All Forum Posts by: Raky Patel

Thanks guys, you confirmed my thoughts. 

Hey all, I bought a new primary house and will be renting out my current house in the Houston Heights. It is a bit of a unique situation because this home is worth $400k. The home should rent for around $2600-$3000. I don't want to sell it yet because it is not worth it for me to pay the transaction fees, the area is appreciating in value, and my PITI on it is around $2300. While the cash on cash return is not great, I would rather sell in 3 years to take full advantage of the tax benefit.

My options:

1. I have a higher end refrigerator and washer/dryer ($5k) that I would like to move to my new place. I can replace with cheaper units for $2k - swapping appliances from old place is not an option because they are not included in sale

2. Don't provide refrigerator, washer/dryer

3. Provide only refrigerator

4. Provide refrigerator but offer to include a washer/dryer for an additional $50-$100/month

Any advice is appreciated! Thanks!

I am in contract with a turnkey property and have yet to see the inside pictures. I have found old pictures of the inside online and will compare to the new pics when I receive them later this week. I made my contract subject to receiving pictures, scope of work, inspection, home warranty, rental credit (since I would rather have my own management company place a tenant that I approve of), ability to get financing, and 2% concessions towards my closing costs. The other suggestion I have is to ask for a 3 week inspection period so that you have a chance to back out during that time (or extend if rehab is not complete). Put as little money for the option contract as possible. I put $1k down on mine ($63k purchase) but know that with all the contingencies I have I could back out if needed to (though I don't plan to as I want my deal). 

In your situation you should lock up the deal if you really want it. At the end of the day if the deal is fair to all sides I don't think it is a big deal if you try to lock it up now.

For non owner occupant in Indy taxes are at 2% of assessed value. Issue is that some of the homes have not been reassessed so in your numbers you need to plan for that happening. I believe they do it every 2 years or so. Also, there are lenders that will do 15% loans provided you have good credit/debt ratios. I am working with one right now for a loan on a rental. 

@Jerry Padilla

I am currently using him on a deal I am working on and highly recommend him.

I estimate 9% of purchase price for closing costs which includes insurance for the year. If you don't want to do this you can subtract $1k or so. The way I structure deals is that I have the seller contribute 2% (which I believe is the cap) towards my closing costs. In your situation I would be willing to raise the price to $54k with a 2% contribution towards your closing costs. That should be close enough to net the seller the same amount but it allows you to keep more cash in your pocket. I do all my offers this way. You will be around $12-13k out of pocket on this deal. Your mortgage guy should be able to give you a good idea of the true number. 

I would also say if possible, buy the seller first if you are doing turnkey. I am in the process of my first deal with a turnkey provider. I have had several conversations with him, done reference checks here on BP, and actually read thru almost every post of his on here (since he is an active member). I think if they are an active member here it is sort of an insurance policy - if they screw you over you will likely announce on here to everyone about the awful experience you had. Also keep in mind that if you are doing a turnkey you will be paying close to retail. If you are lucky they will leave some meat on the bone for you. I don't have any vested interest as a turnkey provider but I understand that all parties need to make money and it needs to be fair for all. I have struck up several relationships here on BP with people that make me comfortable enough to buy from any one of them if the deal is right. 

Well I can tell you my opinion on Houston since I live here. We have seen significant appreciation over the last couple years. For example a property that I bought back in 2008 for $120k and dipped down to $110k before stabalizing at $125k around 2011-2012 is now at $160k today (what I just sold it for). Houston is a good market but honestly seems a bit toppy. I am actually in the process of investing outside of Texas now. We do not have state income taxes here but our property taxes are pretty high as is our insurance rates. I see "deals" everyday being emailed to me from wholesalers wanting to sell properties at 90% ARV requiring enough work that would exceed market value in better condition. I don't know which turnkey company you are using but just want to caution you on the general market here. Another thing, if a seller tells you it is appraised for XXXX amount on the taxes, that is not a true indication of market value.

All that said, if you are still planning on investing here, I would say the newer the better. We have a lot of foundation issues here in Texas. Furthermore, I would recommend getting a home warranty as part of the package as A/C units are always running here as it is so hot. They seem to be a common item that needs maintenance. 

Let me know if you have any specific questions.

I would find out who the management company is for the condo and contact them directly for the bylaws. You may have to get the owners permission. Honestly, if I were you I wouldn't waste time trying to sell it to another party without having them because as a condition of closing you need to provide the other party with that. I just sold my townhouse here in Houston and I got the bylaws directly from the management company. I could download them right off their portal after logging in as an owner. If I needed a printed copy I think it was $100. 

I would be interested in knowing this as well. I am originally from Michigan and would buy in certain areas if I could find someone reputable.