All Forum Posts by: Treivor Cashion

Thanks Bruce - appreciate the insight! We have noticed that inventory is super tight, despite the onset of COVID-19 and substantial unemployment that has come from that. A little frustrating, but given the diverse employment base in the DFW area, I guess it's not all that surpising. We are just beginning to start looking at and underwriting deals, so we may adjust our strategy to what is a more reasonable expectation in the market. For example, we're taking into account the rent savings that we would experience by moving into a duplex and taking that into account in our CoC return metrics. We are also willing to expand our search radius into the surrounding DFW submarkets (i.e. Royse City, Arlington, Prosper, Celina) if need be. But yeah, we realize we're getting into a competitive market with a lot of investors having a ton of liquidity sitting on the sidelines waiting for the next deal...so we're keeping our expectations for finding our first investment reasonable!

Hey all - I made my first post on here about 3 years ago in Oct of 2017. At the time, I was a relatively naive and wide-eyed kid who had just listened to his first real estate podcast and was eager to get started. However, I quickly realized (with the help of my wife) that before we could comfortably start investing in real estate, we needed to make some significant lifestyle changes. Since then, I got married to the woman of my dreams in July 2019 and we have paid off a total of $110K in student loans together and are completely debt free. Additionally, we've been building up a cash cushion and have a sizable emergency fund as well as enough cash for a downpayment, closing costs, and some reasonable rehab to our future first investment. We have also both listened to the BiggerPockets real estate podcast non-stop, have nailed down our investing criteria, read books on everything from property management to negotiations, and have put a business plan together for our real estate investing future. I have also been lucky enough to have been working with a real estate firm here in DFW that focuses primarily on due diligence of Freddie Mac multifamily securitizations for B-Piece buyers, so I've been able to hone my multifamily due diligence and underwriting skills in this field for the past 2 years on top of our self-education.

At this time, we're focused on acquiring a duplex/triplex in the DFW metroplex (focused in the Irving/Las Colinas, Coppell, Carrollton/Farmers Branch, Richardson and Trinity Groves/Medical District areas in Dallas, as well as some of the surrounding submarkets on a deal-by-deal basis), with the plan to house-hack. We are shooting for a minimum 10% CoC Return. Since we don't have much experience in construction/rehab right now, we would primarily only focus on a property that needs cosmetic/interior renovations and would generally avoid properties with major foundation/roof/plumbing issues. We would prefer to keep the renovation budget to around $30K-$40K total. Our plan is to hold long-term (10+ years), with a primary focus on positive monthly cash flow and equity capture through strategic renovations (targeting a 10% to 15% increase in equity above the cost basis), with a secondary focus on properties that are likely to appreciate in value over the investment hold period and tax benefits derived from investment real estate.

Right now, we are trying to identify real estate brokers/agents in the DFW area that specialize in 2-4 unit buildings with a real estate investor mindset. While this would be our first home (we're renting right now), we would 100% view this as an investment and would treat it as such. We are not in the mindset of a normal first-time homebuyer. On top of this, we're also trying to find local lenders that would be able to give us good terms as first time homebuyers (i.e. FHA/PMI products), as we're only trying to put about 5% down to use the excess cash for rehab. But we would also like to be able to start building a relationship with the lender as real estate investors for any future investments.

It's been a long time coming, but we're excited to get started! Any recommendations for a real estate broker/agent and local lenders in the DFW area, as well as just any general advice as we start this journey, would be very much appreciated!

Thanks, 
-Treivor & Lisa Cashion

Looks awesome man! Congrats!

I love this thread and I love capitalism haha

 Underappreciated comment. That blog is an absolutely amazing resource!

@John Acheson that's eventually where I want to go, but not anytime in the near future! I'm planning on self-managing for the first 8-10 properties and then eventually shifting over to PMs from there...and then after I establish a large enough residential real estate portfolio, I'll be 1031 exchanging or disposing of underperforming assets into commercial properties later on. But this is 10+ years out from me for right now, but it's good to know those types of things like corporate credit...start with the end in mind! :)

@Randy E. also excellent advice! Everything does come down to the money whenever s*** hits the fan, so I believe this is certainly the bottom line...what I'm realizing though is that if opportunity cost dictates that it might be worthwhile to "invest" in the tenant to avoid turnover costs, marketing and other related costs to finding a new tenant, it would certainly be worth it to establish a system for standing out among other landlords or PM companies by providing some sort of "loyalty discount" or something along those lines and establishing a brand that tenants will view as customer-service oriented. Again, in my mind, I would want to clearly define when I would do this and the types of circumstances I would consider doing so, but only to the point that the benefits outweigh the costs. So you're right, it seems to be a monetarily driven policy that is subtly disguised as a customer-centric service that would hopefully establish loyalty and a good image for your brand as a whole. Thanks for the wisdom!

