All Forum Posts by: Laurie Williamson

Update! I ended up buying a house in Flower Mound. Spent $400,000, which was, uh, quite a bit over their asking price, and ended up being $19k over appraisal as well. I realize I am playing a part in housing prices going up, and the crazy bidding wars...but I did what I had to do. I had already made about six reasonable offers on other houses, and offers were not accepted. I will say that I like the house a lot and it cash flows. For reference to anyone looking in this area, the house was about 1600 SF and built in the 1980s. I was able to complete the 1031 exchange in time.

@Michael W. McCord Wow, I had not thought of it that way. Now that 400k is entry level (if you're lucky) locally, you're right—25% down is 100k! Nuts! When I bought my first rental house / investment just seven years ago, it was $122,000, and I put just $30,000 down. Fortunately, I was able to sell it for a lot more, and am putting all of that equity into my next investment with a 1031, but even with $191,000 available for a down payment, it looks like chump change next to the cash buyers who are plunking down $450,000+ ....on houses that I would still consider entry level!

I want to update this thread for anyone following it to get info on the local market. It is crazy!! I mean, I already kinda knew that, but it's one thing to search the MLS and crunch numbers in a spreadsheet, and another thing entirely to go out and look at houses with your Realtor, then make offers, and have your offers rejected. It has been a couple of weeks since my original post, and last weekend we went looking. I quickly realized that my goal of spending $300-$360k in Plano was trash. There is nothing out there that is actually at that price, in the 3/2/2, decent quality (not a total dog) category. Yes, there are properties listed for those prices, but they are lying. Some of the listings are purposefully listed quite a bit below market value, to attract a lot of offers, which I should have realized, but I didn't, until it was too late!

The nicest place I looked at was in Frisco, around 1800 square feet, with beautiful finishes—hardwood floor, granite, etc. It was listed for $375,000, which was higher than my price range, but I decided to offer on it. I offered $400,000. For some reason, the agent decided to spill the beans to all the other agents whose clients had offers. This is crazy. Get this, he said: 320 people came to look at that house over just that one weekend, and it got 52 offers. 30 people offered over $420,000. (That’s $45,000 over asking price.) 10 people offered over $450,000. (That’s $75,000 over asking price.) I never stood a chance on that house. Also, that means only 12 people, including me, offered less than $420,000. 

So I asked my Realtor to make an offer on another house, which was listed at $345,000. I looked at the comps, and one nearby, very similar, sold for $398,000. I offered $400,00 again, but this was for a lower-priced house, so that is $55,000 over asking. This agent shared that she got 26 offers, many that were "well above asking."

All in all, we looked at 8 houses, and I ended up making offers on 3 of them, but I didn't get anywhere. I am glad that I have this information, and that is what I am trying to think of this as, just information to help me make a better decision. However, the message I am getting from the houses in this market it... "You ain't buying me!"

@Michael W. McCord, that is interesting! Someone in our neighborhood recently moved and put their home up for rent, and it is probably a $750+ home... we were wondering who could afford to rent it! I did not really get it until I went out and started actually looking for houses to buy last weekend. It is nuts. If smaller homes are going for the sales prices they are, and renting for the #s I am seeing, it makes sense that the higher-end homes would go for a lot more. Glad you are finding success with your new SFR!

@Bruce Lynn, Thank you for the suggestion! I know those areas are really growing. I think you're absolutely right on those reasons why tenants aren't biting on some homes with more DOM. That is really helpful. My last property I said no pets, but they got a pet anyway, so I think that requirement may be futile. May try something different this time, like a pet deposit or just looking for a place with tile floors.

@Tyler Hodgson, thanks so much for the intel. That is good news. You're right; I'm barely seeing anything in Frisco and Allen, but there are 1 or 2 that come up in the search. Good advice on the agent pulling comps. Will have my Realtor do that.

@Philip M., thank you so much for that suggestion. I will definitely check out Mr. Landlord! That would be super helpful once I get the next property purchased. For my rental in Garland, I had a property manager place the tenant, then I took over management. Tenant ended up staying nearly 6 years, so I have never had to place a tenant myself!

@Paul Blair, thank you so much for that info! Exactly what I was hoping to hear.

I have a friend who is a Realtor, and I have asked her to run comps for me a couple of times, to see if my rents need adjustment. She is happy to do it, and doesn't charge me, because she is the Realtor I work with when I need to buy a new property, or sell a property. If you don't already have a business relationship with a Realtor, you probably have a friend or acquaintance who is a Realtor. You could ask them to do it, and ask what it might cost for them to do that for you. Probably not too much, or they might even do it for free. Realtors can search the MLS and more results than someone with out a license can. While anyone can look and see what people are asking for rents in their neighborhood, a Realtor or broker can see the actual sales prices—meaning what a property was successfully rented for. They can also help you search for rents on properties that are similar to yours. You can do that yourself to some extent (check zip code, age of home, look at finishes, etc.), but for example, my Realtor will say, "Here's what I found on properties that were within .5 miles of yours, similar age and sq. footage, and rented out in the last 30 days..."

The report shows a negative cash flow, if I'm understanding it correctly. Your expenses are higher than the rent. You could cut property management, and manage it yourself, and that would save you some money, but it looks like it would still be too high. Might see if you can put more $ down, or else need a lower purchase price or higher rent.