All Forum Posts by: Jacob Pereira

San Antonio seems like a shoe-in. Yes, it's appreciated some from the Texas swell, but it's still very undervalued compared to the other 3 Texas cities, yet enjoys many similar advantages. I think Charleston is also a good bet, with St. Louis being a dark horse, simply because of the potential upside.

So much good advice here already, but I'll add my two cents. As others have said, you're unlikely to get immediate, passive cashflow in any of those markets (certainly not Austin, where I work and invest) unless you plan on either 1. putting a lot of money down, or 2. doing some type of value add. On top of that, as has also been mentioned, it'll never truly be "mailbox money" because you do still need to manage your property managers, especially when it comes to capital expenditures.

My personal investment forte is 2-4 unit buildings, and in my opinion they are by far the best asset class for new investors. They're classified as single-family for contract and loan purposes, but have a lot of cost savings that translate into higher returns. The only issue is that they're usually clumped together, meaning a lot of small time landlords dictate how the neighborhood develops, and naturally most renters are not going to do extra maintenance for someone else's property. Still, over the 10 years I've been doing this they've moved me from a 70ish hour a week office drone to someone who is fully financially free. I still work a lot, but it's things I enjoy and am passionate about, and the value I provide benefits me personally, not some boss somewhere.

I think most agents who have no skin in the game would say that Keller Williams is one of, if not THE, top brokerage to get started in to get some basic experience. The big downside is that they're fairly expensive to work for (although not that different than most of the other big ones). I was already investing for many years before I got my license so I went with a smaller boutique operation that specializes in investments, but they don't really hold your hand and teach you the basics. 

If I could do it again, I'd probably have gotten my license back in college and sharpened my teeth on regular retail single family homes or even leasing with KW (generally considered the easiest and lowest stakes real estate sales), and then gone to my current brokerage after graduating.

 I own a few fourplexes and duplexes in Austin, and was excited to see that the Texas legislature recently passed a 20% cap on increases for non-homesteaded properties worth less than $5M. Also, although the Texas economy is still growing, the housing market is no longer the white-hot mess it was, so seeing more 50% annual increases would be pretty unlikely anyway. To @Alecia Loveless, your parents' and sister's houses should have been homesteaded, meaning that they can only go up in taxable value by 10% annually (less for certain disabled veterans or elderly owners). This won't affect @Sam Chicquen, since he doesn't plan to live in them, but if for some reason your family forgot to homestead their properties, they should probably consult a tax attorney to see if they can claw some of that money back.

I have to agree with @Aaron Gordy , although as @Jordan Moorhead implied, it's true that money can be made in any market in any environment if you do it right. I will say that things in our area are slowing down significantly, so sellers are less likely to sell, and buyers are less likely to buy than they used to.

Keep in mind that this is second hand, so some of the details might be off, but here's my understanding of the situation. One of my client's loans was sold to another provider, who didn't do a good job reaching out to her, so she never knew that her provider changed and she continued to pay the original provider. After about 6 months, she started getting calls from all the investors who try to buy foreclosures, so she reached out and realized that her loan had been sold. Once she spoke to the new company, they mentioned that her loan had been in default and because of that they offered her an option to reset the loan into a 40-year at the same rate (3.4%) which would cut her payment by around $500 a month. She's 67, so she's unlikely to reach the end of this loan, but she also had 24 years left on her original, so she's unlikely to finish that one either. Is this legitimate? If so, shouldn't all investors do this? 

Hi Vamsi,

I was born in San Diego and have lived in Austin for the last 15 years. I love both cities, and as I always tell my clients, you can make money everywhere, given the right resources and motivations. As others have stated, Austin is a very hard market to cashflow purely with a purchase. Generally you'll have to either find something off market yourself (even the wholesalers are asking a premium these days; sometimes for more than it would go for on the MLS), or do a moderate amount of value-add (moderate to heavy remodel, change in rental type, etc.)

The thing that it seems like everyone is glossing over is the difficulty you'll run into with a $1M+ exchange. If you go above the 3 property limit, You'll HAVE to close each property, and it's a very strong seller's market, so your offers will need to be strong. You'll never cashflow a $M+ single-family rental in this market, so keep that in mind. You're in a great position; just be careful.

@Jeremy Vandermause, the issue is definitely political. If you could get regulatory permission anywhere in Central Texas you'd have no trouble finding investor capital. It's almost impossible to do for investors and quite difficult for not-for-profits, though. If you ever make it work, reach out to me; I'd love to invest in it.

Right now we have such a shortage of competent contractors that you should have absolutely no trouble finding jobs for him. Do the basics like get an LLC and insurance as @Account Closedsuggested (and you're right; no need for licensing), and also get some pictures taken of work he's done for your website. If he's looking for smaller jobs piecemeal jobs, I've got a property that need a someone who can work through a punch list (hang doors, texture, paint, minor repairs). Good luck!

I'm in Austin, not SA, but yeah, it's brutal over here. I'm paying about double the labor costs that I was 5 years ago, which would be fine if the quality stayed consistent, but that's gone down too.