All Forum Posts by: John Chapman

@Andrew Cairns, so I'm not in your specific area, I can share with you my experience.  If you GC yourself, in my area, you can build at $80-$85/ft .  I think you'r closer $100/ft-$110 if you're hiring, though even that's not unreasonable for self-gc'ing smaller houses  (I think you will find higher price per square foot for smaller houses.) Even in my area, numbers can vary a lot by location so price per foot is kind of worthless metric.

To be clear, though, I've never seen the numbers work for build and rent.  When you factor in dirt costs and refinancing, it's a spendy way to get a  house.  Also, in my area, rents are never commensurate with the cost, so your return needs to come from appreciation.  Finally, I'd make sure you can even build houses as small as you are proposing.  Lots of time there are minimum square footages.  Also, are these on city sewer and water?  If not, I would never hold them as rentals (can't imagine the pain of rental with septic).

In order to justify a new value for a property, you need to do something to justify that new amount, typically improve it. If you are buying a property, then the baseline assumption for any appraiser (and most people) is that the market value is what you paid for it. I mean, think about it, you paid an independent third-party a value that you both agreed on. How is that not market value? (yes, I understand that buying off market and not off the MLS can let you get advantageous deals, but that doesn't really matter for appraisers.) I would not waste my time getting a private appraisal since most banks are going to want to use their own.

Someone else posted on this recently so you might check that thread out.  Bottom line is that you really need to drive the area, particularly at night, before you invest.  There's lots of buzz about the area and some new construction, but I'm not seeing the explosive growth/improvement everyone else is.  Do not rely simply on internet research to assess.

https://www.biggerpockets.com/forums/760/topics/741154-is-stop-6-worth-investing-in

Unless you've got a really high end rental, I cannot fathom a tenant who is willing to pay a $700 water bill.  The tenant's position will almost certainly be, "Well, it's your responsibility to maintain the toilet.  I didn't even know I was supposed to report that."  If you want to escalate things into a conflict with your tenant over a bill that is likely not collectible, then try to charge them for it.  Otherwise, just let it go, eat the cost, and learn from it.  

Oh, yeah, I actually ended up in litigation over a wholesale deal gone bad.  In this case, it was the seller who was the bad guy, though it was a newer wholesaler who did not handle things very well.  Seller knew on the front end that it was a wholesale deal, but then refused to close at last minute.  (It wasn't a huge wholesale fee, maybe $5k, so I didn't feel like the seller was getting fleeced)  Ok, whatever.  I was just going to let him out of the contract and move on (usually not worth fighting)  Then he refused to release my $5k earnest money. (I think he figured we'd end up splitting it just to save the hassle.)  No basis whatsoever to do so, so I ended up suing for specific performance. Got the house at a discount from what I would have paid but it was a major hassle.  Wholesaler got no fee after my costs.  Nasty business and I no longer do business with wholesalers unless I know them very well and know everything is on the up and up.  

Sure, I've done dozens of these appraisals in the last decade in your area.  Here are a few tips.  (nothing really original here)  First, give the appraiser a list of repairs and total amount spent.  Shows you actually did something to justify new value.  Second, kitchen is where I've found you get biggest bang for buck, particularly if you put in a solid surface (I do commercial grade granite and it helps every time).  Third, make it easy for the appraiser to get in there.  Don't make them schedule with the tenant directly as it never works.  I usually have my maintenance man do it.  Fourth, recognize they are going to be more conservative on refis vs. purchases.  Nothing to really do about it, just the way it is.   Fifth, you can give them comps if you want, but I've never found that very helpful unless it's a weird neighborhood with a wide range of values.  

Based on what you are stating, I don't think the banks are perceiving the carry over loss as a liability on your tax returns.  Rather it's the poor performance of your rentals that you are reporting on your income taxes that's hurting you.  It's basically what @Don Konipol is saying.  You have to strike that right balance between minimizing profits on tax returns vs. making yourself look good for financing purposes.  I see a lot of newer investors take every deduction they can get, be aggressive in expensing vs. capitalizing, generate massive losses to make their rentals unprofitable for tax purposes, and then find out banks take them at their words on their tax returns and ding them for it.  To be clear, I'm not talking about taking depreciation; that's mandatory and every lender I know adds it back in when looking at rental income.  

Hello all, was hoping someone could give me a recommendation or two for a decent staging company in Fort Worth. We have a 2000 square foot new construction SFR (price point around $300,000) that we'd like to stage, particularly as we are coming into the slower months. Thanks in advance!

This is a pretty insane lawsuit.  (I say this as a lawyer who deals with litigation day in and day out)  It's clear that both of your hackles are up and this slugging it out over $1500 bucks seems like a waste of time and mental energy for everyone.  Unless the buyer is a complete fraudster (rare, but it happens), then he or she obviously feels aggrieved by the condition in which you left the property.  This is something that should just be settled.  I'd reach out to the buyer's lawyer and see what kind of compromise can be reached.  I guarantee you that, even if the lawyer is a family friend, he or she will want to see this thing resolved with minimal effort.   I've stupidly gotten sucked into representing friends and family and it's always a major hassle that I now try to avoid like the plague.

I was a full time lawyer with a stay at home wife and two non-school age kids when I started.  It's tough but doable.  You get up early and do what you can before works starts, you work on lunch breaks, you work in the evening, and you work on weekends.  My wife (now ex-wife, though that had nothing do with real estate) helped out on the first rental, but then she pretty much dropped out and left it all to me.  You have to learn to delegate and find good people to rely on.  You have to develop good systems for management.  Nice thing about BP is that pretty much everything has been done before so you don't have to reinvent the wheel.  For me, the greater risk was always do nothing, rather than doing something and failing or getting overwhelmed.