All Forum Posts by: Joe Scaparra

 Hold up for a second.  Looking at this at face value, you might be right but with a little home cooking it might be feasible.  Owner occupied duplex you can put down as little as 3%.  A 450k duplex would require $13,500 down payment at 3%. Yes some closing cost and you're still inside of 30k.  Down payment with in 30k.......Check.  450k purchase with $436,500 loan at 30yrs 6.25%  9k taxes and $1800 Insurance equals  total payment of $3588 monthly.   Now, if  you can get 1500 rent on one side you are down to $2088 monthly payments.  

Now you still have to qualify for the loan but at first glance it looks like no way but yes if there is a WILL there may be way.

Listen UP and listen GOOD!  Anything@@!!!! Anything!!!!  Anything on the HYW 35 corridor from Dallas to San Antonio is good if it meets your cash flow numbers.  Concentrate on the numbers over the location if you are on the HWY 35 corridor.  

HWY 35 is like a main artery in your body pumping blood to keep you alive.  HWY 35 is the artery pumping  INCREASING POPULATION INTO TEXAS!  As population increases so goes property values!!!!!  Those people are stopping along the way from Dallas to San Antonio!  Get your share NOW!  Good luck and as always Cheers!

Yes you can still find deals but it is WORK!  I found a duplex gem 2 months ago in the Austin MSA. Listed for 277k, sold for 270k. 2 Bedrooms 1 Bath 1 Car Garage each side.  Market rents $1500 each side and was turnkey, no REQUIRED maintenance needed.  We are painting the outside and touching up some wood rot siding at a cost of 6k.  Summary 270k.  Occupied side  lease in Jan at $1050 the other side was empty (before we closed).  We advertised empty side before closing, had new tenant move in at $1500 day one!  The other side that was rented is in better shape than the one just rented at $1500.  

Lastly, if you're impatient and need something TODAY, look at Bryan/College Station still good buys there.  Cheers!

@Joseph Weisenbloom, what you are describing are issues arising from renting out rooms instead of units.  Assigning responsibility to individuals in a house is far more difficult than to a lone tenant.   Be VERY careful not to violate right to privacy laws that vary state to state regarding camera surveillance .  I think you are risking a lawsuit as most people would assume some level of privacy inside a dwelling even if renting just one room.  

Here are a couple actions to consider.

1.  Find a smart lock on the front door that auto locks after a time limit to ensure security to the home.  Yes you need some kind of security, if not you again could be liable if say an intruder comes inside the home that wasn't even locked.  You may need to have a lock box some where outside with a key in because eventually a tenant will be outside with out key or phone and the auto lock will lock them out.  

2.  Humans are not robots and they eventually will do want they want.  Washing dishes , taking out trash or picking up after themselves mean different things to different people.  However, there is one thing that usually motivates people and that is money or incentives.  You could do this in two ways.  Get everyone together and tell them you will have to charge an extra $25 in rent to have someone come and clean the common areas unless they do it themselves.  (I don't think you will have much success with this but it is an option).  A better solutions is to increase rent by some amount and go to your best most responsible renter and ask them if they would be willing to clean up the common areas for the additional rent money collected.  If this solution is taken don't tell the other tenants who you are going to pay to clean up.   This may cause more messes if they think their additional rent is paying someone else to clean up.   This might eventually just become a deal in private with another tenant to clean up peoples' messes.  However I would emphasize to your tenants that if they cannot clean up after themselves that it may mean non-renewal.  

Ok, I will chime in.   First understand that the rental market is hot in Austin.  Maybe not as hot as 9 months ago but still very HOT!  With that as a background.  

Yes, I absolutely get an application before they get the PRIVILEGE of viewing my property.  You see my properties are duplexes and I keep my units in VERY above -average compared to the other duplexes.  As such, it is my experience that if I have a good match before showing they are going to take my unit.  I don't want to waste their time or MINE!   Because my units rent out between 1600-1900 I have plenty of prospects.  Asking for an application also eliminates the tire kickers!

Here is my kicker.........I charge $40 per applicant over 18yrs old, BUT I don't collect the fee unless I accept them and they take the property.  So those who don't want to "waste" an application fee is not discouraged to apply.  I also go through many questions mentioned above should I actually talk with them as they inquire.  I don't take application fees and then decline the prospect!  I usually show the property to one prospect because of this process and I like it very much.   I enjoy showing my property ONCE!  I take lots of pride in my properties but I only want to show it once!  My rule is that if I don't show a property within 24 hours of first inquiry you will not get that tenant.  If you don't get a committment on the showing they are usually not going to become a tenant.  Cheers!

@Austin Berlick, it is hard to give advice with the very little information you provided and your PROFILE absolutely tells me nothing about you.  Please utilize it for your benefit and for us to get to know you.

My random thoughts on your question:

1. Since I don't know your age, Real Estate Goals (long range, not interested in your short range goals), Your Why, and your real estate experience it is hard for me to provide meaningful advice.

2. If I look at this from purely a math problem then here is how I see it. 450k purchase 30k down, Mortgage 420k, 30yr@ 6.5%, Taxes 9k/yr, Ins 1.5k/yr, HOA (New Built, $100/monthly) 1.2k/yr, PMI 2.1k/yr ($175/monthly); For a total monthly payment of $3800. Charge 3 roommates 1k per month (3k) and your out of pocket is $800 per month. As a math problem this works out as you say and in a vacuum you move out 12 months later and now get 4k monthly with 4 roommates this on paper works.

