lawsuit.  (i.e. 99% of lawsuits can be resolved within that limit.) It's so cheap, so why wouldn't you?

Is it possible to make money on rentals in Dallas and Tarrant? Yes.  Is it easy?  No.  Pretty much any deal is going to (1) need to be off market; and (2) not offered to you through one of these blast email wholesalers or turnkey companies.  (Duplexes are very tough to make work as they are much sought after.)  I wouldn't touch DFW if I was an out-of-state investor unless I had significant boots on the ground or a partner here. Just my observations.

@Andrew Postell is absolutely correct. I can generally refi as soon as rehab is complete and house is leased. (Could probably do it sooner but I want the post-rehab ARV.) But you do have to structure it correctly on the front end and you do have to have a really good lender.

This sounds like a terrible idea from a practical standpoint.  So much can go wrong in the purchase of a property, including delays in closing, which means you won't be able to perform if you don't own the property.  Also, a verbal confirmation with a tenant is worth nothing and in no way obligates them to perform.  Basically, you are just collecting unenforceable expressions of interest.  Moreover, how can you collect any money without a written lease in place?  I would close on the property and then advertise it for rent as the lawful owner.  Much, much cleaner.

Setting aside the legality of it all, that roof sounds like an absolute nightmare.  Flat roofs are literally just one giant leak waiting to happen.  It's not a question of if, just when.  (My understanding is that most savvy apartment investors specifically veto flat roofs for that reason.)  Also, no access? Ungh.  Your initial post assumes a lot  (rot, mold, etc.), but you don't really know.  Is there truly no way to assess the extent of the damage without tearing it off?  How many people have you spoken to?

Also, don't freak out.  A lot of times a lawsuit is filed when the statute of limitations is approaching.  Often results in getting a different adjuster too.  99% of these things settle.

The first line of defense is to carry a good amount of liability insurance plus a personal umbrella.  (A million in coverage can usually handle almost anything and is generally what 18 wheelers carry.)  How much in liability coverage do you have and how injured is the person claiming to be?