All Forum Posts by: Joey H.

Great advice so far thanks for the feedback. One thing i'm seeing is to throw out an offer and if it works great and if not keep moving and that is really good advice if I were buying this purely as an investment property and not as a house hack. Something that might help shine some new light on this issue is we received an unsolicited offer to sell our personal residence at a metric that was very motivating. It has a short fuse and they want to close quick, to me this is a great opportunity to move into a house with some built in rental potential. This particular house has a large guest house that with some minor work could spit out some serious cash. So its a little more complicated than just throwing an offer and moving on if it doesn't stick.  Now this house doesn't have to be the house we buy and I wouldn't overpay for it but it is a good option if I could buy it for current market value. 

Going back to the original question, if you were to really want to engage in true negotiation, who has some experience working with people and getting them to a move off an unrealistic value to a true market value?

I am currently pursing a house that was listed for 8 months and did not sell. Just for some background, I live in a very active market and its not uncommon for houses to sell before they are listed or the day of, so usually if a house sits for any amount of time there is something out of place. In this case it was priced well over what it was worth; given that it didn't get any offers it seems like the market agreed.  The current owners have been trying to lease the house and again have it overpriced and have been unsuccessful in leasing it. Its a great house that has great potential but needs some work, probably to the tune of 20k-50k.

I really like the house, and I would be buying this to house hack for a year or two and then convert to rentals. I always strive to work out win-win prices but on this deal we are about 75k-100k apart from each other. I can pay fair market value in its current condition but it doesn't appear that the sellers have a realistic idea of what that value is. 

Does anybody have any advice for purchasing off market deals, particularly when it comes to pricing?

@Nate Barbee I'm late to the ball game but its interesting reading this post after the fact. I read an article this summer that the average sales price of a home in Midland is rising! I'm not sure I can comment on the pricing of rentals but as of yesterday there were only 20 rental homes available in town, to me that seems like there is still a pretty good demand. I think one reason there hasn't been a mass exodus is the funding for oil & gas deals is coming from different places. 

I'm not an expert but the way I understand it, in the past funding has come from local sources, so when oil drops so do investor returns  and the availability to reinvest. The last 5 years locals have been sourcing investments from private equity outside of Midland, most of these investors have large amounts of diversified capital that gives them flexibility to reinvest even if the commodity price is down. Because of that many companies are continuing as if oil is at $100/barrel instead of $50. Overall that is good for the local economy and haven't seen a lot of changes but one thing I think is important to discuss is what happens when/if private equity pulls their funding and local companies are left to fend for themselves?

Michael great perspective, very wise! Its always nice to hear from somebody that understands the wild west I call home! For the others contributing to this discussion the primary industry in this area is Oil and Gas and because of that our market is often dictated by the price of oil. When oil is up its impossible to find hotels, rentals or even rv spaces and when its down there is usually a surplus. Historically, when oil would drop so would our market and we had this up and down cycle. The interesting thing is the up and downs of the last few years have not affected our market the way it has in the past. The money funding investments in the area is coming from outside sources as opposed to local banks and individuals funding everything. I would be interested to know how other investors mitigate markets with up and down cycles. 

Currently the market is still very active, houses usually sell in a few days and there are only 20 rental houses on the market and of those none have been updated in the last 20 years. 

The property actually has an apartment in the back that is leased to a good tenant and its rents will almost pay the mortgage. It's cash flow positive right now but the previous tenants in the main house had to be evicted and complexly trashed the place. At a minimum, it would be all new paint and some work in the bathroom. So i'm going to have to do a minor rehab just to get it rentable to respectable people so my thinking is does it make since to do a little more to make it really stand out? Going back to my original thought, how do you know if you are doing too much or too little......I think in this case it sounds like almost everybody is recommending a little bigger reno for the bigger rents it could produce. 

Does anybody have any experience with renovating a little nicer to try to attract a higher caliber of tenant? 

Does anybody have and calculations they use to determine the max rehab they should undertake as it relates to the additional income it can produce?

Thanks for all the input! The house was built in the 30's so its not super big but it is ample and the original living room is a good size. The second living room was an addition so most houses in the neighborhood would not be expected to have 2 living rooms. I appreciate your metric Thomas on how to calculate if it makes since. This will be a long term buy and hold so the appreciation it creates isn't as important as the additional monthly income and it provides. I will be doing a full on reno so the total rehab will cost more that is just the portion that it would cost above what I will spend, +/-. My thinking is that it would attract a higher degree of renter and I could charge 200-300 more/month. 

I am under contract to purchase my first rental and I would appreciate some advice on how to scale a rehab on this property. I have rehabbed houses for flipping but that's a different ball game.  The house is currently a 2 bedroom, 1 bath with 2 living rooms. Its in a transitional neighborhood with little old houses and I think the neighborhood has the potential to be a great neighborhood for young families and young professionals moving to the area. The existing bathroom has enough space to be converted into two smaller bathrooms and the second living room could easily be converted into a third bedroom. Since this is my first rental rehab I though I might reach out to get some advice on if its worth the expense of a reno (10k +/-) or if I should clean up the current floor plan and make the most of it. How do you decide how much to reno in a rental rehab? 

I am under contract to buy a rent house and I am trying to figure out the extent of rehab I would like to take on and what it will be worth. The house has 2 bedrooms, 1 bath and two living rooms. It's in a transitional neighborhood that I would anticipate would attract younger professionals. I think it has the space to convert the second living room into a 3rd bedroom and the bath into 2 small bathrooms. My question is which configuration would be the best option as a rental?

Do you have any recommendations for private lenders in Texas?