All Forum Posts by: Robert Steele

It turns out that the judgement was against a different guy and whoever put together the sale, constables office or lawyers, had the wrong guy. I found this out when they got lawyers of their own and the lawyers started hashing it out. I didn't have access to their social security numbers when I was doing due diligence so only had the name and faith that they had the right guy to go on.

I ended up dropping the case and quit claim deeding the interest back to the owners. Was it worth the $600 I paid even though it turned out to be nothing? Yes. What it worth the $5K in lawyer fees. No. But I kept trying and made that money back tenfold on my next judgement sale (not a partial ownership btw).

3 days is not the end of the world. Just follow the advice given here about following through in a firm, fair and polite manner. These tenants may have been trained badly by the previous landlord. If so it will take time for you to train them right.

Don't be so quick to kick them out. You will have make ready, time off market and you may end up with worse tenants.

To find what you're looking for you need to travel back to before 2012. If you can't manage that then perhaps wait a few years for things to swing back.

@Keith Allen I meant that lower income rentals tend to have higher cap rates and cash flow on paper. But not usually in reality.

I don't have any lower income rentals anymore. I had a Section 8 property for 13 years and never had a problem until the very end when HUD decided the tenants were making enough money that HUD would stop paying the rent. They didn't and I had to offer cash for keys to get them to leave. Hardly a horror story though.

@Ayrron P. The old adage is that you make your money when you buy. Meaning you probably didn't buy the right property.

That said I've had a 3/2/2 house here in Collin county sitting on the market for 3 months that just won't sell either. House is solid and priced below comps. I think it's just a really slow winter this year.

@Angel Guillen While getting a real estate license is not necessary to being a successful investor it can help. I wouldn't start there though unless you want to start as a Realtor and then get into RE investing later, which is not a bad idea. You'll get to see lots of houses and build a feel for your market which will help you later on. You'll also learn more about the business. Plus if you do well you can use those commissions you make to help kick off your RE investing business.

@Keith Allen Yep. That's typically how it works. People with lower incomes have less savings so it only takes one car repair and your rent's late. Then we start playing the catch-up game except they can never catch up and bingo! Eviction.

That said, I've had well off people that have caused me trouble too. No evictions but one left my house in such a bad shape that even after security deposit still owed thousands. They declared bankruptcy. I had another that turned to meth for depression and got put in jail. On the other hand I've had a couple lower income tenants (mostly section 8) that paid on time for years.

Cash flow on paper is usually higher for these properties. Just put in a large vacancy allowance and take another look at that cash flow.

My recommendation is figure out what kind of tenant you want and work backwards from that to find the house they want. That should be your rental.

 Are you sure about this? My TX RE Broker has never heard of this law and I cannot find anything on the Internet about it?

In TX we have something better anyway, it's called a handgun license.

@Alex Guerrieri Thanks. I'm glad you found it helpful.

The tenants are paying on time and everything is smooth sailing so far. It seems that they are not eager to redeem the property either. I think after being cash strapped for so long they like the feeling of having an extra $110K in their bank account. Nine more months and the redemption fee jumps to 50%.

@Jay Hinrichs You're absolutely right. I've always believed that property taxes were the sole reason keeping prices down in DFW, until these last several years. Over a decade ago I was looking at investing in Raleigh, NC. It was interesting to note that even though the house prices were much higher, the property taxes were much lower and for comparable houses the cash flow worked out exactly the same. I guess the saying is true; people buy payments, not houses.

Looking at it now we have the $10K cap on property taxes for homeowners which is really going to put a dent in those high end luxury homes. Is that thing even indexed for inflation? God help the equity appreciation investor in those high property tax states if it isn't.