3.  Theory and Reality is not likely.  Your vacancy rate is going to be much higher than what I calculate for long term housing 5%.  You will be the glue to make everything work well while you live there but when you  move out who is going to be the sheriff to run the household?  There are people doing what you suggest and it is possible but with little experience your failure rate is going to be high.  Again I don't know anything about you and your experience to tell you if it is a good idea, so I will default to probably NOT! 

Now may I suggest a possible alternative? It won't meet your 20min rule but if you can live for a couple years just outside Austin then your plan could work well! Let me explain not with theory but with real world example. Duplex buy in Elgin, double your time 40 mi to downtown with tolls. REAL WORLD, just closed on a duplex LAST WEEK! Price 270k. We will use your downpayment of 30k (owner occupant) same 30yr mortgage, PMI 100 monthly, No HOA and INS 1500 per year. Total Monthly Payment $2160. Duplex is 2 Bedrooms 2 Baths with one car garage each side. Rent out one side $1500 and your side, rent out a room for $700/monthly you're living Free. Your vacancy rate is far more manageable and when you move out your rent both sides for $1500 each for 3k/monthly and you're making $800 a month. Now full disclosure at time of buy one side empty, one side rented for $1050 Jan 2024 term. Each side identical. Signed lease yesterday with new tenant for $1500 no work needed on unit.....rent ready at buy!!!!. I will have to wait till Jan 2024 to raise rent to $1500 on the other side!!!! This was on the MLS. https://www.zillow.com/b/805-l... same pictures that was used to sell.  We advertise for rent before we owned with permission of seller.

Live in this situation for a couple years, get some experience as a landlord/investor and then you are ready for whatever the next step is.  Your success rate will BE MUCH HIGHER than the plan you worked out.  Again I don't know what your long term goals are, this might not be great short term but long term it is a HOME RUN.  I care not what the short term goal is if it is a detriment to the long term goal.  Again I'm an old fart 67 prior fighter pilot and I don't care much about  feelings and more about accomplishing the mission.  Sacrifice now and live like a King later.  Live like a KING now and maybe struggle the rest of your live.  Right or wrong I will shoot you straight.  Good Luck.  

I live in Austin and have about 14 rentals in the area.  So i keep abreast of what the properties rent for.  When you look at property history on individual properties that also could give you a clue.  Then also call a few rentals and talk to the listing agent and ask questions as to what is the response to their listing and what are their thoughts on the housing market, rental market ect.  Talk to people, meet other investors in your local area and have coffee with a few and learn from them first hand.  Ask them what they are experiencing with their rentals.  Get out an meet and greet!  No need to reinvent the wheel!

@Account Closed, don't want to rain on your parade, but this question should be step one AFTER YOU DETERMIND YOUR GOALS and before you buy.

Are you investing for cash flow or appreciation, short-term or long term hold? Did CA recently change the rules for owners of investment real estate.......probably not that is the Major reason I would not consider investing in CA. Do you live close to the property? Do you have any experience with STR? It is not about how can you make the most money, it is more what is the best FIT, FOR YOU!!!!

@Bryan McElrath, please utilize your profile page and give us some insight about you.  Where you live, what are your goals, experience ect.  I have no clue, where is Claremore?  Tell me about the duplex, bedrooms, baths, carport or garage or neither.  Private yard?   Go to zillow.com, put in the address and then go to the subdivision page and start clicking on duplexes around the one you are interested in.  Go to property history and see what they have been renting for and some may still have the photos and description of the property when it was listed.  That will start to give you an idea.  But don't stop there.  Look at the pictures and determine how your's compare.  Since I have no friggen idea where Claremore is I can't get an idea  on rental trends.  I live in Austin and the rental trend is up big time.  If you are not desperate, figure out what the rent should be and ADD $100 if the trend line is up!  Give it a week and see what the response is.  Be a trend setter not a follower if you are not hurting on cash flow.   

For example, I just bought a duplex renting for 1000 a side.  One tenant is month to month and he has given notice to move.  We advertised 1500 and are getting unbelievable interest.  Many individual landlords have owned their property so long they have not kept up with rents.  So don't let the laggers set your rent.  Cheers!

Hold up and put some math to the equation.  $190 X 2units X 52 Weeks = $19,760 per year!  That is $1647 per month.  1% rules says to pay no more than $164,700 for the property.  If you acquire it for $48,000 that is better than 3%.  That is GOOD NEWS!

However,  you mentioned bad part of town. I don't know what city you are looking at and since it has been occupied for 3 straight years the property is livable, no doubt.  Yeah, the property is probably not in good shape. I think the condition of the property is the least of your concerns!  You're buying the property so cheap that you can afford repairs.  Your concern would be tenant management.  If this is a bad neighborhood, just fixing up the property might not be enough to get good tenants. It is not uncommon for investors to back out after the inspection, usually it is the more inexperienced investor that is nervous.  When I look at a duplex, there is really only 3 areas of concern on an inspection that I am most concern about and those are: foundation, roof and AC/Heating systems.  Those are the big ticket items, most everything else is cosmetic.  I usually replace flooring, baseboards, countertops, paint , plumbing items to include toilet and faucets, LED lighting and some miscellaneous items.  I can usually do this for about 10k a side.   Factoring 20k rehab for interior, 10-15k for new roof if needed, and 10k for AC both sides; the repair cost should be no more than about 50k  48k purchase, and 50k MAX rehab gives you a totally new property but the problem remains if it is in a bad neighborhood.  You probably won't command more rent and your property would be primed to get destroyed again.   Normally, I don't concern myself with location when buying a duplex as location is usually a step down, but if it is a war zone that is a no-go for me.