All Forum Posts by: Michael Le

Welcome to BP, @Ruben Rodriguez. Glad to have your expertise added to our community here. Hope to see you at a local meetup.

How far into the lease are each of the units? Some of the higher priced ones could be newer leases that already have the increased rent. That would mean the market supports this higher number and you can be relatively sure you can raise the other units when the time comes.

Also, it's possible some concessions were made by either side at the time of the rental. Perhaps it was a re-up from a long time tenant so the owner didn't want to increase rents. On the other side, perhaps the renter had bad credit so was willing to take higher rents. Could be many reasons.

It seems like you're counting profit simply by taking the monthly rental of $1500 and subtracting the $930. Does that $930 even include the taxes portion of PITI because you only mention mortgage+insurance? And I don't see anything in there for any other expenses.

Going off the 50% rule, with a monthly rental of $1500 you should expect roughly $750 in expenses. That only leaves $750 to pay for your mortgage. Unless the insurance part of the $930 is $180 a month, there won't be enough left over in that $750 to cover your mortgage. Which means not only you have no cash flow but you would be negative.

Very interesting. I'm looking forward to your updates.

@Tim Shin, if it's a complete reno then I think your repair/capex is more reasonable. Are you sure you've captured all the expenses? Speaking of common areas, do you have costs in there for lawn maintenance and general garden upkeep? What about garbage collection fees? What about water? Even if the units are individually metered, there would still be common area costs I assume?

As for the tax question, the tax cap is only for your residential homestead.

http://www.hcad.org/Help/CappedValuesFAQ.asp

"Does the capped value apply on property other than my homestead?

No. The intent of the law is to address the needs of homeowners by making the taxable value of their homes more predictable. This statute only applies to residential homesteads. All other properties, like rental and business property, vacant land, or personal property, are generally appraised at their market value."

@Chris Turpin, Jake is correct. If you purchase a home as an owner occupy then the mortgage company will expect that you live there. I actually just refinanced my primary residence so I pulled out the documentation and it states that I shall agree to move into the house as my primary residence within 60 days of signing the document. And that I will stay in the house for a period of one year from the date I first move in.

Different lenders have different requirements. If you are using an FHA loan to purchase the house then they will only let you lease out the house if you're forced to move somewhere else.

@Chris Turpin, I believe it generally only affects people buying the house via FHA loan. So if you are trying to flip a house to someone using an FHA loan, you will have to have had your name on the title for more than 90 days. Some other lenders might have their own restrictions along the same front. Without those restrictions you could do simultaneous close and technically only own it for a minute or so.

Hi @Chris Turpin. I've never heard of any such law and am pretty sure there aren't any. People buy and hold (ie buy and lease out) all the time. There are 'seasoning' laws which require you own a property for a certain amount of time (like 6 months) before flipping it. But I've not heard of anything for just renting out a property.

Welcome to BP, @Justin Osborn. It's great to see you're planning ahead even if you're not quite ready to make the jump. The first step is mental and it seems like you're already down the right path.

Welcome to BP, @Xavier Morales. If you're hungry to learn, there's a buffet here for you. Listen to the podcasts. A lot of the earlier ones focused on wholesaling.