All Forum Posts by: Joseph Heath

Sean Harold welcome to BP, and congrats on closing out your service. Good luck!

The area surrounding Walzem is really a mixed bag, you'd have to drive around the area to really get a feel for it. There are some decent neighborhoods, for example the Windcrest area isn't bad, but there are also some ok to slightly not ok areas closer to Rittiman Rd. Good thing about that area is there is a lot of blue collar employment there which gives you some higher demand for rentals. Hope this helps, you'd really be better off making a few trips through the area so you can see for yourself.

@Shawn Dandridge I wouldn't say this is treating military differently than most other tenants. For any tenant, they usually have to submit this type of information on their application for verification of employment. It may be true, commanders dont have the authority to order their troops to pay their bills however, I now know that I can take a claim to the post finance office or provost marshal who will usually help with settling the claim.

I served 10 years active duty and I did see people who were labled as you put because they were unable to manage their finances. For the most part, those individuals were provided assistance (education) so they could better handle their money and financial responsibilities. My mistake as a landlord was empathy.

I apologize if this is considered bullying tactics, I suppose the alternative would be strictly following the "due on the first, late on the 3rd, evict on the 5th" mantra. What I've learned from this experience is, whether the tenant is military or civilian, the rules apply equally. One of my biggest mistakes in this situation was allowing leniency with my military tenant. In this case, I welcomed him to do as you stated; take his money elsewhere.

Did a little research on this, as far as Texas law goes for repairs. Basically, it says the landlord shall make diligent effort to repair it remedy if the tenant notified the landlord through the normal channels, tenant is paid up with rent, AND the condition materially affects physical health or safety. Seems like that's a little much wiggle room. I suppose it makes sense, as long as your trying to get the work done. Still, that's subjective.

@Dave Savage thanks for the response! I will definitely bring this up with my property inspector, as well as looking into what my timelines will look like with the health/safety repairs that are required.

My largest concern would be the floors and foundation. If I move forward with this buy, I would like to pull up the carpet and get a look at the subfloor to see how bad it is. Hopefully this does stay in the low thousands for repairs, that would be manageable.

I can call my mortgage broker and see what the refinancing and property ownership requirements are for Texas. I think I heard somewhere that it was 6 months.

Thanks for your input! Definitely got me thinking.

I'm trying to work the numbers on this deal, which is a buy and hold here in Texas. To keep it brief, I'll provide the high points (and spare everyone my analysis paralysis scribbles).

I've been working on a deal for a buy and hold (two duplexes) that yield a gross rental income of $2400 / month. The properties are older, built in 1948, and need some work. The current owner is VERY motivated to sell, I'm assuming they got more then they bargained for. The area is home for many oil field workers here in south Texas, so the demand for rental properties is very high (so no forseen issues getting tenants). The units are already occupied, as mentioned before, and the tenants are sitting on a month to month basis, but all seem willing to go to something more stable like a 6 month or 1 year lease.

So, asking price is 185k, I'm probably going to be offering 80k due to the repairs needed. With the lender, I have a hard money lender willing to finance up to 60% ARV so I might be able to get this without much money out of pocket. Worst case (by my math) if I get the property at 105-110k, with the hard money interest rate (and using the 50% rule) the cash flow will be somewhat small until I refinance into a conventional. Interest is 10% on a 15 or 30 year, so mortgage payment will be around $965 per month which means cash in pocket (figure of speech) will only be about $235 per month which breaks down to $58.75 per door. Each unit is 2/1 BTW.

I have a few questions about this deal that I'm hoping someone can help with:

1. How long after I close the deal should I wait before refinancing into a conventional? Is there a limit? I dont anticipate pulling out any rehab money unless the property inspection finds something bad.

2. There is some work that needs to be done, some items the previous owner neglected but I'm pretty sure there are laws (health and safety) that are being broken. Is there typically a reasonable grace period in getting those items fixed? In this case, there is a broken pipe (PVC) on the ground outside and one unit's dishwater (and garbage disposal) is now draining into the yard.

3. To expand on item #2, the property looks like it was ran by a slum lord. When I walked through the units were well kept by their current tenants, people taking care of their homes, and there is a lot of potential for raising rents but, I'm afraid there may be too many issues and that I should walk away from this deal and grab something.....easier?

Items I've noticed:

- Unit 1 dishwater and sinkwaste drains in yard

- Unit 1 and 2 have broken window panes, ground level units

- Outer door to unit 1 and 2 has doesnt have a deadbolt lock

- Floors in all units sagged slightly when I walked through

- Door jams on 3 of the units have some wood rot

- Stairs leading to unit 4 are "rickety"

- Rain gutter on unit 4 is hanging off at a -30 degree angle

Typing this out, I think I may have slightly talked myself out of this one, but I'm very interested in input from the community! Sound like a deal or a money pit?

Thanks!!

Joe

Welcome @Edgardo Matos, good luck with your goals, I know you'll do well!

Welcome to BP Alex, I'm in the area as well. There is a REIA meeting this week, Tuesday the 1st. Can't remember which, I think it's SAREIA. Might be a goid place to meet people, haven't really heard anything about this REIA, but I plan on being there. See you around!

- Joe

@Paul Wurster I've been looking around Randolph AFB and Ft Sam Houston mostly. I don't have much faith in the area around Lackland. I was looking at the areas that could attract more than just military though. Don't want to depend solely on one market. My current rental is about five minutes from Randolph and each time it's gone up for a new lease we had multiple applicants within a day or two so the area is good.....today. Who knows how it will look in five or ten years. The military draw down will hurt more than just the rental market for sure.

@Paul Wurster you have some good points, I remember those days and definitely see that attitude toward dwellings almost nonexistent now in the military. I see where I screwed up here, and @Joe G. Hit the nail on the head, I didn't treat this as a business transaction, I shouldn't have allowed the leniency.

No two people are alike, I wouldn't let one bad tenant put me off from renting to military. My current tenant is military as well and so far pays every month on time and is keeping the house up as if it was her own.

I chalk this up to experience :) I knew nothing about renting and learned many lessons with my first lease. I like the San Antonio area, and I plan on investing in more properties close to the military bases here. Finding a prospective tenants has not been difficult at all. I hope to learn more and by the time this contract is up maybe I'll be able to manage the property correctly.