All Forum Posts by: Mark Brown

@Jack Holmes, if I wanted to invest in Galveston, I'd reach out to @Timothy Church, since he knows that market backwards and forwards. He's a realtor who lives on the island who both invests in and manages a lot of STR / AirBnB's. He also runs an investor meet up group on the island about once a month.

So here in Texas, back in the old days as some of the oldtimer landlords tell me, they would just disconnect the electricity (i.e. - I don't mean calling the electric company, I mean removing the electric panel or all of the electric breakers), or they would remove the front door, or several windows. Without a/c, or heat, or a front door, eventually the tenants would just move out.   It got so bad the legislature passed laws, 1 month's rent plus $1,000 civil penalty if you do that.  But if the tenants owe a landlord a year's worth of rent, at what point does it just become a business expense worth paying?  The civil penalties net out against what they owe the landlord in back rent. Now of course in Texas, they'd have to sue to get a court case to hear the complaint about the missing heater or front door, and the courts are backed up for months. Be spring time before they ever got in front of a judge.  Are they really going to wait around that long without a front door or heat? But of course, New York is a different state.  But I keep wondering at what point will landlords start to go back to adopting some of the more do it yourself eviction remedies to protect their property interests.  Also, if a landlord is worried about tenants damaging the property, they should make sure their insurance policy covers vandalism with a low deductible and replacement cost coverage, if possible.

Did you not hear the news?  The recently signed stimulus bill extends the CDC's national eviction moratorium for nonpayment of rent to January 31, 2021.  In many jurisdictions - like NY - they aren't evicting anyone for any reason.  I expect a Biden administration will continue to extend the eviction moratorium for the forseeable future.

If you haven't already, try checking the events page: https://www.biggerpockets.com/...

Also check it again after the New Year's.

@Jay Souers Hi. I’d pick League City. The school district is great and will help with rental values. The area is growing a lot and pushing up home values. Friendswood is established but has a lot of flooding issues.

@Purva Mehta Messaged you.

Hello!  Welcome to the community. What part of Houston are you guys in?  There are usually 2 or 3 meetings a month. In person meetings in Galveston and in the Heights for sure. Another meeting in Montgomery County. And some zooms as well. But, day before Christmas, there's just not much on the calendar right now.  I'd check back on the Events page after the new year: https://www.biggerpockets.com/...

Interesting project.  There might be some skin on this deal, but I'm not sure how much.  Here's what I see:

If you're putting down nearly 40%, you should get a lower interest rate in today's environment.  

Is this owner financing interest only?  With a 30 year amortization that includes principal payments, I'm looking at $1,962 per month.

You need to factor in a vacancy rate. It might be 100% occupied right now, but you can't assume that vacancy will stay 100% once you take over.  The current vacancy rate in Houston is 11%, so that right there will make a big impact on your proforma cash flow projections, basically pushing you down to break-even status before raising rents.

It's hard to analyze expenses without knowing more, but it seems a little light. Are you sure you have enough for repairs? I'm looking at about $20K a year just for property taxes, insurance, and management fees. Then with an old 8 unit building, you probably have to pay for trash, lawncare, and utilities that can't be split out like water, or possibly electric? So add that in and then you need money for repairs and unit make readies.

$485,000 may be TOO MUCH for this property, if the net income isn't there to support the valuation.  

I don't know what the seller means by owner-financing to avoid reporting capital gains taxes. Even with owner financing, I would still want title insurance and closing at a title company with an updated survey. You just never know if the current owner's ex-wife has community property rights to the place or some easement crosses under a building, etc., and that means the title company reports the sale to the IRS and owner will be paying capital gains. 

@Renee Lindgren

Renee, congratulations on taking your first steps into the rental market. Texas definitely has higher property taxes compared to California.  But remember, there is no state income tax for you to file and pay tax on your profits here, so that should factor into your cash flow analysis. Second, a lot of "new" subdivisions have municipal utility districts ("MUDs") here.  These are taxing entities that reimburse the developer for the cost of installing utilities. As @Marlen Weber alluded to, these tax rates go down as the improvements are paid off.  BUT, you can always buy an investment home in an area that does not have any MUD and avoid about 1% or show of additional property taxes. Of course your realtor can tell you if a prospective house is located in a MUD district, but if you like, you can also view a map of all MUD's in Texas on this website: https://www.tceq.texas.gov/gis... 

Best of luck finding a great real estate deal! I'm in the Houston area, but if I can be of any help, let me know.

At one point I had several apartment complexes we were invested in and about once a year someone would die.  The worst was someone that was a recluse who we think died shortly after paying rent... so they weren't discovered until they failed to pay rent the next month.  At that point, after the coroner removed the body, we had to call a crime scene clean up company to take everything out where the person died. I'm talking wall paneling, carpet, etc. It was terrible and our property manager, who discovered the body, nearly quit.  Unfortunately, it's just a numbers game.  The more doors you get under management, the more likely this will happen. You get up to 60 - 100 units, when we only live to be 70+ years, and yeah, it's likely gonna be an annual occurrence.

One good resource is take a look at your local apartment association's website. They usually have a list of vendor-members.  One of which is likely a clean-up company for this sort of thing.