All Forum Posts by: Sam Smith

@Jake Bryant

I used to live in Austin. I analyzed a lot of deals there, but ended up deciding that I couldn't get the cash flow I wanted in that market. I looked at San Antonio, New Braunfels, etc. but ended up investing out of state. 

If I were you, I would consider San Antonio and New Braunfels. It's close enough to visit and check on properties, but not as overpriced as Austin. Plus, if you end up not being able to flip for as much as you'd like, you can rent it out for two years. This also reduced your tax bill by tens of thousands of dollars if you hold it for at least two years. Talk to some property managers in those areas and ask what places rent for there, and ask for some advice. They'll know better than anyone else. 

As far as finding deals, that all depends on the rent to price ratio and potential resale value. You'll only know if something is a good deal if you know how much it will rent for, so start with the property managers.

Then, before you close, have the property managers walk the property and double-check what they will rent for and what needs to be fixed up so everything is legal.

Good luck with it!

@Rahul Srivastava

1. (When to buy) Consider buying during winter time if you are not rushed. On average, prices are lower. Spring and summer are the highest prices.

2. (Where to buy) That's open to debate, as you can see from the comments. With a $50k downpayment you have some solid options. So, congrats in advance! I agree with one of the other people above that house-hacking is a good option.

If you are fully remote, you only have to commit to living in the house for 1 year. If you rent out the other bedrooms and have roommates for the other bedrooms you will come out ahead.

I live in Texas, so if you have any questions about this area let me know. I'd be happy share what info I can

Good luck!

@Adam Sharp

I would let them know that they hold a contract (called a lease agreement) that says they have the right to occupy that space until the specified date. Legally, you are not allowed to rent to someone else until the contract has expired. 

If they don't abide by the lease, or come to some agreement with you to amend that contract, you'll need to start an eviction process to formally terminate the end of the contract. This might sound like playing hard ball, but you need to cover your butt and do things by the letter of the law. If it comes out that you rented to two tenants on top of each other, then you can be in hot water. Now, I'm not a lawyer, but contracts are pretty straightforward. You should do what the contract says.

Nobody wants an eviction on their record, so it will at least bring the tenant to the table to find a solution that is fair for you and fair for them. 

This is how I would handle it if they won't work with you. Treat people fairly without letting them treat you badly.

Good Luck!

@Mystica Maxie

That's great! Make sure you clear everything with the city and it should work out fine. My only other tip is to get opinions from contractors and property managers on a property before you buy so that you know the estimated budget and estimated rent. You can choose to use a contractor/property manager or do some of the work yourself, but it's better to have all the information before making an investment.

Good luck and I hope you let us know how it goes!

@Jerel Ehlert

Didn't mean to rain on your parade. My dad was a small town attorney and took this kind of work from people in the cities all the time since he charged the small town rates.

@Wayne Clark I would talk to the lender specifically about using her commission as the down payment. As in, ask what it would take to consider her commission as part of the down payment before she has receives it, not as a reimbursement to yourself after the fact. Do you need to have a contract written up? Do you need to get the title company in on it early so that every is clear on the process?

I know it's been done plenty of times before, you might just need to find a lender who has done it before so that at least one of you knows the process.

@Drake Robertson,

Congrats on making moves and asking questions! I would suggest getting a 4 bedroom if you can with at least 2 bathrooms. It makes things better financially and the two bathrooms make things better socially within the house (which leads to less roommate turnover). 

How many lenders have you spoken to and what did they say exactly? Did they line out what would be necessary for you to qualify for the mortgage on your own?

As for your parents, what gives them pause exactly? Are they worried about losing money and being on the hook for the mortgage? If you're able to save $1,500 per month would that cover the mortage on a 4-bedroom house? You could talk to them about making a deal where you pay them one month early so that if there is a problem they know well ahead of time. 

You could also make a deal with them where you have a shared account where you put in $1,500 each month, and make the mortage payments and repairs out of that account. After a few months you should have a good "buffer" savings account there.

It can be hard doing business with family, but I understand that it feels necessary in this situation. Keep in mind that your relationship with your family is more important with money. Be patient when talking them through things. It sounds like they are coming from a place where they don't know nearly as much as you about rentals, so it's your job to teach them in a way that makes them feel comfortable. Explain what your goals are with this, how much you would profit over even just a 2 year period. Make sure you have the names of people who would rent from you and what they would pay. It might feel uncomfortable at first, but it's a huge learning experience. When you talk to your friends make sure they are getting a good deal too (don't try and charge them over market rates or more than they are paying now, not that you would).

Hopefully some of this helps!

Good luck and keep it up!

@Jason M.,

Generally, I agree with Jon here. Unless you are looking at an appreciation play where you fix up the house while you are living in it, 3% CoC is not a great deal.

BUT, if you plan on living in the house for the next few years it could turn out to be a good situation! There still might be better deals. It really just depends on what your goals are.

Good luck with it!

@Wayne Clark,

If your wife is a licensed real estate agent, you might talk to your lender about using her commission on the sale as part of the down payment. I've never done this myself, but have talked to people who have. Apparently different lenders handle it differently.

Also, it might be best to just take the time, pay down the debt, and continue to learn. I know the feeling of being ready and raring to go, but if you are patient, get your DTI where you need it, and save up some more money from your part time job, then you'll be in a great position 1 year from now.

Meanwhile, I would use your wife's license to it's fullest potential. Are you actively looking at houses with her to get the in-person analysis skills for when you are ready to buy? That's what I would be doing if I were you

Good luck with it!

Hi @Randarious Cooper,

I live in DFW but invest out of state. What draws you to DFW as an investment opportunity? I have a friends who invests here and has had success, but just curious about why you decided on DFW.