All Forum Posts by: Trent Honea

I did a lot of research and ended up using ZenBusiness to set mine up.  They had the best combination of services and price for what I wanted to do. Shop around. You need a lawyer if you are doing anything special, but setting up a simple single-member LLC can be done DIY if you choose. The advantage to a service is a good one will guide you through all the various required documents, and some will even help create your company "book".

I did investigate using a lawyer; for my purposes it was a lot of unnecessary expense for little extra benefit. BUT my LLC was extremely simple and I mainly wanted to use the service to provide the registered agent role. Shop around and read articles on the internet. There's tons of free information you can research before you decide. Sometimes a lawyer is the right way to go, sometimes a service is better, and sometimes DIY works.

Fee schedule is a list of all fees the PM charges, and whether they go to the PM or to the owner. They should provide you with this information before you sign with them, or at least on request. They might just call it a list of fees or something similar. If they don't have a list and are just making it up as they go, you need to find a new PM and fast. They are your agent and you can be held partially liable if they break the law.

Evictions can vary greatly by jurisdiction. For example, Dallas tends to be very tenant friendly, where Fort Worth tends to be slightly more landlord friendly. SO much depends on local ordinances and which judge presides. I've only actually been through one eviction in Fort Worth. The tenant had not paid a dime for over two months, and the judge was one who just asks the tenant if they paid. He gave three chances for a yes, but when all he got were excuses he ruled against the tenant. I believe if you have accepted any payment at all, you will have trouble evicting, but I'm not a lawyer. If you go that route definitely get one.

A couple of years ago I had a problem tenant I thought I'd have to evict.  I called him up, had a discussion with him, and eventually said something like "You don't seem to be really happy in the house any longer.  Are you interested in moving?  Would you like me to let you out of your lease?" and he jumped at the chance.  He wanted to move but did not want to lose the deposit for leaving before the lease end.  I would have offered him some money to help pay moving expenses to avoid going to eviction if it had been necessary.  That process is expensive.

Happy Investing!

Disclaimer:  I'm not a lawyer and this information is not intended as legal advice.  These are my experiences and opinions only.  Please consult a lawyer before taking any legal action.  If you are interested in more information on Texas law relating to property, I suggest online search for Texas Property Code, and below are some specific sites to get you started.  All of Texas code is available online, but it's a bit hard to search without a starting point.

Landlordology.com - Pretty good summary of Texas Landlord-Tenant laws.

TEXAS PROPERTY CODE - TITLE 8. LANDLORD AND TENANT - CHAPTER 91. PROVISIONS GENERALLY APPLICABLE TO LANDLORDS AND TENANTS

TEXAS PROPERTY CODE - TITLE 8. LANDLORD AND TENANT - CHAPTER 92. RESIDENTIAL TENANCIES - SUBCHAPTER A. GENERAL PROVISIONS

I've self-managed and worked with PMs in Texas. One of the advantages of REI in Texas is the fairly landlord-friendly laws, or the law is silent on the issue and the lease dictates the rules. This can work for or against you, however. To the best of my knowledge, there are no specific laws to cover this situation. The lease dictates how the tenant is charged late fees. Late fees cannot be as high as the rent itself, but otherwise the law is pretty vague and they can be quite high as long as they are clearly stated in the lease.

Your contract with the PM governs how fees are collected and who keeps them.  They should provide a fee schedule either in your contract or as an attachment.  This is typical best practice, but not mandated by any laws that I know of.

Be very cautious about doing anything like changing locks.  Not only do you have to let them in if asked, but depending on the city, having locked them out can get an eviction denied.  Some cities are more tenant friendly, others more landlord friendly.  (It's generally cheaper to get the tenant out without going to court, even if you have to pay them to leave.  Search for Cash-for-keys if you need more info on that topic.)

You need to work this out with your PM or get a new one.  One of the first questions most Texas judges ask the tenant in an eviction proceeding is "Did you pay?" - If they answer yes and can prove it, they deny the eviction.  In your scenario, they DID pay, but the PM did not apply the payment to rent.  That's pretty shaky ground to go to court unless the lease is very well written in my opinion.

Good luck and let us know how this progresses.

You're off to a great start!  Asking questions here on BP is a great way to learn for free.  It's a lot cheaper than "going to school" on a bad deal that costs you $$$.  I love talking about real estate investing, so here's my two-cents worth:

I agree that staying close to home is a good choice.  (That's what I do.)  There's not much inventory available below $150k in the area right now, (if you find some let me know!) so you will probably have to really look for a while to find a good option. 

Rents for SFH 3-2-2 brick in an A to B area are running approximately $1 per square food for 1000 sf to 2000 sf, but RETAIL list prices are frequently above $150 per sf. Of course this depends heavily on the area. For example Como, Stop-6, SE Fort Worth, and the area around Wesleyan University (areas I think of as C to D generally) will not sustain those rates, while Chapel Creek / White Settlement, most of Benbrook,the areas near Hulen Mall, Saginaw, parts of Cleburne, Mansfield, Arlington, and many others will do so easily. Those are very rough rule-of-thumb numbers just to get you started, and are my opinions only. Always do your due diligence before you buy. Trust but verify!

C and D areas are easier to get a "good deal" meaning low price, but you end up paying for it in the long run.  They tend to take much more of your time, have higher vacancy and repair rates, and I personally don't recommend them for your first deal.  Some people do very well investing in those areas, but I'd suggest you stay away from the war zones until you have some experience.

As you look, don't allow yourself to get in a bidding war with a retail buyer.  That's an easy way to pay too much for the property, assuming you are a buy-and-hold investor.  I've let some deals go that appear good, but someone comes along and makes an offer $10k or more above list.  Remember to not get emotional about the property.  It's an investment - you're not going to live there.

