All Forum Posts by: Michael Hayworth

Dan, this is useful info. Thank you. Can you provide a bit of info on how PetScreening.com works and what it costs? I tried to get info on their site, but they're one of those frustrating sites that don't provide any real info until you go through the "Create an Account" process. 

There are plenty of longer explanations of this online, but what you really want to know is "can you do anything about this"? Yes, but it can be difficult.

Emotional Support Animals are NOT Service Animals (service animals have specific training, ESAs do not), so they are not covered under the ADA. They ARE, however, covered under the Federal Fair Housing Act.

IMPORTANT POINT #1: If you are an landlord renting your own property without using an agent, and you have 3 or fewer rentals, you are not bound by the Fair Housing Act, so you can tell them to get stuffed. So when you're starting out, it's often better to handle your own rentals just for that reason.

IMPORTANT POINT #2: You do not have to accept an ESA letter from an online "Emotional Support Animal certification" site. Even HUD, bureaucrats that they are, recognize that most of those are BS. They allow you to require a letter from the person's own health care professional. So you can decline until they accommodate that. (HUD guidelines, see pg. 11). 

IMPORTANT POINT #3: You can't turn down a Cane Corso just because it's a Cane Corso. But if you have evidence based on the behavior of the individual animal that it poses a danger to your property or to others, then you can disallow it. So the first time it threatens someone else, or if you see property damage during your regular site inspections or maintenance, you can make them get rid of it.

Good luck.

"Vinyl plank" is used to refer to two different types of products. The first is a very thin glue-down vinyl with no backing. The second is a rigid-core vinyl usually with a cork or rubber backing, like Lifeproof from Home Depot or NuCore from Floor & Decor.

Glue-down vinyl is good for rentals, but will show any unevenness in the floor, and will tend to show bubbles if your flooring contractor doesn't go over it properly with a heavy roller, which many of the cheap guys don't do. The rigid-core vinyl is really excellent, and it can go down over other hard surface floors, but it's more expensive.

$3/sf seems a little high for the glue-down (I pay $2.50/sf and I've seen loads of vendors in the $2.50-2.75 range), and low for the rigid core (best price I've seen is $3.50/sf installed).

@Bill B.'s explanation is an excellent, but I would say it misses one important component.

Not only does leverage allow you to increase your cash flow from rents, it also allows you appreciation on more properties. Unless you're investing in very dead markets, each one of those four $100,000 properties you bought using leverage is worth $120 -150,000 (or more) five years later, and your net worth is significantly more than it would be with one property bought for cash. That's how you become a multimillionaire.

(Yes, there are many complexities to this. Yes, values can go down, so don't be over-leveraged. But even in the 2008 crash, market values fell about 20%, far less in some areas. People who had been investing for appreciation for years still were way ahead.)

This is odd behavior, but I have seen it occasionally before. It can be a combination of "he doesn't need the money right now" and "he really likes doing the work, but is bad at the business side." I have one subcontractor who works this way - he'll work on several projects for me, then 2-3 months later, we'll get bills for all of them.

I'd try having another conversation with him, along the lines of "Bob, this is really unusual behavior for a contractor. Surely you need the money - can you tell me why you're not invoicing me?" Maybe you'll figure out where he's coming from.

At a minimum, I'd create a separate savings account you don't touch and escrow money over there to pay his bills when they ultimately arrive, so you don't end up spending the money on something else.

One big question is how much additional per year you're going to be able to put into this? $100K could buy you 3-4 properties in secondary markets that will cash flow maybe $1000/mo., maybe even a little more. They might cash flow more than that on paper, but you should be setting aside a decent amount because lower-end properties typically take more maintenance and you're going to have to pay for new HVAC units, new roofs, etc., over time. 

You might get better cash flow from small multifamily, but there's huge competition for that in many markets.

But just for round numbers, let's say that every $100,000 you put in gets you $1000 in cash flow. That means you need to put in $1MM in investment capital to get to your $10K/mo cash flow. Is that feasible? Over how many years?

What you might want to look at is taking less cash flow initially in markets that are appreciating. I tend to hold my rentals 2-3 years, then sell and use the appreciation to buy 2 more, without having to inject a lot more capital.

House hacking is a great way to go in Austin if you don't mind moving every couple of years. As @Jacob Pereira said, you're going to have to work hard to find 2-4 unit properties in the Austin market, and when they come up, whether thru wholesalers or on MLS, you'll be fighting a hundred other bids.

Other things to know about Texas investing:

• Jacob already mentioned property taxes and foundation issues. You just have to factor those in.
• Investing in Austin or DFW (probably Houston, too) is not a cash flow play. It's an appreciation play. That'll make some of the regulars on BP scream, but it's a fact. Rents are rising, but not as fast as property values, which are going up fast, and won't stop going up as long as literally thousands of people per day are moving into Texas and need a place to live. I have had multiple houses that had negative cashflow for 2-3 years, but still netted $50K when I sold them.
• Don't believe anything a wholesaler tells you. The wholesale business is cutthroat here. There are a few good ones, but tons of them pushing crap deals with dubious numbers. Check your own numbers and reno costs.

Good luck with it.

It baffles me that people answer questions without knowing the laws of the state they're answering a question about. 5 seconds on Google pulled up the standard Florida seller's disclosure form which asks about present OR PAST water intrusion or roof damage. And if the water damage was from, say, a busted pipe, and the seller decided that didn't fit the definition of "water intrusion" (a lot of the form seems to be poorly worded), there's another section of the form that asks about any claims filed against homeowner's insurance and the details of such claims. 

So yeah, the seller had a duty to disclose. And if the latest one was only 3 months ago, there's no way the seller didn't know or forgot about it. So yeah, the seller lied.

(Barring, of course, possible, but unlikely, scenarios like "it was grandpa's house and he must've filed the insurance claim right before he died 3 months ago and we had the fastest probate ever but don't know anything about the house".)

I often buy properties for cash or on my credit line, then refi them basically immediately. (Typically no seasoning requirement if you're working with a local bank who's a portfolio lender.) The reason I typically do this is to be able to close quickly, when there's not time to run a deal through the loan process.

When you say doing a refi is cheap, I'm not sure about that. Maybe it varies by state, but here, I'm paying closing costs (mostly doc fees and title policy) when I close on it for cash, then paying those same fees again, plus lender fees, when I close on the refi. It definitely costs more than just buying it with a loan the first time.

Sell it. Use the profits to buy two more. Even at the higher prices, you'll be building more wealth.

The twist is that you're 9 months in, so potentially sit on it for another 3 months until you're past a year. Most CPAs will then file it as long-term gains which will save you on taxes. (You''ll get some arguments about that on here, but talk to your CPA.) 

I'm personally very skeptical of 1031s or any other structure that keeps you from using your money how you want to. (I'm also skeptical of IRAs and 401(ks) unless there's a substantial company match.) I became wealthy by having my money available for me to use and invest, not having it in an account where I have only limited access to it. Now that I AM reasonably wealthy, I might consider something like that for tax deferment. Others obviously disagree. Discuss with your CPA.