Irving 4-Plex Available!

Get the Address!!!

4 plex with GREAT numbers! Property is vacant and needs paint and carpet only.   All units are individually metered for water and electricity.  AC units are all in tact and look to be in good condition.   Roof and foundation are in good shape.  Rents in the area are going for $750/unit.  each unit is a 2/1.1.  Property should bring in $3,000 a month.  We will lend on this property.

For more information, please contact

JD Castillo
214-65-5493

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7 Short Steps For New Investors Learning To Pull Their Own Comps

The more you know about pulling your own comps the less you will be surprised when you hear back from an appraiser.  Appraisals can make or break a deal for investors.   Whether it’s a subject-to appraisal (appraisal subject-to written repairs being completed)  that determines how much your hard money loan will be or an appraisal that determines your potential home owners’ loan amount.  Your best defense against a botched appraisal is to learn how to pull solid comps yourself.   Pulling comps is much more an art than a science.  If you are planning on protesting your taxes, buy fix and flip or planning to buy fix and sell; pulling your own comps is a skill that every successful real estate investor needs to master.

Let me start off by saying that I am not an appraiser.  However, I am a real estate broker and investor.  I have had my real estate license for ten years and have been a part of countless real estate transactions.  I was the agent on about 50 closed transactions last year alone.  The only way I can continue to do this type of volume is by being a good judge on after repaired value so my investors stay happy and I am able to guarantee repeat business.  I’m sure there are many ways to pull comps and determine value but the following are just some tips to show how I do it. 

Note: if you do not have access to MLS, go to www.investorblock.com and sign up to pull comps for free in Dallas, Fort Worth, San Antonio and Houston.  Some of the same principles will apply so feel free to keep reading.

Here are 3 rules that you should always start off with;

11.  Comps that are in the same subdivision are always going to weigh more than comps outside the subdivision. 

22.     It’s always best to stay within 5 years +/- year built when searching for comps. 

33.    Appraisers only pull comps for the sale of a house from 6 months back.  For rental comps, you can go about a year or two back. 

Step 1:          Go to your local MLS provider, sign in, and find the property type that you would like to look for. I.e. Single Family, Commercial, Rental etc…

Step 2:          Select all Active categories, pending and Sold categories, then select “search by map”

Step 3:          A map will appear and on the top menu of the map will be the label for “Locator”. Click that and then type the address of your subject property and press Enter.

Step 4:          Zoom out a bit so you can get a good view of the area and then select “Draw Polygon” at the bottom of the map.  Draw a polygon around the area around your subject property remembering not to cross any major streets and staying within what would appear to be the same subdivision.  Once finished select, “Apply to search”.  Doing this should remove the map from your screen and take you back to your home page.

 

                  This is where the process starts to develop into an art.

Step 5:          Add in Square footage and year built into the main search remembering to start off with 5 years +/- and 10% Sq footage +/-.  You can always widen the search later on but this is a great starting point.  Once this is done, select “Search”.

Step 6:          If you have a manageable number of Sold comps pulled skip to step 7.  If you have either a large or under 3 properties that have not been rehabbed pulled up, re evaluate the search criteria you have entered.  It’s better to go down in square footage and year built.  If you go up in square footage and year built you will need to do adjustments.   If you have too many comps, you might want to add the subdivision to the search criteria.  It will help further narrow your search.

Stage 7:        Once you have a manageable number of comps, start to go through them one by one and look at the pictures of each one.  This is where newer investors have a tough time.  if the house looks like the subject house will once the repair is 100% complete, put a check mark by it and use it as a comp.  If it’s a foreclosure, short sale, motivated seller, a house that needs work or is “well maintained” then it is not a true comp.  You need to determine the ARV (After Repaired Value) by houses that have already been fully repaired. 

Hopefully that helped a little.   All you need is a little practice and you will be able to do this entire process in no more 5min per house.  As always, if you need any help or assistance, don’t hesitate to call me.   If I’m a strong enough resource to you now, when it’s time for you to buy your next Texas investment property you know who to call.

JD Castillo
214-650-5493

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Inventory is down and prices are rising…what now for investors?

If you have been following real estate in Texas in the past few years you know that Texas has been one of the most reliable ports in the storm of uncertainty surrounding the real estate investing market.  Maybe it’s confidence in the economy or maybe we finally have come to a point that we have a “new normal” and potential buyers are tired of renting.  Maybe the appeal of  TV. shows like “flip this house” and “flipping out” have over saturated the market with new investors.   REITs have also entered the market and allowed investors to take a more passive approach to staking their claim in this modern day gold rush of real estate.  Either way, in the DFW area, inventory is way down and prices look to be on the rise.  What does that mean for investors?  

Let me preface the rest of this article by saying the beauty of Texas real estate is that the volatility rate in this state has historically been low. Nothing happens overnight and with that fact, single family real estate has been a safer investment here in Texas than most markets around the nation. 

The gradual trend in north Texas has shown a decrease in inventory driving house to sell 18% faster and for more than they were last year at this time.  

In fact, inventory is at its lowest point since early 2005. 

This number is the current active listings on the MLS.  As far as new listings the number is practically the same.  Therefore this shows that there are simply more people buying houses. 

  Simple supply and demand would lead investors to believe that we have finally reached the bottom of the lull and if not now, then 6 months ago was the most ideal time in recent history to buy real estate.  That’s basically right!  With exit strategies like owner financing growing in popularity, investors are able to purchase property and ride the growing trend of “flipping property” again.  Smaller banks and financial institutions like Sherman Bridge Lending are now allowing qualified investors to openly wrap their mortgages.  Typically the investor that sells to a homeowner and carries the note will be able to charge a 5% premium on the price of the same house than they would if the buyer was strong enough to purchase with conventional financing.   Different than rent to own, which has become basically impossible to do, owner financing is relatively simple for a real estate attorney to draw up and execute. 