When you think you have a potential deal, use the calculators on BP.  They are easy to use and will give you a good idea of if the deal makes sense or not.  I wish BP was around when I started investing - it would have saved me a ton of time!

Happy Investing!  

I went with Ft Worth Insurance Co, Safeco is the carrier.  A couple of units that were already low went up slightly, but the highest came way down.  I had been with 5 different agencies and carriers prior to that.  I saved significantly on my home and auto as well.  I've had a couple of claims, one on a rental and hail on my primary residence roof, and no complaints.

I won't name any of the companies I left, but in one case they had a house in the city with a fire hydrant in the front yard, 5 blocks from the fire station, rated as high fire risk rural.  Mistake on their part, but was very expensive until I got it corrected.  

I sent the RFQ and received responses from Ft Worth Ins, two agencies affiliated with Goosehead (interestingly they came in 2nd and 4th lowest), Allstate, Farmers, State Farm, Al Boenker, GEICO, Tx Farm Bureau, and a few other local agencies, plus I think 3 or 4 that chose not to reply or provide a quote.  Besides saving a few thousand dollars a year, the process was very informative.  Especially since three different agencies quoted the "same" Safeco policies but came in at very different prices.

To show how much it can vary, on one property in Fort Worth, Ft Worth Ins quoted $591 and the highest quote was $1121 per year, almost double, and that was not unique - it happened with several.  The three Safeco quotes (keep in mind these are exactly the same coverages, deductables, etc.) were 591, 1035 and 1051.  My new agent at the time (he's since moved on to other opportunities) was willing to educate me and explained how that happens. Way too long for this post, but it was educational.  Definitely shop and compare - you can save a bundle.

I had the same problem a few years ago.  You'll find different agencies are better at helping investors than others.  My suggestion (this is what I did):  Put together a Request for Quote with the details on your properties, outline the coverage you need, send to as many area insurance agencies as possible, then compare the results.  In my case, 10 of 12 agencies responded, and the highest, middle, and lowest prices were all with the same underwriter!  I actually got a better deal by including my homeowners, auto, and an umbrella policy all with one company.

It's been a couple of years, and I'm still with the same agency and underwriter.  I have a relative who is now an agent, and she keeps re-quoting my policies.  The problem is the company she works for does not work well with investors and she can't get even close.

Happy Investing!

I am not a lawyer so I cannot give legal advice.  That said, I've been reading a lot on here about holding property in Land Trust, two-company structures, and similar strategies to enhance anonymity.  From what I've read, it's not only possible but fairly common.  But it can get complicated and you can create more problems that you solve if done wrong, so you should definitely consult a lawyer licensed in your state.  It's not really a DYI task.

When you turn management over to a property manager, as I have done a few times, this is exactly what they do. They send a lease amendment with their company and contact information as the payee, but my name still appears as the landlord/owner so it reduces the direct contact, but I'm still identified. If the property were held in an entity name rather than personally, that would appear on the lease, so you get the result you are seeking. All of that is separate from discussing asset protection, which should be considered as well. My suggestion is read and research before you decide. Nolo.com and other sites have very good articles on the processes. Google for "Land Trust", "two-company structure", "two-company LLC", etc. and you should get some interesting results.

Here's a BP discussion to start with:  https://www.biggerpockets.com/forums/51/topics/147...

Happy Investing!

I used to work in the Plano and Frisco area and the key phrase is:
in Frisco's high-end neighborhoods 

You have to have very high starting prices to cut by 150k when they go on sale.  The high-end in that area are somewhere around 500k-1M, I think (I don't have current numbers).  I don't typically invest in that area for rentals.  How about you? 

In the "middle-class" neighborhoods I invest in, prices are not dropping, but time on market is starting to creep up.  Buyers seem to be getting picky and not offering 10-20k above list to guarantee they "win" the house, as they have in the past couple of years.

Don't let property tax scare you away from investing in Texas.  Yes, they are high compared to places with state income taxes, but you really need to run the numbers.  Use the BP calculators to see if the deal is profitable.  That's what really matters.

I have owned an 1100sf SFH rental in west Fort Worth for about 3 years. Now rents for 1300/mo. Estimated annual property tax is going up to 3900. It still cash flows well, and appreciation is pretty good. Now I don't intend to sell anytime soon, but with appreciation so far it would be a nice profit if I did.

I bought it at a discount from another investor by accepting the in-place tenant, who was at below market rent.  Tenant moved out, I rehabbed the property, raised the rent, and it's been great ever sense.  But I ran the numbers before making the deal.  ANYWHERE is good to invest if the deal returns a reasonable profit.

Good-luck and Happy Investing!

I've done this, but had to go through a broker to find a lender willing to work with us.  Texas has a rule to protect investors from over-leveraging their primary residence to buy investment property. You cannot take a cash-out re-fi or HELOC to buy investment property using your primary. Many banks (including all the big ones like BoA and WellsF) will refuse to cash-out re-fi or HELOC on investment property due to misinterpreting the rule to apply to all property. The rule is very specific to primary residences but the language is confusing.

( See Texas Constitution section 50(a)6 )

I'd recommend using a broker who regularly works with investors  (I used Cendera but there are others) to find a willing lender.  In my case, PennyMac was the lender finally used and they continued to service the mortgage on the property until I sold it.  Credit unions and other smaller banks are more willing to work with you on these.  I've also heard that Quicken Loans is willing to do these, but I have not tried them myself.

(I made it all the way to underwriting with BoA, just to have someone balk and say "that's illegal in Texas" and back out of the loan.  I almost lost a deal over it but managed to save it with help from Cendera.  I was using the funds for the down-payment on another property purchase, and PennyMac ended up with both notes.)

Happy Investing and Good Luck!

-TH