All Forum Posts by: Robert Steele

@Wesley W. Gotta disagree with you there. I started sending tenants out payment reminders (invoices) not long after getting into the landlord gig and it increased my on time payments dramatically.

It doesn't matter if they are adults or not. Some people are just not good at managing their life, time, finances, relationships, etc. 

It's not like it is a huge waste of time. Property management software will spit them out with the press of a button. I'd say the effort/reward ratio is heavily in my favor with this practice.

@Sehun Kook I know cash flow is the holy grail and we're all taught to not bank on appreciation or take a rental with negative cash flow but I think these truisms have led many down the wrong path. 

You are correct, you are not going to get a 1%/month gross rental yield. You don't want anything that gives you 1% anyway. To give you a guide, I am getting 7-8% p.a. gross rental yields on my desirable median priced or above SFH rentals.

I strongly suggest you read everything on this Investing Architect site. The author contributes here on BP. He advocates purchasing quality assets in desirable neighborhoods that attract quality tenants in order to build wealth. I wish I had subscribed to his ideas when I first started. It took more than a decade for it to 'click' with me through experience.

@Sehun Kook if you have a good paying W2 job and your timeline is at least a decade out why would you even bother looking at cash flow today? You should be planning for cash flow when you are retired. So stay away from the crap and buy quality, preferably newer, in quality neighborhoods. 

I wouldn't touch a condo with a ten foot pole. Too many horror stories. I tried a four-plex once but too many problem tenants. I figure if you're going to do multi-family go all in and buy 16, 24, or 50 doors.

@Mark Severino Yep.

And I just missed out on another one in Plano. 1 DOM. $210K ask. $280K ARV. $40K flipping costs. I bid $217K.

I guess I just need to accept smaller margins.

I had two great deals fall from the heavens last weekend. When it rains it pours I guess. 

First was $195K ask, $40K repairs/holding/closing costs with a $275K ARV. 1 DOM. Multiple offers. I bid $203K. No luck.
Second was also $195K ask, $60K repairs/holding/closing costs with a $285K ARV. 4 DOM. No offers. I bid full price offer. Suddenly they get another offer and go with that.

I guess I need to bid higher when there is actually some meat on the bones.

I haven't been to the Trustee sales in a while but I am assuming it is still nuts over there with people paying retail.

@Jody Nichols Do your numbers include holding costs, closing costs and commissions? I assume you are bundling that into your estimated repair number otherwise I can't see how you could make a profit with buying for $115K + $60K repairs - $190K ARV. Unless of course you don't use Realtors and flip within a few weeks.

I agree with everything said here. Good point about the iBuyers - I hadn't considered that.

I think it's important to underscore the mentioned point that contractor's are taking advantage of this market (no offense OP). I'm seeing at least 25% markups than from a few years ago.

You're right; the wholesalers are either completely clueless or liars. I've called them out on it multiple times.

How much do you think is the result of newbie investors flooding the market buying up everything in sight and then getting burned? Before another batch of HGTV newbies rotates in to replace them?

Case in point I just passed up what looked like a good deal last weekend because the numbers were tighter than an otter's pocket. It went under contract immediately so I guess either people have access to cheaper contractors/suppliers than I do or they are willing to take a big risk, or take a tiny profit or they are newbs.

I miss the old days when I could look at dozens of distressed foreclosures and take my pick of the litter. I'm sure it will come full circle again.

@Michael Calor Definitely. As long as it is what they call a "market purchase" meaning you closed at a title company, got a HUD-1, got a loan, etc. That is, purchased it normally and not at an auction then they should 100% accept the purchase price.

This proves why the state messing with the property tax rate is not going to make much if any difference when they can just pick whatever appraisal value they want out of the air.

There is a local newspaper columnist that is advocating that everyone dispute their appraisal and go to the review board in order to break the system. It doesn't sound like a bad idea. If every homeowner in the county wanted a review there is no way they could get them all done on time without hiring an army of reviewers, clerks and renting out the space to do all the reviews. Might just teach them not to be greedy.

A heads up for anyone going to McKinney to talk to the appraisers concerning your tax notice. They are in rare form this year, really trying to screw residents out of every last penny they can.

They are using comps from early 2018 even though their own rules say the effective date is Jan 1st 2019.

I showed them comps from November through January of bigger houses (+400-600 sq. ft.) in my neighborhood selling for less ($20-$30K). There were no houses smaller that sold recently. They wouldn't accept that. They are fixated on the square foot matching because it allowed them to go back a year to use comps.

This happened with multiple properties across multiple appraisers.

I'd say things like; "All things being equal a larger house is going to sell for more than a smaller house" and would get told "Smaller houses in your neighborhood must be in more demand; that's why the price is higher".

I'd say things like; "Here is a house that is the same square footage in the same subdivision going to the same schools and it sold for much less" and would get told "But it's in the older part of the subdivision" when the year built was only 2 years older than mine!

I'd says things like; "You are fixated on square footage determining if a house is comparable but you are comparing single story houses to my two story and single stories cost more to build and typically sell for more than two stories of equal square footage" and would get told "if you don't like it go to the review board".

What's the bet that next year when we try to use comps from early 2019 when the market has been soft they won't accept them if the market has gotten stronger towards year end.