All Forum Posts by: Keaton M.

Great and thorough answer by @Costin I.

@Nicholas Weckstein Foundation repairs are very tricky. I'm a structural engineer and in this part of Texas we usually have slab on grade without basements because we typically have expansive soils. Foundation repairs here are hit or miss. Costin is right, if you fix one area, you may just transfer the problem to somewhere else. I'm not sure how much runoff you have from the hill but it may take significantly more than just a french drain. You likely also have other damaged areas that are not currently visible. I wouldnt say its an absolute no-go, but know that it can get very expensive. If you drill piers under the whole house, I've seen that cost around 100k. I've also seen a few perimeter piers installed for 2k for some cracked bricks. Despite the cost, neither of them guarantee no future issues or effectiveness. Get a geotechnical engineer or civil engineer to evaluate the soil and foundation. Definitely increase your cost but I would move that decimal up, more like 2-3x. Expect to find more as you address the issue, especially with a cave in like that. That is significant, dont underestimate its possibilities. 

@Sameer Kh

I think betting on appreciation is risky. They’re turning every pasture out there into a new neighborhood which is going to increase your competition. I don’t think a 6% increase each year is amazing, especially with how fast the market is growing. So if you’re going to hold it, I would look at getting a new property manager and look at the area to see if it’s appreciating like new stores, Whole Foods, HEB, or something else getting built.

@Austin Hefner

Fellow engineer, what kind of access do you have to beneath the floor? Why install new joists at 16" oc while leaving the old ones where they are? Is there a reason to not put the new joists at 12"? Also, it sounds like your high/low spots may be between joists so installing another plywood layer may be a good idea to stiffen it as long as you can connect it with the previous floor with screws. Make sure that adding the plywood won't interfere with doors or the elevation change as you mentioned. Could you explain what that elevation change is? 

I dont know if you're doing any permits for the work, but I assume there will be some electrical cords in that wall you're removing so make sure you have a plan moving those. I assume you have determined already, but make sure that wall is not load bearing. 

I have a question for anyone willing to answer, hopefully this is the right place. I am renovating a fourplex and have pulled permits for it, the inspector is now telling me that I need to change the permit from a residential to a commercial permit. Have y'all had similar experience and is there a significant difference between the two?

Thanks

@Austin Dame

I'd say either hire someone to fix the house if possible and reasonable, or sell it at the the lower value near what you paid for it. It also sounds like the wrong use of "market value". You bought it for what it was worth, do the same selling it. 

You may be able to make the purchase contingent on the seller getting a tenant to leave. Or just find a property that is not fully rented. It seems like you dont have a particular one in mind already. 

Again, I'm not sure how this will affect your clients, but that's just something you will need to analyze. 

I'm also not sure what size of place you're purchasing for that amount. That's a pretty nice 4-unit in my area, Austin, TX, which is pricey. I assume you're going for something larger? If so, I don't think you can use a conventional home loan. 

@Femi Ibrahim

Thanks for the post and a heads up. They definitely sound like they run a scam business and that's unfortunate and yes you were the sucker in this deal. I appreciate that you're sharing your story and identifying a company that is unethical. Nowhere in this post did I see where you mentioned your part in this. Part of growing is recognizing our own failures, not shifting the blame to others, even when its really easy to see their faults. I hope you learn from this and are able to recoup your losses. Best of luck and I hope you continue investing. 

Thanks for the post. 

@Austin Dame

I'm currently house hacking a 4 unit similar to you and its my first investment property. 

1) Do you need to sell your current place? Can you turn it into a rental? And is it THAT obscure that nobody will buy it? You bought it so there's gotta be someone else out there interested. 

2) Is it the end of the world that a tenant doesnt accept a buyout? I inherited 3 tenants and I've been blessed that they've all been great. They've helped offset my costs while I'm renovating the other unit and figuring this thing out. I have kept them all up to the end of their lease. I'm renewing some for the next year to keep cash flow and terminating others. 

3) I'm not licensed or have extensive knowledge on the mortgage side, but it doesn't sound like you're committing fraud. You're legitimately intending to move into the place as your primary. Why the distrust of the mortgage lender?

4) This could be a big deal with your business. I'm not sure what your business is, how often clients see you, how big the demand is that they travel to you, how much of a change it is for them, and if there would be new clients in your new area. My wife runs a specialized personal training gym and her location and convenience to clients is very important, but she also sees people multiple times per week and she could get new clients in new areas. You can probably get a feel for it from your clients by giving them really clear communication. They will complain but most of them adjust pretty well after a bit. 

5) It sounds like you're also putting yourself at a lot of risk financially. If you're putting everything you have into a non-expensive property (possible read as a run down or lower classified), you may find yourself even more financially extended when stuff breaks down or repair/renovation costs. 

6) What is your plan on what to do with the unit? It seems like you want to raise the rent since you're wanting the existing tenants to leave. Are you doing a renovation? how are you financing that? I'm not sure if you're planning on doing any of the work yourself, but if "way too many stairs" is damaging your health, you should probably steer away from self-renovations. 

@Scott V.

It sounds like you just got out of school or near the end, you bought a 400-500k house in the lowest cost of living area, you’re spending 84k a year and single, your company pays for your current car, and you want to start your own practice ASAP. Idk if you’re going for a frugal life but I don’t think this is it. You’re set up very well, but you’re risking adding a lot of weights around yourself. I understand you’ve worked your tail off to get here and you shouldn’t have to budget every detail of life and work until you’re dead just to say you have your own business. Just don’t get in a trap of buying the best of everything and not actually getting what you want. And make sure your future spouse shares a similar mindset. Otherwise That big paycheck can feel like a small one really quick.

I'm currently doing that near the domain. I bought the place in June and working through the remodel of the first unit that my wife and I will move into. The other three were already rented. 

@Mark Anderson I've contemplated the same thing for one of my 2 bedroom units near the domain that hopefully I will implement in the next year or so. I also went to UT and did a group rental situation with 6 people in a 6 bedroom house. We all lived there for 2 years with a few people changing out and we actually added a girlfriend and wife to the group (not to the same guy) for a total of 8 people. I think doing the individual leases would have been a great option too if I did not know people. A few things I would make sure to consider for single leases, are you paying the utilities and internet and adding that to their rent? How to deal with shared areas (there's always 1 person that doesnt believe in doing dishes)? How to deal with disputes/loud music/drugs/disruptive behavior? Are pets allowed? 

On the legal side, I would imagine you're only limited by the number of occupants allowed in a residence which can be found in the Austin city code (sorry I forget what it is). For adding rooms, the size needs to be a certain minimum depending on people living in it (found in Austin code) and I believe you're required to have a certain number of outlets per wall. So depending on the size of your place, I'm not sure if adding rooms is worth it. Personally I wouldnt add a kitchenette either. If people are willing to share a house, they're willing to share a kitchen. I would just make sure that it is part of the lease to clean up or terminate their lease. 

I'm not sure what rent collection you use, but I currently use Cozy and it lets each roommate pay their portion of rent.