All Forum Posts by: Pete Harper

Quote from @Justin Brin:

Quote from @Pete Harper:

I would make a suggestion on your target market strategy.  Look at secondary markets in the path of progress from major metro areas.  We are doing well outside Austin, Dallas and Houston. 

 You are suggesting not to focus on main metro areas but secondary areas?

 Correct.  Don't invest in Austin but along the I35 corridor going North.  Similarly along the I45 corridor from Houston.  Hwy 75 North of Dallas is another good area.  

Quote from @Justin Brin:

Quote from @Ali Nichols:

@Justin Brin great lead in for discussion, thanks for putting that together. Generally speaking, we have the same approach - avoid areas that are heavy in renter friendly regulation (i.e. CA). Then TX is tough right now because of property taxes. And then, Florida is difficult with insurance right now until that stabilizes. 

Then, when we look at Atlanta and Charlotte we see a good amount of supply because of the footprint of large institutiional buyers (i.e. invitation homes).

That leaves the midwest (OH, IN, MO), TN, and the one off markets like Tucson and Albuquerque. Personally, we have had success in small multi-family across OK, TN, MO, KY, IN, OH. 

Did taxes went up in Texas?

Regarding Atlanta and Charlotte institutional buyers are buying up the market?

From all these stats "OK, TN, MO, KY, IN, OH" which one is your favorite? 

Property taxes in Texas have always been high.  With no state income taxes they government needs to get their money somehow.  Unlike CA there is no Prop-13 cap on appraisals.  Appraisals keep going up every year unchecked.  We own 8 properties in Texas, every one went up in 2023.  Same in 2022. Low prices might look attractive but your total property tax burden is about 2X California.  Make sure you account for this in your underwriting.  

I would make a suggestion on your target market strategy.  Look at secondary markets in the path of progress from major metro areas.  We are doing well outside Austin, Dallas and Houston. 

Quote from @Raymond Schmitt:

Here's an update on Waco plant....not looking good https://wacotrib.com/news/local/business/development/s2a-wac...

 I was going to say, nothing but a field of weeds at the Waco location.  I believe the Paterson CA facility is just a circus tent.  Nothing is real, all their home photos are CGI renderings. 

Quote from @Joshua Bautista:

How do you guys analyze a property? Based on what metrics?

BP has excellent calculators available for free in the tools section of the website.  I believe you get 5 free free uses.  I "borrowed" the formula's and created my own spreadsheet to quickly analyze deals.  Save both your good and bad deals and you will quickly get a feel for your target market.  

Quote from @Hannah C Christie:

1. Why? Because every resource recommends doing so from a liability stand point and I do not want my name out there as the property owner. I am staying local to where the rental is, work in healthcare where I can be found reliably and with little security. 
2. Tax benefits? I don’t plan on selling anytime soon which is why I’m going through this trouble. My interest rate is 2.875% which I do not want to give up and the house hasn’t changed too much in value to make selling lucrative. Additionally, I still like the house so if things don’t work out with my living situation (cohabiting with partner) I have some place to go back to. 
3. I’m ok spending more if there’s some benefit to it- like privacy and being able to sleep at night. 

I have a business banking account and a PO Box for the LLC, a property management company picked out for once the transfer is approved (so I can sign the agreement as the LLC and the LLC actually has the right sign) and a CPA that has helped me file and form the LLC. I took the advice to put the house in an LLC (or at least try to) from a prominent real estate maven in my area (she has about 40 properties).

Hannah, I've been in a similar situation where I wanted to transfer title to my LLC. As you can see this is a hot topic with strong opinions on both sides.

Transferring title will give you a small degree of anonymity. It will likely dissuade a disgruntled tenant or stalker who will try and look you up.  They will see the LLC name and address instead of your own.  A PO Box for business is a good idea. As others have pointed out a good lawyer can easily get around this and find your personal information. If you are looking for total anonymity there are other legal instruments like Wyoming LLC or Trusts but I believe that is beyond the scope  of what your are asking.  If you are looking for legal protection then a good umbrella policy is your best first defense. An umbrella policy inside an LLC is even better. The umbrella policy provides access to very good legal defense lawyers who's job is defending you.  You should sleep better.

