All Forum Posts by: Linda Osborn

@Daniel Pitta. I agree with several in here...if you want to learn wholesaling, find someone who does it successfully in your area by attending local REI meetings and use them to learn and meet people. Find out what people do and what they are looking for. Find someone who can help you learn the business (may mean you have to do work for them), and find other people who buy properties for rehab or buy and hold and use them to build your buyers list. Find out what their "good deal" criteria are. My observation is that if you find a good deal, you will have people coming out of the woodwork to buy it from you. That won't be your problem. Build your buyer's list AND learn what other investors in your area consider a good deal. If you can find what they want...end of problem.

And if you put a contract on a home, you have to honor it. So make sure you have a good list of people willing to pay you to find them a good deal. 

Welcome to BP @Daniel Tisdale!

Hi @Kellie Mecham. I tend to agree with both @Jim Cummings and @Costin I. There are opportunities in and around Austin...but you need to be ready, able and willing to (1) spend time finding them, (2) have your criteria defined so that you can recognize them when you see them, and (3) be able to react quickly to them. 

Also, you do have to pay very close attention to the tax rates and areas of town that are appreciating at crazy rates....this is a great thing if you are selling, but can be a deal breaker if you are buying, and/or you want to buy & hold. I personally think the areas south...Kyle, Buda, San Marcos are very desirable areas because they are within commuting distance to both Austin (ok, it's painful, but still doable) AND San Antonio. Most homes are still reasonably priced and there is a good rental market for buy and holds in those areas. I also like north areas (Leander, Cedar Park, Pflugerville, Georgetown, some areas of Round Rock), but it is harder and harder to find deals here. My concern with Hutto is that many areas in Hutto have tax rates that are really high, even for the Austin area. And I am not yet sure how good the rental market is in Liberty Hill. 

I personally would not drive more than 45-60 minutes. A heck of a lot of gas and time can be eaten up in that time. 

@Lucien Gautreau. It is my opinion that if a home has been on the market for 304 days, what you have is an unmotivated seller. In that case, I think making your offer of $45K is perfectly understandable. If you do not get a counter, or if the listing agent does not want to discuss this, you can assume your seller is not motivated to sell. In that situation, there is not a lot you can do. 

If ARV is really $90-95K, you have to ask yourself why NO ONE wants a property at 72% of ARV. It may mean the repairs are significant, or it is in an undesirable area.

If you are offering $45k, can I assume repairs are in the $20K range?

If your agent does not want to make this offer, that may be more about whether the resulting money in his/her pocket of $1000-$1300 (not including taxes and depending on terms and commission splits) really makes a $45K offer worth their time. Showing properties, writing up offers (often more than one if you are always being "aggressive"), negotiating contract terms, and dealing with repairs and inspections, etc. takes more time than you realize...and $1000 is not a lot of money for all that. Just sayin'...

Ever thought about finding an investor minded realtor and partnering with them on the deal?  Or maybe make an agreement with your Realtor up-front that gives him/her the listing once the flip is completed? Getting some money on both sides of the deal might be more enticing. 

@Surendra Chawla, I have rental property in Pflugerville and know several others that do as well. I have had mostly good tenants, but would be lying if I told you all were good.  It is my belief that you have to keep in mind WHY people are renting (vs buying) in the first place and take this into account on a case by case basis. In many cases it is because they are recently self-employed and do not have good income history, or maybe because they have bad credit history or delinquencies. So I try to be a little more open-minded and dig a little deeper. 

First of all, I always do full credit and criminal background checks, and verify their rental history with previous landlords. Before I do that, however, I review their (detailed) application and income history in detail. If there is something in their history that is problematic, I try to find out whether it was a one-off circumstance or bad decision, or if it is something that has been systemic. 

For example, if some one had a foreclosure during the 2007-2009 time period, I want to find out what happened. In one case I had a couple who were being foreclosed on by a less than honorable bank, and despite significant effort to work it out with the bank, the bank just ramrodded them through the foreclosure. They could show regular payments and subsequent attempts to pay. After discussing this situation with them, we asked for a double security deposit, which they agreed to, and signed a lease. They leased the property for 24 months with no issues.

