All Forum Posts by: John Vo

Our house was flooded during Harvey and it was not located in a floodplain. I bought another property 3 miles down the street while rehabbing the old house and listed it for rent once the rehab was done. I originally thought the flood stigma would make the house a little bit undesirable and would take a while to rent it out. But to my surprise, we had several applications submitted to us within 2 days of listing the property and have since rented out the property. Although I did get a couple of prospective tenant, who balked that the property was flooded, but because we put in higher end fixture, appliances, flooring, etc... most people generally didn’t care that the property was flooded. They only care about whether I accept tenants with low credit score or not. I get that some people don’t want to deal with any issue that might arise out of a flooded property, but in my opinion, there’s plenty of people that want to live in a nicely rehab property at an affordable price. As I write this post, I just signed a contract to buy another flooded property.

Thanks everyone. I appreciate your feedback.

Hi Everyone! 

I just spoke with my neighbor, and they're looking to sell their house fast. They want $220,000 for the property. The property is located in Richmond, Texas and it was flooded during Harvey. Before the flood, the two story property was listed on the MLS for $289,000 for almost 1 year and no one wanted it. Since the flood, they have repair almost everything except for replacing the flooring on the 1st level. I know because the contractor that worked on their house, also worked on my property first. I estimate the flooring to be around $6-$7K, mainly installing ceramic tile and some wood flooring in the master bedroom.

So my problem is I've been crunching numbers  and getting lost in it. I'm kind of in a panic attack mode because I told them I would give them an answer tomorrow. Here's what I came up with:

Strategy #1: Buy using conventional loan and rent out

Cost: $220,000

ARV: $260,000

Downpayment: 20%

Closing Cost (I pay all closing cost): $5100

Repair: $6000

Estimated Out of Pocket $55,105

Estimated Monthly mortgage with Tax, HOA & Insurance: $1725

Estimated Rent:  $1800-$1900

Strategy #2: Flip

This is the part where I'm in new territory because I've never done a flip before. So the question is do I just buy it using a conventional loan and turn around and sell it while paying the monthly mortgage payment? The profit seems to be pretty slim if I go this route. 

Strategy #3: Owner finance it

Completely new to this strategy. I got the part about buying the property using conventional loan and turning around to resell it at a higher price and higher interest rate than my loan. But I don't know how to analyze and calculate what my profit would be in this deal. 

So what would you do? 

@Fred Heller Do you have a recommendation for a reputable insurance company that'll write policy for a rental property in the Richmond, TX area? Please PM me if possible. Thanks!

@Steve Rozenberg Hi Steve, please PM me your recommendations for an insurance company for rental property. Thanks!

Let me also preface this thread by saying that I currently have no deals in the pipeline that resembles this scenario and that I plan on consulting professionals before structuring this type of deals. I just wanted to see what everyone think in general regarding the scenario as well as get some insight in to the questions I should be asking. 

Hi everyone, so I recently learned about self directed IRA and the many ways it can help you when structuring your deal. I just wanted to throw out a what if questions to see if I'm on the right track.

So here's the scenario, let's say I put a property under wholesale contract and I'm looking to make $10,000 off the contract. I have to put down an option fee of $1000. I want that $1000 to grow into the $10,000 that I'm looking to profit tax free. So I open up a Self Direct Roth IRA and wrote a check for $1000 to the property owner in the name of my Self Direct Roth IRA account.

Now here's where it gets tricky. According to the IRS, I do qualify to open a Roth IRA account, but have maxed out my yearly contribution on my employer 401K contribution already. So there's two question I have with this scenario:

1) Since I'm max out on my employer 401K contribution, can I still make contribution in the amount of $1000 after tax money out of my regular checking account to the Roth IRA account to fund my wholesale deal?

2) What are the reasons that I can't structure this "what if" deal this ways? 

Ben Pentz I'm a real estate agent that currently looking for rentals purchase, so I found your question interesting about disclosure. I don't know what state you're in but I found this article through the Texas Association Of Realtor and they have the following to say in a similar situation..........."One of my agents wants to sell her home without listing the property with our firm or any other firm. She’s not advertising the property through the MLS, either. What disclosure must she make about her status as a real estate agent? She should inform any buyer that she is a licensed real estate sales agent acting on her own behalf—either in writing before entering into a sales contract or by disclosing the information in Paragraph 4 of the sales contract. This disclosure is required by TREC rules. The Code of Ethics outlines similar requirements in Article 4 and Standard of Practice 4-1. In addition, Standard of Practice 12-6 requires REALTORS® to disclose their status as owners or landlords and as REALTORS® or real estate license holders when advertising unlisted real property for sale. Similar rules apply when license holders intend to acquire property on their own behalf." https://www.texasrealestate.com/advice-for-texas-realtors/article/what-should-an-agent-disclose-when-selling-her-own-property I would consult you're broker first to see what they say, but I would just disclose that fact anyways. I don't think there's any harm in your tenant knowing that you're a realtor if anything they would know that you know the law and won't try funny business.

Jesal Shah Your number is good for your assumptions. This just means you need to buy it at a lower price or for better terms. If anything your assumptions is pretty liberal. For instance the rate for 30 year mortgage for primary residence borrower is at 4.6% ish...last time I check, as investors you would probably be at 5.5% unless you have killer credit or higher down like you're doing.

Sorry fingers keep slipping on the post button... Anyway as I was saying, unemployment numbers are not very reliable, but I do glance at it. Number of people moving in and out of the area is a good indicator of how the local economy is doing. But since you're an agent you have the ability mine data of zip code or neighborhood to see number of sold properties and for how much they sold for. That's probably the best indicator of how the market is moving because 90% of the property sold on the market is through an agent and most agents are affiliate with HAR and the MLS which has strict rules on agent recordings their transaction. People pay a lot to get their hands on those data, you just have to mine the data to figure out the market condition. In my opinion, the monthly market condition press release that HAR does is very generalize and often more optimistic than what some local neighborhoods are experiencing so don't put too much weight in those press release.