You said you have lived in the home two years.  That qualifies you for a $250k capital gains tax break, $500k if filing jointly.  Even if you sell after renting for a year you still qualify.  Check with your CPA but this is a huge benefit if you decide to sell the property.

Nuts and bolts of transferring.  I've done this before.  You are taking the right approach speaking with the bank first.  Done right this will not trigger due on sale clause.  For FannieMae loan I was not able to transfer the loan itself into the LLC.  My name remained on the loan.  I was however able to transfer the property title to the LLC.  If you look on the county records you only see the LLC name and address.  If you dig further you will see warranty deed transfer from me to LLC.  Your average Joe stalker would see this as property being sold.  A smart lawyer could dig further and find the loan lien.  On top of the regular home insurance policy I carry a sizable umbrella policy.  BTW warranty deed preserves the title policy chain, don't do Quit Claim Deed.  No issues with title when we later sold.

1% is a useful screen criterial for evaluating cash flow properties.  It is a quick and easy way to sort through a bunch of prospective properties.  If you see a $400k property that rents for $2000/month move on.  It isn't going to cash flow.  Don't bother running the in depth numbers because it just isn't going to cash flow positive.  If however it is close to 1% then it is worth taking a closer look.  June year we closed on a 10 unit complex that was 0.9% that is cash flowing nicely.

Don't believe the nay-sayers that 1% deals no longer exist. I closed on a 2%+ deal in April. Our overall portfolio average is 1.6%. In todays market you are going to look a little harder. Off-Markers deals not on the MLS. Or tertiary markets outside the major markets in the path of progress.

lol "another seriously battered and abused landlord"  Says the guy with footprints all up and down his back from his tenant walking all over him. lol

You obviously know more than everyone on the forum.  Best of luck.

I'm sorry if are not getting the sympathy you expected.....

Most of the issues I'm seeing are on you, not the tenant.  You need to start running this as a business.  

Late rent is totally your fault.  You have allowed them to get away with paying late and they are abusing it. Rent is due by the 5th, pay our written quit notice go out by the 7th, by the 15th we have started eviction process in court.  In Texas you can have a court judgement before the end of the month.

I can't believe you are allowing a non-approved home business.  You should have sent notice the minute you found out.  Not only is this illegal, it is a huge liability for you as the property owner.  Imagine if someone gets sick or injured.  Any smart lawyer is going to come after you as the home owner.  Your property insurance is not going to cover you either.  I'm sure there is a "home business" exclusion in your policy unless you purchased a special policy.  Not only that but I doubt the tenant has the appropriate business licensing and health inspections.  Home business is grounds for eviction. 

Sorry, but you are in over your head.  You need to seek the advice of a professional property manager to unravel this mess.

We had a similar issue where a tenant would call for a maintenance issue then not let people into the apartment.  The boyfriend would make the request but his girlfriend would not allow anyone to enter the unit.  Finally I called him and said I was leaving for the day since I couldn't get access.  I guess he called her and she came out and sat in the car while I unstopped the sink.  That might be an option in this case.  Ask her to leave while you are there.  

I would not say BRRRR is dead. Is it more difficult? Yes. Is it dead? No. Too many people get into real estate wanting to make a quick easy buck. The minute they run into difficulty they give up or just start whining. It takes work. You need to get out there and look harder for good deals and buy deeper. Don't expect a good deal to fall in your lap off MLS.

We recently purchased an off-market estate sale 2%+ deal, a duplex in smaller market.  Purchase was 20% down at 7.25%.  By buying at a deep discount we have over $16,000 in equity on day one.  We just completed the renovation of the first unit so we are half way into renovations.  The other side is currently rented and paying the mortgage.  We will need to wait a bit for seasoning but I expect to be able to refinance in the coming year pulling out all our original capital.  Meanwhile the property is running at a positive cash flow ($800 month) saving up for the next good deal.  I only need to find 1-2 of these deals a year.