All Forum Posts by: Luciano A.

@Account Closed

Sorry to hear but good thing it happened before you bought and not after. 

It sounds like the seller caught a break if they did not want to sell anymore by using the flooded basement as an excuse otherwise they would be at fault for breaking the terms of the contract thus realtors and yourself could go after damages. I had a deal in which the seller did not want to sell after the house got flooded. They figured they could use the insurance money to make it look nicer and sell for a higher price. I walked away from the deal. They ended up selling for less than they anticipated because they had to disclose it had flooded. A few years later it flooded again. 

A few things to consider which should be a blessing. 

If a property sustained any damage and an insurance claim is filed then that claim will show up on the CLUE report. This is how insurance underwriters determine risk besides looking at the area. This property will forever have a file showing basement flooded. The insurance premium will be higher. 

Also, a property that flooded can have a lower value than others in the area that did not. 

With flood insurance ever-increasing I would count my blessings and look for another house. 

And if the seller did not have flood insurance then his regular homeowner's policy wouldn't cover it. 

As an investor, I would not take the risk of buying something that flooded. Especially if it is not in a flood zone and it flooded then that means something might be causing it. Maybe a new development built down the street that now causes the water to move towards this area. Or grading is done by the next-door neighbor. Whatever the cause count your blessings.

Best of Luck  

@Douglas Curtiss

I have learned to not care what others say or think especially if they have no experience. Opinions are a dime a dozen. Take advice from those who are doing what you want to do. 

Look at the person who is telling you that you are dumb and RE sucks and ask them..... how many properties do you own? 

Or....... Cousin, thanks for the advice. When was the last rental you sold since you must have had a bad experience?

Too many people watch TV and base that as having life experience. Just look at Youtube. A 21-year-old giving life coach advice. I'm not sure about anyone else but I can say I have learned a lot and developed a lot since I was 21. 

One day, the people that didn't believe in you will tell everyone how they met you. (quote I remember reading somewhere so not trying to be a Brandon and claim its mine) lol

@Susan Tan

Correct that 3rd Ward and SC Houston has not reached the same gentrification as Montrose but that is the point. Buying in Montrose makes no cash flow right now unless you but large down payment. Montrose has already gone to major gentrification. I have bought in 3rd ward since 2010. The rents have more than doubled. The properties have appraised 3x more. I would not suggest anyone buy retail prices just because they have money. If you buy right and after rehab, you are able to create equity from the deal then you are better off than buying in Midtown at retail price.

I see you too are from CA. I moved out here back in 2008. So I have seen areas that changed since then. Montrose was not what it is now. The same thing goes for the Heights, EADO, etc. If you can catch a neighborhood right as it is gentrifying that is when you will see great values. Coming in at the tail end is not where you will get good values unless you buy a major fixer. As a builder, I don't get scared of fixers. 

I would not buy a property in the Third Ward, Montrose, Fifth Ward, EADO unless I can get a great price and after rehab still have equity in the deal. I don't rehab to have a property appraise at market value. I am not a non-profit lol. 

If you are suggesting someone who has money and they want to park in a property that is safe and will not likely lose value then I agree, some established areas like Midtown would be a good place but I think most people are wanting cashflow and appreciation. 

Just my thoughts, not looking to disrespect anyone and how they want to invest.

Best

@Cenddie Alaban

From someone who seen a lot of people crashed and burned back in 2008 with FOMO. I would advise you just to be patient. The hardest thing to do when you see everyone buying and talking about the home run they just scored but a disciplined investor should use common sense and numbers, not emotion. Hang in there. Real Estate is a long game so you have plenty of time to score. Use this time to crunch numbers on deals you see and practice as if you were buying. With this practice you will come across a deal that you will know is a winner without hesitation. 

Best of luck 

@Vic B.

I have done a few of these. You should get a lawyer involved to draft the contract and owner finance terms. Call some of your local Title companies and see if they can do this work for you as they usually have in-house RE attornies. 

Something I learned from doing this type of deal. My last tenant asked to buy with owner finance. I figured it would be great as I would not have to worry about any maintenance and still get cash flow. However, consider if you have to sell the note to someone else because you need to free up cash. Lessons I learned:

• Have a Balloon payment no more than 3 years away
• Collect Down payment as it will give tenant incentive to keep paying and not walking away from the house.
• Have a higher interest rate like 8-10%
• Price higher than what it's worth as you will have to discount the note if you were to sell. 