When someone is self-employed, and it is difficult to see income history, take a look at their credit history and bank balance instead. If they have plenty of money in the bank (enough to cover several months of rent), and good records on paying their rent (always check rental history), again ask for extra security deposit. If they can provide it and there are no other glowing red flags, sometimes it is worth giving them the chance.

I have had applicants whose credit is bad due to medical bills resulting from an unexpected disease, surgery or hospital stay. In these circumstances, I have validated that they are regularly paying all their other bills and trying to pay off their medical bills when they can and there are no other glaring concerns. Again, I check rental history and I might ask for extra deposit money to mitigate my risk. 

I have had tenants with a criminal record (misdemeanor) that happened 10 years ago when they were "young and stupid." If there is nothing indicating they still act this way, I am likely to overlook it. 

That is not to say that this always works. In cases where tenants lie and you have no way to confirm or validate their claims, you may make a mistake. In those cases, it is important to act fast when you realized you made an error in judgment  and remedy the situation as soon as possible.

Just remember that someone who is renting is renting for a reason. If everyone had excellent income, credit history, rental history and a clean criminal record, they would probably be buying, not renting! If I believe they have taken steps to improve their situation, and I am comfortable they will continue to do so, I will often request something to mitigate my risk and move forward anyway. 

On your other question, bite the bullet and move the utilities over to your name! You do not want the power shut off...especially as we move into the hot season. I have seen several homes damaged due to mold and/or warpage of doors because the owners didn't want to pay air conditioning bills. The resulting damage cost them far more. Also, very few tenants want to rent a home that has no lights, AC or water when they go through it. Suck it up  ;-) ...Consider it a cost of doing business.

If the home has only been on the market 2 weeks, you are a little impatient. After all, you HAVE gotten 4 applications, so that shows that there is interest and it looks to be priced well. Also, most families wait until school is out to move, which is still a few weeks away.  And, some areas of Pflugerville have a lot of competition, so make sure you compare your asking rent price to similar homes that have already rented...not only to homes that are actively competing with yours. 

Hope this helps!

-Linda

Welcome to BP, Randi!

@Robert Johnson, if you are looking to start learning more about investing from the investor side, the first thing to do would be to start attending investment group meetups and actually meeting and networking with local investors. Austin has a plethora of these...and if you PM or connect and provide your contact info, I'll be happy to share what I know about the ones I have participated in. Or, you can google "real estate investment meetups Austin TX" and sort through the results....there are a lot!

I agree with both @Account Closed. All three of these cities have opportunities, and I know successful investors in all three. So definitely invest where you live (I always strongly advise this, especially when getting started), whether it be San Antonio, Houston, Dallas, or any where in between! Good luck!

@Brian Coleman Interesting thread ;-)  I moved to Austin from northern Indiana on purpose. We go back to visit family, but I prefer Austin! From both a weather and life-style point of view (arts, music, theatre, food, outdoor activities...all better in Austin, IMHO). My parents moved to SC in the 90's and I have spent a fair amount of time in NC, SC and some time around Nashville. I would personally choose any of those areas over Indiana, unless you prefer a sleepy rural kind of life. Don't get me wrong...I am originally from Ohio, love the mid-west, and it is a great place to raise a family. We visit often. We still have family in Ohio & Indiana and have really good friends in Michigan. I just don't really want to live there anymore! So it's all very much personal preference! You may want to make plans to take some time to visit your top 3 places to help you decide. 

@David Faulkner is correct. Tax benefits for buy & hold investing come in the form of (a) tax deductions for mortgage interest, (b) tax deduction for depreciation of the property, (c) ability to deduct all expenses such as management, repairs & maintenance, advertising, travel to and from the property, etc., all while your tenant is paying off the mortgage and (hopefully) the property is also appreciating. No big tax advantages for flipping or wholesaling...just the "normal" self-employment deductions for marketing and other expenses (contractors, materials, etc.). These, of course, aren't really tax benefits, but typical of any self-employment activity.