All Forum Posts by: Joe Scaparra

Hi Floris,

I have been investing in Central Texas for 25 years. Can give you some of my wisdom over the last 25 years but I am better at talking than typing.  If you want to do coffee or lunch let me know. 

I am neither a realtor or lender nor do I have a thousand dollar training program to sell you.  

What I do have is extensive investment experience (look at my profile).  What's in it for me?

Feedom, to tell you what I know without any conflict of interest.  Why?  Just because I like giving back.  I am a 68 yr old fart that likes to bloviate.  Most people find my bloviating worth hearing. Hit me up for coffee if you want.  Cheers!

Great question!  Since you ultimately want to make this an investment property, would you select this property if you had plenty of money and was going to use it as investment real estate from the get go?  

At the current time you are negative $1000 a month.  That is fairly frugal for living in Austin.  Good for you!  I would rather you find a property for which you could live in and still produce some income.   Like maybe a duplex.  However, that may cost more than you're able to handle.  So I will stay with your current question on this property.  

You need to improve your situation if you change your situation.  You are $1000 negative now, if you are willing to rent out a room while you live in the townhome and you are only out of pocket a $1000-$1200 then I think the move is worth considering.  

I don't like any investment property that has HOA or condo association fees. They eat into your cash flow. Cash Flow is KING! Don't let anyone tell you otherwise!!!!

I could go on for several hours with you on this question but I don't like to type as much as I like to talk.  If you want to grab coffee or lunch I can sit down with you and give you STRAIGHT unbiased advice.  You see, I am not a realtor nor a lender so I have nothing to gain.  Nor do I have a training program that will cost you thousand of wasted dollars.  I am just a 68 old fart that like to give back so if you want some of my 25 years of wisdom investing in properties then hit me up with a direct message.  

There are very few, good buying opportunities in the Austin metro-plex for pure investors.  If you live there and are currently renting, then there still is a pathway to house hack say a duplex and better your situation.  However, if you have money and are looking to buy investment property there are many, many better places to invest than Austin.  Cheers!

I know this is going to come out a overt critical but I know of no other way.

You bought the property in 2017 or 2018? That was 5 to 6 years ago!!!!  You are negative cash flow and you seem to fully rely on your property manager.   Looking back did you know your were going to be negative and did you not grow your rent to keep up with taxes the last 5-6 years?

The one glaring issue for me is that you have a property manager! If I am new to REI and I am after Cash Flow, I am going to eliminate out going flow as much as possible, especially if I am in a NEGATIVE cash flow situation. If you're renting for $2000 a month you could save yourself about $200 per month right there!

I have a property that I may be willing to let someone use arbitrage.  Would be willing to hear their spell.  

East Austin 2 bedroom 1 bath duplex.  One unit considered.

I am sorry to tell you but replacing an appliance for a duplex rental is not that big of an obstacle.  AC issues, roof leak issues, slab leaks, are more daunting to overcome when low on funds.

You are playing Russian Roulette if you start out owning investment real estate with no reserves at all.  Probably should try and delay your buy for 6 months if you can with the seller and save $1000 a month or get a side hustle.  

When you were a baby, you learned to crawl before you walked and you walked before you learned to run.  Same  for investment real estate, reserves are a must before you lay down the deposit.  Cheers.

As a pure investor there is a lot more risk within the Austin MSA.  Within the city limits, it is a real challenge to make the numbers work.  House hacking or renting by the room seems the only plausible avenue to try and make the numbers work. 

If you are renting now, I believe you certainly can improve your economic standing but to get cash flow positive using 20% down is like trying to find a needle in a haystack.

Looking on the outskirts of the Austin MSA is really the best option, other than leaving the Austin market for say the Bryan/College Station market.  Cheers.

@Adam Reilly, @Nathan Gesner said it all.  I am chiming in as I am local and mostly a duplex investor.  Bought my first one in 2003.  Just helped my nephew buy one in Elgin beating the 1% rule just 6 months ago.  

Adam, you are younger than I when I first started.  I am now 68 and have 19 units total.  Yes it was different 20 years ago but deals still exist but they are much harder to find.

