All Forum Posts by: Michael Castro

I recently did not get a permit for one of our STR units. There were nearly 200 units in a fairly small community that did not get STR permits (you are familiar with San Diego so almost 200 units in Mission Beach did not get STR permits). We converted the unit to MTR. We refused some crazy absurd rent offers. The rent offer we accepted was absurd (versus crazy absurd). Market LTR rent was $3.5K to $3.7K (2/1/1 ~100' from the boardwalk, 732.5 Jamaica Court). We accepted $3.5k/month (basically we are possibly/probably renting our unit furnished, paying utilities, and paying MTR PM rates (which is higher than LTR PM rates) for less than we could get renting it out unfurnished as a LTR. This is what happens when close to 200 furnished units all lose their ability to be STRs at the same time.

Note our PITI on this unit is ~$4K, so the MTR rent does not even cover the PITI much less PM, cap ex/maintenance, utilities, vacancy, etc.

We have already made a lot of money on this property; certainly, I am not looking for pity.  I can handle the large negative cash flow but it is difficult for me mentally (I have never purchases a negative cash flow property and this property has produced crazy good cash flow over the years).  My point is to show that if enough furnished properties are converted to MTR at the same time, the MTR rents can fall significantly.

I'm sure you've heard, Dallas city council voted to ban all airbnbs in residential areas. I've been seeing people saying this is going to bring a flood of listings onto the market and cause a crash in prices. I could not disagree more, and just wanted to share my reasoning in case any of you are making any investment decisions based on this theory.

I don't think it'd flood. Here in KC they banned STR and we have not seen an abnormal amount of listings. Most people would have known the ban was coming to plan around it. Sure they'd be some people caught off guard but that wouldn't cause a "flood"

@James Longmire as @Andrew Postell mentioned, there are very few listings with ADUs in DFW area. Not impossible, but tough to find one that works like that in the price range most people want to be in. There are some in the general M streets area of Dallas, and Arlington Heights area of Fort Worth. As @Jay Hurst mentioned, this is mainly due to zoning laws. Places like Flower Mound which is likely mostly zoned of single family only, typically won't have true ADU units that you can rent out. Some ciities like Flower Mound also have lots of HOAs which probably won't allow ADUs for rental. As @Jay Hurst mentioned the neighborhoods we typcially see in Dallas or Fort Worth with good ADUs are mostly the garage type apartments. I've been in probably 1000s of houses in Irving and I think I've seen 2 with ADU type accommodations. There's a few larger homes with pool houses, but typically they don't have kitchens by code as they don't want to change the single family zoning to multifamily which that would probably be considered.

As far as I know you can't really set up good searches on the typical public search sites that you mentioned to specifically search for homes with ADUs, so unless they're using that specific keyword, I would expect they are difficult to locate. The smart realtors can set you up with specific searches though directly from the MLS that can include much more specific searches to try to capture these features. While we don't always use them we have a 200 search options to narrow things down for you.

Probably the best house hack right now is a 4-5 bedroom single family home.  Stay in one bedroom and rent the others.   I think you can find that in Irving...and many other cities.

Best wishes....

My thoughts are to put 3.5% down so that the money have saved up remains as much as possible for reserves. I will renovate the property, the ones I look for undoubtedly will require renovation to be rentable. It will be purchased as a primary residence through an FHA, but the end target would be to rent out the property in its entirety and allow it to appreciate it. Then move onto the next property. The areas in Dallas I'm primarily looking at are Bishop Arts, Old East Dallas, South Dallas, Trinity Grove.

Hello! 

I am brand new to real estate, and I am wondering if there is anyone out there that is a mortgage loan officer to discuss what I will qualify for to make my first purchase of a house! Thank you! 

well from what I'm hearing FHA loan is @ a better rate right now with no pmi. Yea I'm trying to reach out to the right people as much as possible.