Also, check with a CPA but you will have to report this on your taxes differently than a traditional rental. You will not be able to take deprecation thus will pay taxes on the money you collect. But again check with your CPA.

Best of luck

@Joseph Sokhn

Did he complete $25k worth of work? This happens when a contractor has underestimated the work and realizes this so he bounces. Licensed or not contractors are known to not be the best businessman. If you feel he provided work that equates to what you paid him then you will need to start looking for another person. If he did not provide the amount of work for what you have paid thus far then I would file a complaint with the state board that oversees his license. 

Sorry to hear you are going through this but dont stress. There are other contractors out there that can step in. 

Best of luck

@Jennifer Roberts

Congrats on getting a property sold. I know how stressful it can be with a ticking clock. The easiest way to go about is to get a home inspector. Go to one of those advisory websites that list contractors and find one that has a good rating and have them do a full inspection. They get a flat fee regardless if you buy or not. A RE agent is getting a commission so their opinion if you are working with them for the first time, should be taken with a grain of salt. However, utilize them by having them do Facetime and walk the property so you can see and ask questions. But most importantly have them pull up comps, rent comps, etc. 

Again use one of those websites to find the necessary contractors to give you bids. 

I have done out-of-state deals sight unseen but had built a trusted team. In an upmarket everyone seems to be a genius. As if nothing can go wrong. But you should consider any place you will invest to take a flight out for a day. If you cant take a flight and go for the day to look at the property and do face to face with your new team then the property is too far to buy. Spending $500 is money well spent for a round trip before parking $100s of thousands of your hard-earned money into a deal. 

I'm originally from CA and I have seen many 1031 coming to Houston and buying stupid deals in areas that many experienced locals like myself won't touch. Numbers work great on paper but sometimes in the real world, they don't turn out well.

Also, be careful in buying in a city that has one large employer like a military base as some banks will be nervous to loan especially if you are considering buying multi-family and have higher military personal as tenants. They can move during their lease term with a 30-day notice and you can't do anything about it if they show you deployment paperwork.

Best of Luck

@Cenddie Alaban

I was buying like a kid in a candy store when we were in GFC so I think the media showing people losing houses was not for the reasons many thought. I had friends in CA that had bought at top of the market and with prices crashing they figured they can go out buy a similar home as theirs for 50% less than what they paid. They had a good income and were able to afford the mortgage of their more expensive house but they saw the equity disappear so they dumped their first house to buy the cheaper house. I think many people got into RE because of FOMO (Fear Of Missing Out). That is all I could hear people saying they need to get in now because prices will be higher in a year. This mentality is what caused this crash. Buying because of fear of missing out. I think smart investors that focused on cash flow were not hurt. Those buying with speculation on prices going higher were not really investing for the long haul. They were in the market because it was a gold rush. 

I see this happening in our current market. Why do you think syndications are hot, Internet Funds Companies, Companies offering homebuyers ways to buy all cash over asking. We will experience another correction but I don't think as bad as 2008. I'm still buying today but I am not getting caught up in this craziness. I buy if the numbers work otherwise I walk.

@Allison Meggison

I agree you don't have a buyer. In today's market getting qualified is tougher than it was back before the 2008 crash. You are wasting your time showing houses to people who are not pre-approved. I would not take a buyer and have them waste my time if I don't see a pre-approval letter. Besides, what seller would agree to sign a contract with a buyer who has no proof he/she can close. 

Best to break the bad news to them now and save from wasting more of your time. They should be looking to find a way to get approved then come back to you and have you help them find a property. 

Best of Luck

@Naoko Potts

This type of request is a luxury, not something that will prevent them from using the property. If it isn't a health or safety issue I would say sorry but we can not install such an item on our windows.  

I have put 3M type of film on our office windows and they are a pain to remove but not impossible. If you decide to let them do it just make sure you put in writing that they will install and remove when they move out. And he will be responsible for the cost to remove if he does not. This way the tenant can think twice about this. 

Another option if you are wanting to be nice is to get those roll-up blinds that can block the sun. Again I personally wouldn't entertain this request but at least you have a choice.

Best of luck