Read my profile to get some idea about me.  I do mentor a few young investors, so if you want to do coffee or lunch let me know.  

I have several duplexes in Round Rock and may be heading up there this week to put to bed a few issues.  A meeting might be in the cards.  Let me know.  Cheers!

Quote from @Jonathan R McLaughlin:

Quote from @Joe Scaparra:

My leases specifically state that Heating an AC are not emergency conditions.  

Yes, I will act as soon as possible with an AC issue in the summer but I do not offer or recommend landlords offer hotel nights during periods of no AC.  If I had a tenant who was medically compromised to the point of being a serious health issue I would consider a hotel stay.

However, having grown up in San Antonio from 1st grade thur 11th grade with no AC in the house, i am less sympathetic in giving hotel assistance to my tenants.  

Texas Landlord/Tenant Guide suggest 7 days to repair is reasonable after written notification has been given.   After 7 days the landlord should provide actions taken to remedy the situation and additional time is reasonable if labor or parts are delaying repairs.

https://assets.recenter.tamu.e...

Your lease can say anything it wants doesn’t mean actions will hold up, but you at smart and make reference to the actual law! Buried in the statement you quoted is the phrase about accounting for actions taken once it takes longer than 7 days,which means you are—conceivably—having to explain to a judge what you did to mitigate.
How hard is it to have someone drop off a portable/window AC in 24 hours?? 

agreeing with you by the way, just saying that folks need to treat this with urgency and it’s not that hard: it’s about living conditions not just a repair. This will ultimately save you money

 I hear you!  I have 25 units I own/manage in Central Texas.  I haven't yet have one take more than seven days to fix, except one that happened in November.  Circuit board went out and took a little trouble shooting before we realized that and then got the board ordered.  Even though November, the tenant was not happy but it is what it is and all ended well.  Listen, we have rolling power outages in the Winter and Summer.  Sometimes that may last days or even weeks for some.  Landlords are no more responsible for those either.

Yes landlords need to get to the repairs in an expeditious manner.  Most of my tenants tell me they haven't had a landlord like me in that I am very responsive.  Every Christmas season, I personally drop off a little gift.  It goes a long way and keeps my tenants happy.  Cheers.

Quote from @Austin Bright:

Hi guys,

I'm getting ready to list for rent for the first time and am curious about your rental application criteria for tenants? This is what I'm thinking. But honestly, it seems like it might be too cumbersome? I'm not sure.

1. I've always seen gross income must be 3x rent. Must be willing to submit to employment verification

2. Must be willing to submit to and pass a criminal background check

3. No pets

4. 1 month's rent to be kept as a security deposit due upfront

5. Tenant responsible for all utilities

6. Must provide 2 years of residential history and contact for previous land lords

7. Tenant required to maintain renter's insurance

Are these reasonable or too picky. Is there anything I'm forgetting?

That's a good list to start out but be willing to use some judgement as well.

1.  Employment income is important but also the type of job and how long they have been employed with the company is important too.

2. Background check.....what is your definition of passing.  I look at the offense, how long ago was the infraction.  Usually anything that involves family violence or aggressive physical altercation is a no go.  Drugs other than a little marijuana can be a big problem as it is hard to beat an addiction.

3.  No Pets.  Sounds good but you will eliminate about 70% of the renters out there.  If you decide to change your stance think about what type, size and number of pets you might take.  Cats have to be neutered especially male cats.  I allow small dogs.  I also charge a NON=REFUNDABLE pet FEE!  Also be ready to handle ESA dogs and Service dogs, know your legal rights and the tenants as well.

6.  Rental history.  I will require a minimum of 1 year rental history.  If I have concerns I will contact their current or previous landlords. Yes someone mentioned they may give you a friend to lie to you but the rental application should give you enough information to sort out if you are being lied to.

7.  Renter's insurance is recommended but I don't require it.  If you decide to REQUIRE it have a company information handy that you can give a tenant to use as a lot of tenants will not have a clue.

Good luck. Cheers!