All Forum Posts by: Pete Harper

@Jim Cummings I believe you are referring to the sheriffs tax auction. The auction is held on the first Tuesday of the month on the courthouse steps. The better properties are almost always pulled off the list at the 11th hour. Homeowner comes up with a couple hundred bucks to buy some more time. You’ll see the same property listed again at the next auction only to get pulled off again.

What is left are abandoned properties. Usually owner has died with no relatives to settle the estate. Eventually taxes go unpaid long enough the property goes to auction.

@Chris Alford

Hypothetical. Let's assume you are looking for a 2/1 duplex. Assume after light renovations, paint, flooring and light fixtures the units rent for $700/ month. That's $1400/month Cashflow. A 1% deal would be $140k ARV.

I would be a little careful overshooting the mark on renovations. To qualify to rent a $700 apartment you need to make 3X rent or $2100/month. That works out to over $13/hr. A person working min-wage job is not going to qualify. It will take two people. Don’t pour a lot of money into renovations thinking you are going to get that back in rent. You are not going to find renters able to pay $800-900 for a 2BR no matter how nice you make it.

@Chris Alford

I’ve had good success with 2/1 in rural east Texas. Typically these units rent quickly for $600-$700. Here is some suggestions on how to confirm market rent. First look what similar units are renting for on Zillow, FB market place and Craig’s list. Smaller markets really don’t show up on Apartments dot com.

Second is to call your local housing authority. Ask for the HUD voucher rate for properties similar to yours. I've found they are super helpful with landlords as there is a shortage of units. I would consider the HUD rate to be the bottom of the market. If something is renting for less than HUD then there is something wrong. Either the property is way under market or it is a complete dump and doesn't qualify for HUD. You don't have to use HUD if you don't want to. I mainly see then as a good benchmark.

Now that you have a good idea of rents you can more accurately underwrite the deal. I once underwrote a six unit 3/1 based on HUD rents. Unfortunately I didn't get the deal because of flakey seller.

@Mike Reynolds You are correct. Contractor is not licensed or bonded. Neither are required in Texas. Fairfield is super small market. The city doesn’t have an inspector. Inspector is coming out of Dallas. Private firm. I’ve contacted the inspector and advised him of the situation. He is going to work with me on finishing the project.

AC was never started so there is no sub. The GC told me he purchased the units but I’ve never seen them. I asked to see invoices and he refused. I asked to come get the units and have them installed myself. Shortly after this conversation he stopped communicating altogether. I’m sure the GC was lying. I’ve hired a licensed AC contractor who started today.

The plumber starts next week to finish the plumbing.

I filed in small claims court against the GC on Monday. He will be served the papers by the sheriffs office this week. When I dropped off the paperwork the sheriff was familiar with him. I’ve since learned there are three other projects in a similar situation as mine. One is worth over $200k. The GC has burned through a pile of cash in the last six months.

@April Clark Yes, I’m aware that subs can sue me for nonpayment by the GC. That is exactly why I reached out to them independent from the GC. I will have the plumber sign a release at the end of the job. The electrician didn’t want to cooperate. I now have documentation showing I attempted to settle his claim should he ever take me to court.

@Daniel Smyth I’m using the courts as intended. I paid for a service and the GC and SC defaulted. How is that making a profit?

@Wayne Brooks

Got it, the subcontractor law suit is a dead end.

I still have a case for insurance claim. The GC caused damage to my property. He cut the water supply line in the slab when the inspector said not to. As a result I will now have to run new water lines in from the meters. This is a duplex so everything is 2X. I also have a case for unnecessary damage to the slab.

@Dave E.

I called the insurance agent and she sent me a claims form with the GC on copy. I will go ahead and make a claim against his insurance. Even if the claim is rejected his policy will be dinged.

@Russell Brazil

Breach of contract. They have taken funds and not completed the work per the contract.

@Jim Cummings

I filed in small claims court against the GC this last Monday. BTW Texas raised the limit to $20,000 as of September last year.