All Forum Posts by: Joel Broyles

Hello, 

My apologies - tonight’s quick meetup on market conditions is being rescheduled to Thursday at 6p.  

Thank you, 

Another way to think of this: what is the purchasing power of a given asset through time.  The "price" goes up, but does the purchasing power?  That's harder to answer - some markets yes, some no.  It's all a horse race against inflation - the hard part is picking the fastest horse. 

Short answer: no.  Not in year 1.   But you can achieve the 5.27% Rule.  That's the average home price appreciation in Texas between 2012 to 2019.  Leave out the 2020 to 2022 - we can't count the two years the Fed pumped $40 billion/month into the MBS market.  

Just look 2012 to 2019. Assume you bought using the 0.8% Rule and your rents appreciated 2.5% while value appreciated 5.27% - both annually.  $200K purchase price and $1,600/mo starting rent.  By the end of 2019, the asset is now worth $301K and rents are at $1,850.  

Looking at the entire investment, the marginal difference in 0.8% vs 1.0% is single-A ball vs big leagues in terms of wealth creation over a long hold period.  The difference in total rents - assuming perfect occupancy - is $38K over 8 years.  Then the question is: would an area that can generate 1% also appreciate the way a 0.8% area would appreciate?  Not even close.  It's stepping over dollars to pick up dimes. 

Hi Tyler - Frost Bank is fantastic for HELOCs here in DFW.

Depends on location.  

Ex 1: high density, mostly young professionals, no kids, small/no yards, townhomes, lots of nightlife, proximity to CBD, low priority to school quality, etc.  I would do an office.  Future tenants or buyers will likely value the work space.

Ex 2: suburban, mostly families, big box retail, schools very important, big yards, chain restaurants, etc.  I would do a third bedroom.  The #1 driver for people moving out of 2 bedroom apartments into 3 bedroom homes is when 2 people become 3 people. 

I assume you pose the question with resale or future rental in mind? 

Age isn't the driving factor.  Intelligence, honesty, experience and work ethic are the drivers.  Age is used as a proxy for experience, though, it's not always accurate.

So, go get the experience and don't let age be a reason to question your ability.  No experience is a problem regardless of age. 

100% recommend.  New homes are built by guys that are typically overworked and juggling 20-25 homes at a time.  They're human and can make mistakes like the rest of us.  Yes, it's going to be a lot less than a home built 30+ years ago and you'll have a 1-2-10 warranty, but you'd be surprised what can happen in new construction.  I've seen plumbing, electrical and other major issues that got missed by city inspectors and the builder as well.  

If you can find a property that pencils out at 1%, you're going to do a lot of rehab to get it there and the area will be subpar.  But, like a lot of others have suggested, it's a somewhat stale metric these days.  

I'm seeing it closer to 0.75-0.8 and most folks are pretty happy with that considering the HPA you get in Texas.  I also think investors focus far too much on year 1 for a 10+ year investment.  Look at the deal in year 5 assuming conservative, historical rent growth.  You can still get to 1% with rent increases over long period, but you might not get it in year 1.  If you own it for 20 years, would you be happy to have it at 1%+ for 15 of those or would you pass because you didn't get it for all 20 years?  Factor in price appreciation and look at the whole picture.  Texas is very strong long term. 

This can be any number of things from minor/easy fixes to really extensive repairs.  You need to get a licensed master plumber in there ASAP and understand the scope of the issue.  

Try these folks - I've used several times and they're fair.  https://adrplumbingco.com/

Ryan - awesome job on your portfolio! If you're buying a hard asset like real estate in an environment of structural inflation, then you're making a smart invesmtent.  It doesn't have to look like your other real estate investments - it's not.  

The criteria and considerations for a primary residence are very different and like most things wife/kids/family related, the subjective/qualitative objectives are just as important if not more important.  This is one rare instance where you can have your cake and eat it too.  Real estate in great areas will appreciate and you can have a wonderful quality of life while it appreciates. 

That said, look for the absolute best school district you can afford with the most square footage on the best lot.