@Dale T. I agree to an extent, if it's obvious that a tenant doesn't have their personal finances together and is constantly paying late, or doesn't keep good care of the property or is constantly asking for things to get fixed in a short period of time...then no, that tenant doesn't deserve the benefit of a doubt and I wouldn't put my business' profitability on the line for a tenant with that track record. However, like someone else pointed out, great tenants can certainly come across large unexpected financial issues....like a medical bill or some other act of God that they aren't monetarily prepared for. Surely that has happened before in your experience? Do we just kick out a tenant that has been paying on time for the past three years because they snapped their leg in a car accident and can't work or incurs large medical bills? Obviously, this type of leniency is only worth it as an investor for so long, so do you just judge a decision like that based on opportunity costs?

@Mike Dymski I agree with not becoming lenient with renters with poor history, as mentioned above, I totally get that. I'm talking specifically about tenants that have a proven track record of being a solid renter. Could you elaborate a little more on your "it simply doesn't work" statement? 

@Steve Vaughan very insightful info here! I don't want to completely become the heartless landlord, I feel like I would want to be reasonable whenever a tenant has earned the right historically for me to do so. And I would set certain criteria that would make it very clear whenever a tenant has "earned" the right for treatment like that, to a certain extent...I would not tolerate it from a renter that is chronically late or doesn't take care of my property though. I love the distinction you make between a hand up and a hand out...that is an awesome mentality! Do you lay out the criteria for when a tenant earns your right to a "hand up" in your operating procedures, to avoid liability issues with the FHA of '68?

Also love the discount memorandum thing...I'm definetly going to be using that in the future :)

What I'm realizing from this thread is that, yes, tenants are an essential aspect to your business and it would definitely be worth it in terms of opportunity cost and the reflection on your brand in some cases to potentially be lenient with tenants that have earned that right to. However, I also think that it's still a business, so you have to set firm criteria for how you will implement this and also set guidelines for when the line needs to be drawn and a tenant needs to move on...if not for your own business strategy, for liability reasons as well. I've got a lot to think about, but this has been an awesome thread to follow! Thanks for all the great advice!

So I'm in the process of writing my business plan to start my real estate investing in a couple of years, once I build the connections, systems/processes and the capital to do so. While writing my business plan, I came across an interesting dichotomy that I'd love some input on.

I've gone through this forum quite a bit over the past six months and one of the things that many investors on here emphasize is that your business is, in fact, a BUSINESS and you need to run it like a well oiled machine that doesn't divert from it's criteria or make emotional decisions. While I certainly agree with that, it's also interesting that real estate is primarily a SERVICE industry in that our business model does rely heavily in part on acquiring and maintaining good tenants to provide consistent and timely cash flow each month. Without the tenant, the monthly mortgage payment and other various expenses would quickly eat any small time investor alive, unless they're heavily capitalized. On that note, in theory we should also provide exceptional and unique services to deserving tenants, to keep them coming back to our properties and staying as our tenant. For example, if a tenant comes across hard times or some other financial fallback, it would make sense that if they're a good enough tenant you might work with them on a payment plan or maybe even delay rent payments to keep them on. Even though this might affect the short term profitability of your operations, you've established a loyal tenant that could pay off in the long term for a number of reasons. This is one example of many that I'm sure landlords everywhere have stumbled across, so I'm curious...

How have you landlords out there established a good balance between running your real estate business like a business, but still focusing on the service aspect of the business? 

Awesome stuff! Thanks guys! Appreciate all the input

Ever since I watched "The Big Short" I've been intrigued by the 2007-2008 real estate market crash...and while I know that the crash was caused by loose lending standards combined with ARMs, uninformed borrowers, limited to zero due diligence, mortgage backed securities/CDOs and Wall Street I have yet to wrap my head around one thing. It's very easy to see how a significant drop in property values would destroy development companies, flippers or basically anyone with a short term buy/sell strategy. However, I haven't been able to comprehend how a long term buy/hold investor would be significantly negatively impacted by fluctuations in the market...assuming of course that you have a property with a tenant that passed your screening criteria, you adequately prepared cash reserves for repairs/maintenance and cap ex, bought your property with a fixed mortgage, and essentially took the processes advocated for here on BP, I don't see how a long term buy/hold investor for rental properties would get burned? Except for maybe that the drop in market conditions increases their vacancies because of lost jobs or some macro economic factor of that nature...so I guess in short my question is this: is rent significantly affected by a drop in property value and is it enough of a fluctuation for even a solid buy/hold investor to go under? Thanks for the insight!