All Forum Posts by: Lucas Hunt

$1700 on Property A

$1750 on Property B

Hello BP Family - I am looking for some of your wisdom and/or opinions on my current investment situation. I will not take any of your responses as investment advice!

I have made two aggressive offers on a couple of single-family homes in the northern suburbs of Houston, TX. At this point, both offers have a strong likelihood of getting accepted. This will be my first long-term hold investment property and I am only able to choose one property. They are both turnkey. My current goals are that I am looking to get a base hit so that I can get into the game and build some wealth. I am struggling with choosing between the property that has average cash flow in a class B neighborhood [PROPERTY A] versus a property that has below average cash flow in a class A neighborhood [PROPERTY B]. I have provided some info on both properties below. I can imagine that some of you were in my shoes some time ago. Is there any wisdom/insights that you would be willing share that could help me make a decision? I appreciate all of you!

Property A

Year Built: 2013

Estimated Home Value: $233,000

Offer: $210,000 w/ a $10k credit to the investor (me)

Year 1 Estimated Cash on Cash Return: $150 / mo

Neighborhood: Class B

Nearby School Rating: 2/10

YoY Appreciation: 3%

Home Layout: 3 bed, 2.5 bath, 2 car attached garage

Property B

Year Built: 2009

Estimated Home Value: $226,000

Offer: $215,000 

Year 1 Estimated Cash on Cash Return: $50 / mo

Neighborhood: Class A-

Nearby School Rating: 7/10

YoY Appreciation: 3%

Home Layout: 3 bed, 2 bath, 2 car *de-attached* garage

Good Morning! Could use some advice here. I'm a first time real estate investor negotiating on a turn-key property north of Dallas, TX through my agent and the sellers agent. The home is conservatively worth $270k. It went under contract 3 weeks ago (from a different buyer) in this price range and then the financing fell through. Unfortunately for the seller, they already have a new home under contract in Wisconsin and will be moving there in mid-November. Their home is empty and the movers are already booked. They re-listed the home in TX for $250k since they are now under a time crunch. I put in an offer at $220k and it got rejected b/c accepting this price would cause the seller to be upside down. They countered at $245k. Quite frankly it would be tough for me to bite this bullet b/c buying at $245k puts me at only $50 / mo. of cashflow.

Big business will be migrating to this city in the next 3-5 years that will be creating thousands of jobs. This home is priced aggressively in a fantastic neighborhood. 

Has anyone faced a similar situation in the past? Any advice on how I can get creative and help the sellers without going up on price? 

 Couldn't agree more. The most agressive-priced turnkey home in that zip code (homeowner had a deadline on when they needed to move). Will for sure keep this in mind as I'm making more offers. Appreciate the advice.

Morning Ken, to clarify my COC ROI would have been a hair under 8% if my price would have been accepted (home was in Sherman and I'm bullish on Sherman for specific reasons). The other buyer that beat me offered 100% list price. If I would have matched that offer then my COC ROI would have been 2.5%. My realtor is just a buddy of mine that values appreciation.

I'm in Dallas investing in my first single family property. Bigger Pockets has groomed me to aim for a 10%-12% COC ROI, 8% at the lowest. Today I submitted an offer that was 95% of the list price and got beat out by another investor that paid 100% of the list price. If I would have paid 100% of list price, my COC ROI would have been ~2.5%. My realtor told me some investors have temporarily reprioritized COC ROI to the back-burner (due to the higher interest rates), and have shifted more of their focus to appreciation. Since interest rates have not caught up to rental property pricing, would it make sense to weigh appreciation higher than COC ROI when assessing deals nowadays? Can always refinance the loan later and was curious if anyone has pondered the same thing.