All Forum Posts by: Robert Steele

I can't seem to keep the up with the rent increases here!

I use MLS leased comps and usually ask at the top of the market (my SFHs are nice). I have started getting tenants offering more than my asking rent. I haven't encountered that ever. It doesn't take more than a few days to get a deposit.

I recently did a round of comps and one place that I have been renting out for $1,350 to $1,375 these past three years now reads as a $1,650!? Other properties I have are 5 to 10% below market.

Remember this is not because I ask too low. It's because rents have been going up! Most of my leases are 2 year. I am only doing 1 year from now.

I have no problem with tenants that have filed bankruptcy if it was because of a failed business or medical bills. I also don't mind if they have been foreclosed on. Hell, I think most of the increased demand for rentals is from people who lost their homes due to foreclosure. What I don't like to see is collections for department store cards or phone bills. The most important aspects are sufficient income and stable employment.

p.s. Always remember not to discriminate against protected classes.

One thing they seem to be good at is quick foreclosures. :D

Or at least in my case. I picked up a property that had a tonne of equity in it. I wasn't on the note and it didn't take them long to stop accepting my payment.

Then they foreclosed on the property. I think it took them 21 days from the time they figured out what was going on until foreclosure on the court house steps. Thankfully I sold it a few days before the auction.

I am not sure that is necessarily true. My lease (Texas Real Estate Commission Promulgated Form) states that I will accept partial payments. So if I sent written notice (in compliance with the property code) that the rent was changing to $725 and the tenant sent me $675 they would still owe $50 even if I cashed the check.

I thought that was just me!

I hold my 10 rentals in my own name. The mailing addresses on the tax records are a P.O. Box, not my personal residence.

I have a $2M umbrella policy.

I can still find you even if you have the property in an LLC. I just look up the documents on file with the State Secretary to see who owns the LLC. The only way to remain hidden is to have the properties in a trust.

Yes you are right. LLC corporate veil is not hard to pierce from what I have been told by lawyers.

Also, ask yourself this. If you were getting sued by a tenant would you rather:

a) have you insurance company pay their lawyers to defend the suit and/or settle out of court

b) have to pay your lawyers up front and then even if you win, try to get the court costs out of the tenant who has no money

I did some recent analysis of price changes in 20 major MSAs around the country and it looks like the Boston & San Diego (along with other major CA MSAs) RE markets might actually be starting to turn up.

I am in Dallas so know nothing about these areas. I was hoping some of my BiggerPockets brethren could point out which locations they feel make good buy and hold areas and which areas to avoid like the plague.

I want desirable properties in desirable neighborhoods. Not top end - I don't plan on investing _that_ much, but I also do not want class C properties even if they cash flow like mad.

My strategy is to make money via appreciation within this niche of my REI business. Seeing that Dallas absolutely stinks at that. The rest of my business is all about cash flow which Dallas does very well with.

Thanks in advance!

Update:

I could not get it under contract as it went to an owner occupier during the 10 day "first look" period.

I don't know what kind of retail owner occupier would want a gutted house. More likely it is an investor lieing in order to secure a great deal. It wouldn't be the first time I have seen something fishy like this.

Even if it is a bona-fide OO part of the contract provisions are that they must move into the propery in 60 days. That is going to be one aggressive rehab.

I am going to follow this property and see if I can catch the buyer in a lie. I am not sure what that will do, other than make me feel better, as I have done the same before and the government REO don't seem to care a whole lot when their rules are broken. I guess you just have to lie and cheat to get ahead in this game. Oh well.

Brian, congrats on taking the first step. As a local that's been shopping this market for the last decade perhaps I can help.

With a $12K budget you don't need to limit yourself to deals in the hood. As you mentioned there is Homepath 10% financing out there and plenty of Homepath properties in DFW (I wouldn't say equity deals but sometimes you have just got to buy on terms).

Early last year I picked up a $160K house in a brand new subdivision in McKinney. I invested $8K total in it. I only get $176 cashflow (not including maintenance and vacancy - Eeek!) which is way tight I know. But I only have the one like this.

It also has $211 principle paydown and so far (18 months) I have had 0 vacancies and 0 repairs. It is a brand new home and my tenant makes $330K/year so I never have a problem collecting the rent. Which with lower income housing will give you grey hairs quick.

I don't want to parade a bunch of GC's through the property just yet because:
a) I don't want to waste their time until I have it under contract.
b) I don't want them to steal it from me.

Assuming I get it under contract then I will bring in the GC's and get firmer numbers. Then I will be able to be more confident on wether to move forward or not.

I'll keep you guys posted. Thanks for all the advice.