All Forum Posts by: Mark Brown

@James Farrior Yes, that's all pretty much correct. You should definitely do your due diligence as if this property will be taxed at its market value or close to it. Being a non-disclosure state simply means the sales prices are not required to be reported to the government. But of course Realtors are required to post sales data on the MLS, and the government can get access to the MLS. If you buy a property not on the MLS, then the sales doesn't get reported, and the government won't know what you paid for it, but even then, it's not like they can't do their own comps. Also, as another person mentioned, the property values are appraised as of their condition on January 1st, but the local appraisal district won't send out a notice of what they think the property is worth until May. So whatever the appraisal district says the property is worth today is not the updated value that the government will post sometime around May.

@Timothy Ray Lots of great advice here. As a property manager myself, I’d add just a couple things that I haven’t seen anyone else mention:

1) Ask if they can take rent payments by automatic bank draft or credit cards. And if they pay you your profits electronically as well. Obviously better companies are better set up with technology.

2) Ask if they screen applicants by pulling and reviewing their actual credit reports. There are some PMs that just use a service to get a credit “score” report and that’s all they use. Better PMs are set up to review the actual credit report.

Finally, whoever you choose for a PM, I recommend also letting them find your tenant. Sometimes realtors will help an investor buy a property and then lease it out too. Then the property is turned over to a PM. More often than not, the tenant the realtor finds may have red flags that the PM would have seen but now it’s too late. Help yourself out by having the PM find the tenant. Best of luck!

@Marsha Rost Whatever the county lists the property as is not what you are legally allowed to do with the property. That's just an error in their records, and their records are full of errors. What controls what you can do with the property are a) local zoning laws (not a problem in Houston), b) local construction codes (definitely a hurdle in Houston, c) local HOA - probably there is no HOA if the property is that old, and d) the property's deed restrictions and easements. This property is old enough that it might not have any deed restrictions, but ask a title company for a copy of all the deed restrictions and easements affecting the property and then go read all the documents that come back. Some deed restrictions will specifically limit the use of a property to one single-family home, for example, and you won't know that unless you read the document.

@James Munoz Hey just to add a little nuance here. If you are the ONLY member / owner of the LLC, the IRS calls it a disregarded tax entity, and, like @Cody L. says, all the income and expenses get reported onto your personal tax return.  If you have two or more member / owners, then the IRS treats it like a partnership and you file taxes on Form 1065. You would need to call the IRS to get a tax id number for the partnership. Income gets reported to each owner of the LLC on a form called a K-1. Since you opened a bank account already, it sounds like you have a single-member LLC because the bank would have asked you for the tax id number if it was a multi-member LLC, but it sounds like you may have opened the LLC under your own social. Hope that helps.

@Jared Smith  Yes, from what I hear in other states, the judges are just not setting court dates for evictions - even for evictions for something other than not paying rent.  So by the letter of the law, landlords can evict for all sorts of reasons besides not paying rent, but property rights are just a fiction if you can't actually get a court case set for a judge to hear the case.

@Lee Hampton

Interesting concept. How many square feet are these units? Were you able to rent them out at a good price?

@Nick Gerli I think appreciation has a lot to do with building regulations. Places that put up all sorts of barries, regulations, and fees for building new homes tend to have faster home price appreciation because supply can’t keep up with demand. Assuming it’s a place where people want to live.

It's not quite all roses. Buried in the report is this little table:

Broken out by housing segment, December sales performed as follows:

• $1 - $99,999: decreased 15.7 percent
• $100,000 - $149,999: decreased 20.2 percent
• $150,000 - $249,999: increased 13.2 percent
• $250,000 - $499,999: increased 44.6 percent
• $500,000 - $749,999: increased 80.8 percent
• $750,000 and above: increased 54.0 percent

So homes at the low end of the market saw a *decrease* in the number of homes sold.  Any idea what to make of this?  

My guess is Covid has dramatically hit people harder in the lower incomes, and so those people aren't moving. With no jobs, they can't afford to move or qualify for a mortgage.  With the foreclosure moratorium, they don't have to leave. At some point, when the foreclosure moratorium goes away, I bet we will see a lot of distressed homes coming onto the market.

@Lizeth Nevarez

If you have a lot of equity, I’d look into getting a heloc - home equity line of credit, as opposed to a cash out refinance. With a refinance, you have to start making payments and paying interest in the money you take out, even if you don’t have a money making a investment right away. With a heloc, you won’t pay interest until you take the money out for your credit investment.

@Chad U. I believe, also, if the judgement is older than the the foreclosure then it survives the foreclosure and stays attached to the property.

The judgement will have to be paid off to get title insurance on the property.