OK, it sounds like you’ve done pretty well at buying in below market, congratulations. I see you’re in TX so I’m guessing DAL, HOU, or AUS with those FMVs.
My question for you is “are these places cash flowing”? I don’t mean "covering your PITI. I mean CASH FLOWING. Covering PITI, allowance for vacancies, repairs, PROFIT, the higher taxes that come when the homeowner’s exemptions come off, etc.
It sounds like you may be a bit resentful that your friend is making a commission off of your business. I try to do business with people that I’m buddies with, but not at MY EXPENSE. If his rates and fees are comparable fine, if not, tell him so.
Assuming you’re making money on all these units, big assumptions in TX, evaluate where you stand finacially. That means taking a REALISTIC look at your ability to withstand a market downturn and/or multiple long-term vacancies. Then when you’re comfortable add to your portfolio.
Remember, life is long. Your goal during your “working” years to acquire and maintain those assets that will support and maintain you during your retirement years.
New Investor PLEASE HELP Pt.2 - Posted by Terrance (tx)
Posted by Terrance (tx) on July 11, 2005 at 23:58:11:
First, I’d like to thank everyone who posted a reply offering advice. I’d like to give a little more detail about my situation and maybe someone can expound on it a little more. The first property I bought was through a co worker whose father was being transfered to another city on his job. He was already having some financial problems and he would have to start paying rent in a month as well as his mortgage. He was asking for 100k and the county appraisal distric appraised the house at 125k for tax purposes. I had a CMA performed and homes with the same BR, BA ect were selling for about 140k, so I bought the home for 100k and I presently live there with the intention of selling in couple of years. The other two properties were purchased as a package deal for 240k and 175k and appraised for 280k and 220k respectively. I also had a CMA performed on those properties amd both are selling at more than the appraisal suggests. Not to mention that there seems to be a really high demand for this particular sub division. Those are the specifics of the so called deals that I have made. I’m not trying to mask my inexperience I just wanted to let it be known that I did as much homework as I know how to perform. Also my friend does not have any stake in any of the properties. Although he has a couple of properties of his own. Someone mentioned that he’s using me to get loans (him being a loan officer) at no risk to himself and to be honest with you all I KNOW THIS IS TRUE. I just wanted desperately to get into the game. I have a full time job that I’m prretty secure in and so does my fiance, but I truely believe that this is my passion.That’s why I visit this site EVERY SINGLE DAY and I WILL become successful in this bussiness. Of course with a little help from you guys. Anyway thanks again for the replies and any and all advice will be looked at and taken very seriously.
Terrance, I feel SO much better now that you have posted more details–thanks! I was worried that someone else was finding your deals & just having you sign on the dotted line. Sounds like you are fine & I can go worry about something else now–