All Forum Posts by: Ryan Betzing

Since there seems to be some curiosity - This is what a $5,000 house looks like in West Texas.  County actually has it appraised for 18K.  Not great but not terrible.  I've spent exactly $110 on maintenance and capex in over 2 years lol.  Also, it's been vacant for a total of 2 weeks.  I think the fenced yard sells it, tough to find a place to live with your dog for under $500 a month.   

@aaron 

@Aaron Moayed just for new lease. They won’t charge me for renewal but honestly no ones renewed. Turns out 12 months of living in 186 square feet is enough. 

@Jay Hinrichs definitely no debt - bought it with cash at a tax sale 

They charge me 25% of one months rent for a leasing fee...but they bump the rent to $500 a month for anything less than a 12 month lease. At the end of the day, my average cash flow after all expenses has been just over $200 a month on a $5,000 investment so...home run 

@Aaron Moayed

I have a tiny little “efficiency “ house I bought at a tax sale for 5 grand. I rent it for $425 and pay a $50 management fee which is the minimum for my manager. Let me tell you they earn that $50. You’re not finding long term tenants in the $400-$600 a month range, so either you put up with a bunch of turn over and finding new tenants, or you happily pay someone to do it.

Also, just want to point out that my numbers are after using the BRRRR method. I just purchased my 6th house, I don't have a single dollar of my own money in any of my deals, so even a couple hundred a month in cash flow is an infinite return, which I'm obviously very happy with. Real estate is hands down the best investment you can find.

I was just curious how people were paying retail or going through a company like Roofstock and seeing positive cash flow.  Seems impossible with the tax rates in Texas.  

@Cody L. my statement about Texas was just the fact that throughout the entire state we have exceptionally high property tax and fairly high insurance as well. I’m very granular with my investing, I invest in San Angelo, Texas, and have 4 specific neighborhoods I focus on. Just seems like I can find home run deals but it’s difficult to get cash flow numbers as strong as I’d like because property tax and insurance increases way faster than rents. Maybe that’s  just in my area not sure 

@Joe Scaparra I try to be super conservative with maintenance and capex - 5% seems a little low but I’ve only been at this for 3 years so I’m still trying to figure out my real numbers. I use a property manager because I actually live in Round Rock but invest 200 miles away in San Angelo. Super impressed that you’ve found cash flowing properties here in the Austin area. This market seems exceptionally competitive and overpriced, which is why I still invest our west... 

I’ve been investing in single family homes in Texas for the past 3 years. 

Here is something I am struggling with - I see posts throughout the forums about Texas being a strong cash flow market, and I’m trying to make sure I'm not missing something. Texas has a fun combination of high property taxes and high insurance that eats away at cash flow.

Here is an example of the numbers for probably my strongest property. I have to be very selective, and pick up homes at 60-70% ARV to make the numbers work.

Rent                 $1,150.00

Taxes               $185.17

Insurance        $71.80

Vacancy           $57.50

Prom Mgt.       $92.00

Maint.             $57.50

Capex $150

NOI $536.04

Debt Service $412.00 

Cash Flow      $124.04 

I have prop management for 8%, vacancy at 5% and maintenance at 5%. The debt service of $412 is 30 years fixed @4.75% on a 65K loan. The house is worth around 115 - 120, so my LTV is around 55%.

What I can't figure out is how investors are making the numbers work in Texas?  With a mortgage of 65K and monthly rent of $1,150, I'm approaching 2% rule territory, but my cash flow is still only $124 a month.  Am I missing something? 

@Brad Gibson what is the other Texas market with negative growth rates?

@Randy McDonald I have 4 rentals in San Angelo, TX and I’m working on my 5th. The San Angelo market is fantastic with little competition from other investors. I’m always kinda hesitant to post about it because I feel like it’s that secret fishing hole that everyone is going to jump on once they realize how good it is lol 

This is an old thread but just to chime in - I'm finding it very difficult to achieve cash on cash returns in the mid teens with our property taxes here in Texas. I invest in San Angelo, Texas, and I'm picking up SFR's for 60k that I rent for $1100 a month and I'm still not getting huge returns because I'm paying $2400 a year in property taxes...

I’m closing on my second home with a little local bank and the loan product they offer is incredible. Here’s the way it works: I find the deal and bring it to them along with a scope of work from my contractor. They do a drive by appraisal, and if the numbers work out, they fund the purchase plus rehab cost up to 80% of the ARV. They set up a draw for me so the rehab payments are deposited into my bank account at the appropriate times. The loan can be 15 to 30 years with a 5 year ARM, fixed at 6.25% the first 5 years. Here’s the best part - I don’t have to start paying for 6 months. After 6 months, I pay the accrued interest and start making regular payments if I want, or I can defer the payments another 6 months if I need to. Here’s the 2nd best part - all these loans are in house, so according to my banker, I can do as many as I want as long as the numbers work out. Twice now I’ve found a house for 50k, borrowed 65k, then rented at $1,000 a month after a 15k rehab. Works out to about $250 a month cash flow and none of my own money in the deal. Just curious if anyone has a bank that does this? Real estate is awesome :-)