All Forum Posts by: Ryan Blake

@Account Closed There isn't much MF in Round Rock that is below 50 units from what I have seen. A big chunk of Round Rock has been built out in the past 30 years. Most zoning boards started to shy away from MF zoning in the 80's in Texas except for the high density larger developments. You will have better luck with 2-10 unit MF looking in the north part of Austin but it does tend to be a little pricey.

@Noah Weitzman As far as I understand it, if you have an active license and are not a broker, it must be hung under a sponsoring broker. You won't even be able to take the exam without a sponsoring broker already lined up. It has to be submitted to TREC  along with your completed course work before you can sit for it.

You can always represent yourself with or without a license. When representing yourself as an unlicensed person, you can pretty much do anything. And anyone can use the TREC 20-14 (basic purchase agreement). You can submit it via email to any listing agent or just call/email the listing agent and tell them you want to put in an offer for $XXX, let them know if you are cash or financing and the terms you are looking for in financing, the option period you want, and then the option fee amount, earnest money amount and closing date. Those are the main points to a contract. There are a lot of other smaller options you will see in the TREC form but those are the key points.

@Noah Weitzman I am not an agent but may be able to give you some guidance. As an agent in Texas, you will have to hang your license under a broker for your first three years. Then after that you can continue to do so or you can work to get your broker's license and be 100% independent. You can do a simple web search to find brokerage firms that will hang your license for a flat fee verse a % of every sale/purchase but you won't get much assistance from them and I am not sure exactly how "legal" all that is.

Other things to consider, 1) there is a fee to have access to and be able to list on the MLS, 2) I think the state requires you to carry or it would be a very good idea to carry Errors and Omissions insurance commonly called E&O insurance 3) if you plan to tour properties, you will need to get those electronic keys that agents have and I am guessing there is an annual fee associated with that.

Those are the big ones I can think of off the top of my head.

@Kusum Chanrai I think it is easiest for you to just open it yourself and pay the state it's $300 if you are opening it just to work this one property and don't plan on ever adding in partners or selling the entity. If you have loftier goals, I would suggest going through a firm or online site. You will need a registered agent and I believe that needs to be in the state where it is formed. You will need to hire someone for that. Since they basically don't really have to do anything, this should be a very very small annual fee.

I know it has been 9 days since you started this discussion. Do you mind updating us with what you have done in regards to this or if you are still considering options?

@Brianna Shults There are some contracts you can purchase from Bigger Pockets. You can also download the TREC 20-14 (basic purchase agreement) created by the Texas Real Estate Commission. You don't have to be an agent to use it. Don't let anyone tell you otherwise. Many agents will say you have to be licensed to utilize it. You can also draft one yourself but if you do, you MUST have an attorney look it over. You don't want to leave something small out and pay big down the road. Only do that if it is your last resort and I would just pull the parts you like off the TREC form.

You can use the TREC 20-14 for both purchasing from a homeowner and selling to an investor. If you do this, you will need to preform a double close so make sure you have a title company that is well versed in double closings (most are).

Or

You can use the TREC 20-14 and draft it with "Brianna Shults and/or assignee" which means you can assign the contract to someone else. You would charge your end buyer a fee and then just assign the contract to them. If you don't draft it with the "and/or assignee" you can add an addendum to the contract which is just another page that can be added at anytime if both the buyer and seller sign it. On your addendum you could state that the contract may be assigned to another buyer.

Either way you go, you will want to make sure that you have as long of an option period as you can. I would also try to keep your option fee and earnest money as low as possible.

If you have any other questions, feel free to reach out to me. Just know that I am NOT a licensed agent and that it is best practice to never take anyone's word and always do a little extra research to verify anything someone tells you, including me.

@Preston L'Ecuyer I know some people are telling you it is terrible. I don't think it is quite that bad but it's not great. I think you are smart for asking for extra eyes on the deal. I wish I could help you out more but I am very new to rentals. I don't own any and have only recently started taking notice on rates, returns, and the current market. I think you can do better.

I agree that the market is tough right now. The downside I see is that you are putting in $47k and don't really expect to make it back for 20 years. I understand that at that point you will also have roughly half the principal paid back but I would look for property where you can get 1% of the purchase price (maybe even 1.25%) back in gross rent.

Also, where are you getting your property tax number? My house is assessed at $274k and my taxes are $6,500. Seems like you might be a little high for a property selling at $200k. Not sure about the special assessments or rates in the Arlington area.

Good luck!

@Jason Toledo Welcome to the wild west. DFW is booming (which doesn't always make it the easiest for investors). Buy and hold is a great strategy right now for beginners if they have a day job. I haven't taken that step yet but plan to this year. I have been flipping cumulatively for just under 3 years.

My advice to new investors:

1) Read and listen as much as you can. BP podcast and eBooks (they are cheap and go with you wherever you are) are the best sources. When you are driving, skip music and the traffic reports and listen to a podcast. When you are at home, don't turn the TV on, instead reach for a book.

2)Put it into action. Don't wait to start out. Use your knowledge to start analyzing properties to get practice. Every book and podcast you listen to should have things you can start doing/using right away. Do them. Don't go on to the next chapter without writing something down that you should be doing the next day.

3)NETWORK. Real estate is a people business. In DFW we have tons of REIA (Real Estate Investors Association) groups or similar. Be wary of the ones that include sales pitches. It will sound so good and so easy but don't do it! Come prepared to share your contact information and follow up with those you meet. Very important to not be afraid to say you are new. This will only make others (the good ones at least) want to help you more.

Hope this helps. If you ever make it out to Fort Worth let me know and we can talk shop over lunch or drinks.

@Sammy G. Thanks for the tip. I am guessing you flip the pre-auction because you are getting better rates. What have you had most success with when contacting pre-foreclosures; i.e. postcard, letter, call, or door knock? I will look into that and your company. Do you provide service nation-wide or just local to Houston?

@Eric James It is not easy. If it has a homestead exemption, the prior owner or heirs have 2-years to redeem the property. It very rarely happens but it clouds the title until the 2 years are up. I also have a friend who bought one as a flip and after 8 months struggled to get a title company to insure it even though there was no homestead filed. Evidently in the past year there was a court ruling where a property that was not filed as a homestead was someone's primary residence and they didn't have a homestead or even own any other property. The judge ruled that the homestead should have been there and turned the property back over to the original owner for the standard purchase prices plus 50%. 

It is a better idea to rent those houses for the first 2 years and then fix and flip or just continue to rent.

@Ronald Rohde I don't see how that can't be a win-win deal? :-P