All Forum Posts by: Scott Nipp

This is an older home in Haltom City, Tx that we have completely renovated.  Rehab includes foundation repair, complete bathroom and kitchen remodel, new paint and flooring, all new lighting and ceiling fans and much more.  We have had literally dozens of calls inquiring about possible rental availability.  The rehab is 95% complete lacking only a couple of broken window panes in the garage conversion and about 75 feet of fencing to install in/around the backyard.  The rental estimate in this area is about $1400/mo with the occupant typically paying all utilities.

@Scott Lewis

Thanks for this feedback.  This is kind of the way the wife and I were leaning on how to handle this but didn't have the escrow account idea in the plan.  This sounds like a great way to handle the situation.  I guess we now just need to figure out how to draft the documents for this arrangement.

I also assume that we could somehow designate any maintenance/repairs issues that would typically fall on a landlord to be responsible for would be deducted from the escrow account?  The idea is that while they are "renting" they are really purchasing the house.  The other question becomes are we getting sideways with any legal requirements as we obviously don't want to open ourselves up to these kind of potential issues.

I also assume that we would reduce our homeowners insurance to a structural only kind of policy and allow them to obtain a renters insurance policy of their choosing?  This is not a matter of trying to stick them with extra costs, only making things easier in the event of a claim for something like a break-in and them being able to deal directly with the insurance company.

I guess the other issue to resolve is the homestead exemption.  Not sure exactly what to do about that one.  I think we do better transferring that exemption to our new residence since it has a higher value and is in the same taxing authority.  Might save us a few hundred bucks a year.

@Hattie Dizmond

I'm just paranoid about the DOS clause. I know that everyone says it's incredibly rare but it's a definite concern for me. Unfortunately it sounds like the contract for deed is not a good option either so I'm a bit stumped.

Another aspect of this is the down payment...  We really want to get $20-25k back out of the property to replenish our rather depleted savings from buying our own new house.  The thought was to basically defer their down payment and the excess "principle" we would pocket as the down payment for the first few months until we received the agreed upon amount.  Then the excess would apply directly to the principle to pay off the mortgage in their 3 - 4 year time frame.  I'm not sure exactly how to accomplish this with any financing option?  It's not an issue with a normal sale as we would simply get a check for the excess proceeds from the title company after the closing but in this situation...

Thanks for the feedback so far.  As to the questions about the income and his current financial woes...  Both of them have been thru rather unpleasant divorces and I know that this has contributed greatly to their current financial picture.  The other aspect is that he is trying to get to a point of being debt free, of course a house purchase would be the exception here.  Currently about the only debt they have to their name is about $3700 still owed on his vehicle.

The good news is that he does have an alternative skill set that he can fall back on as he has been doing for the past several months.  That doesn't pay nearly what he makes in the oil fields but they can definitely make the mortgage payment and still have money to live on if he has to rely on his current, reduced income.

One other caveat to the issue is that he wants to pay off the mortgage as quickly as possible because they do still have young children at home.  (Their little boy is a dead ringer for a miniature Eddie Van Halen.)  The oil field work is 14 days on, 14 days off so is a big impact on the family life so he doesn't want to do that indefinitely.  He places a lot more value on family than money.

I have an odd situation where we want to sell our old primary residence to a very good friend.  This is to help everyone involved but there is the caveat about business dealings with friends or family...

Our old house still has about $165k left on the mortgage and it's ARV is around $195k. We recently upgraded to a larger house as we simply outgrew the old house and really needed more space. We have a friend who we have an extremely high degree of trust in, in fact they may end up being named as getting custody of our children if something were to happen to both of us, serious trust here. However, they have crap credit do to a variety of reasons but now that he is getting back to work from a period of unemployment, he is an oil field foreman, they are ready to buy a house.

Our friend actually wants to purchase our old house and pay it off in literally 3-5 years.  When he is working he makes literally $250k+ so this is not some unrealistic goal.  Obviously the concern is the economy and oil prices to keep him employed at this level but I digress.  

My thought is to go the contract for deed route. I believe that with this option everything would stay in our name so we would avoid the DOS issue. Obviously this involves a great deal of trust on both parties but this is in ample supply as I mentioned above. Does the CFD protect us from the DOS issue? Is there a better option for getting them into our old house? Aside from doing business with friends/family and the trust issue what else might I be missing here?

In the event that this makes a difference...  We live in Texas.

Thanks in advance for any/all feedback on this issue.

@Daniel Ryu

I'd love to meet up while we are there, but it's going to be a LONG trip with a pretty short turn around time.  I think we are gone a total of 5 days and almost 2 of those are travel.  I'm pretty sure that we are going to be running pretty much non-stop from the time we land until the time we get back on the plane to come back home.  Thanks a bunch for the offer though.

Great advice there @Hattie Dizmond.  Personally, the wife and I are still trying to get started.  We are looking over deals from a couple of wholesalers on our side of town but it seems like there is always something in the way of pulling the trigger.  We just bought a new house for ourselves, still trying to sell the old house, going to a wedding in S Korea in less than 3 weeks, it seems there is always something...

Right now we are just hoping to find a deal that we can really sink our teeth into and pull the trigger on.  We are planning to "work in" the business for the first several flips by doing much of the work ourselves.  This is planned such that we can hone some of these rehab skills so that we have a better idea of how to manage these specific aspects.  There are also aspects of rehabbing that I'm generally interested in and we both like working with our hands.  All that said, the dream is that we are successful enough that we really need to step back from the physical side of things within a couple of years or so.

Right now if we could just get our existing house sold that would be a HUGE stress relief.  We really don't need 2 mortgages right now.

My mother-in-law lives a couple of miles from there.  It's not a bad area but not great either.  The Crowley school district leaves a lot to be desired.  I'm not familiar with that specific neighborhood, but that area has easy access to downtown Fort Worth.

As far as considerations...  Here in North Texas, you need to pay special attention to the top and bottom meaning the roof and the foundation.  We have a lot of expansive clay in the soil here which causes foundation issues.  We also get some pretty violent weather creating roof issues due to hail damage primarily.  If those check out pretty good you might be in pretty good shape.

I didn't plug everything into the calculator, but depending on your down payment and the cost of that money along with your interest rate is looks like this could be a solid rental investment.  Looks like it could cashflow over $200/mo if the rental market numbers you have been given are accurate.

OK, so I know it's kind of late for this but... Anyone have a good recommendation for a CPA/bookkeeper over on the west side of Fort Worth? We need to get our taxes into someone both on the personal as well as the business side. Thanks in advance.

Depending on your exact timing and situation, we are looking to sell our current home with owner financing probably the latter half of this summer.  It's a 3/2/2 2216 sq. ft. planning to list it for $200k with minimum of 10% down in Eagle Mountain/Saginaw ISD about 12 minutes from the base.  Great neighborhood with easy access to pretty much everything but a Hooter's and a Fry's, you are going to have to drive a ways for either of those, especially Fry's.  

I highly recommend the EMS ISD if you have or plan to have kids.  We have one here in 3rd grade now and it is a really awesome school system.  Keller is a great ISD also, but you will have more traffic issues and it will be more like 20 to 30 minutes to the base depending on where you live exactly and the traffic.  White Settlement is not nearly as strong in terms of public schools but it does offer a LOT more low end options for housing and would be less than 5 minutes to the base.

Feel free to shoot me a line and ask anything about the area.  We have lived in our current house up here for 10 years now so we know the area really, really well.