Potential homeowners who are fringe-credit worthy and not able to qualify for conventional financing still understand the benefits of home ownership.  We are seeing a trend of potential homeowners that are willing and able to come to the table with large down payments in order to achieve their goal of home ownership.   The pool of buyers who cannot qualify for financing through large financial institutions is still high due to the high standards of banks for loans.  However, even with today’s standards, it is relatively easy for a buyer to do a rate and term refinance for a property when they have a strong payment history. 

I don’t want to be a landlord!

When you have a slab leak or a toilet that is clogged up; who do you call?  Do you call Bank of America or your mortgage servicer?  You call the plumber because it’s your house.  Your mortgagor has a lien on your house.  They are not responsible for the repair and maintenance of your property.  Same goes for houses that you finance for a homeowner.  You are not their landlord.  You simply have a lien on the house that they live in. 

I don’t want to worry about collecting a check every month.

Buyers who purchase a home to live in via owner finance are typically prepared to bring a sizable down payment.  I’m not talking first and last month’s mortgage payment.  Investors can expect them to bring anywhere from $10,000-$25,000 for an average $120,000-$180,000 house.  Homeowners know that foreclosure is a real option and the last thing they want to do is loose that down payment along with severely damage their credit. Therefore, paying mortgage on time becomes more of a priority.  But you are not the one that has to monitor it.  There are servicing companies set up that will not only service your loan for a small charge ($25-$30/month) but they will also report all on time payments to all three credit bureaus.  If your payment fails to come in, their automated systems send notices of non-payment. If and when your payment does come in, they pay your mortgage with it,take out their $25 fee and send you the rest. 

Where do I make money?

Investors who purchase investment property with a hard money lender typically have to bring less of a down payment than if they were to go through a small bank.  Small bank’s portfolio loans usually require the investor to bring 20%-30% of the loan amount to the table.  Hard money lenders have investors bring the difference of the purchase price + the rehab cost +closing cost and 70% of the after repaired value.  Some may have a minimum that they require the investor to bring in order to ensure the investor has some skin in the game.  With that said, it isn't improbable for investors to be into a property for $10,000-$12,000 for an average house with an ARV around $130,000.  Potential homeowners who are not able to qualify for conventional loans have less inventory to choose from so an investor may not have to put as much rehab into a property as he/she would need to if they were going to sell it on the open market.  Most investors save a bit of cash on the rehab just getting the house into livable condition instead of shooting for top of the market.  Your buyer will come to the table with a sizable down payment and allow you to recoup if not pull out your entire cash investment in the property.  Depending on your preference, you can sign a 30 year note with the homeowner or sign a 3 year note.  Most investors write up a 3 year note,amortized out 30 years with a balloon payment after the 3^rd year.  After the 3^rd year, the buyer will need to refinance with a large institution, sell the house or receive an interest hike to an uncomfortable rate to help expedite their refinance.  Not only did the investor cash flow more than normal throughout the life of the loan, they also sold the house for a 5% premium over market price.  Doing this all while never paying real estate commissions or any closing cost out of pocket.   When you refinance your house from Bank of America to Wells Fargo, Bank of America doesn't come out of pocket to help you close.  The same will apply for you when your buyer does a rate and term refinance and pays your loan off. 

This is just one avenue for investors to take advantage of.  Because of the gradual change and lack of volatility in the Texas market there is really not a terrible choice for investors to make except not to invest at all.  No matter how you decide to invest, make sure you contact local professionals in your area that are familiar with laws, regulations and the local market.  Connect with multiple individuals that are able to benefit from your repeat business and rely on your success.  

JD Castillo

214-650-5493

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(Updated 2016) 9 tips to help new investors get started in real estate.

             (Updated 2016)          9 tips to help new investors get started in real estate.

                                                                      Time is money; so is effort.  How much is effort worth?   Can you put too much effort into one project and not feel amply rewarded for your contribution?  Be a leader, not a worker; the benefits are immeasurable.   

                                                                      As a worker the responsibility is on you.  It’s your skill, workmanship, reputation and in the end your warranties on any work done to any aspect of a particular property.  Will there be a learning curve?  If so, how long will it take you to learn the skills it takes to properly buy, fix, rehab, market and exit a real estate transaction?  Remember, time spent and effort spent is money spent. 

                                                                      As a leader you are still ultimately responsible.  However, your decision making skills are the things you and your reputation will be rated.  You will no longer have the lag time it takes to learn a skill or trade.  You can rely on others expertise to push your business forward at a more rapid rate.  This luxury doesn't come free but what is the time value of money?  What is the money value of effort?  How many deals can you do your first year being the one that drives every nail?   

                                                                      Make up your mind to be a leader as early as possible. The ability to be a good leader is what allows GREAT investors to maximize their full potential.   The ability to let go of the reins and rely on someone else to work on your behalf is what will grow your business at an exponential rate.  If you are in the position financially to start investing, then more chances than not, you are a better than average decision maker to begin with. 

Where to start:   

1.     1. Find a local professional in your area.  , www.meetup.com  , reputable financial institutions that specialize in hard money and other types of investment real estate and Google are all great place to start.
 

2.     2. Network with people that are currently doing what you would like to do.  As my grandpa would always say, “Tell me who your friends are and I’ll tell you who you are.”  Find free meetups to go to and network.  Be wary of seminars and (expensive) classes and software.  I personally have been to the seminars and paid thousands of dollars to further my education.  There are things that I have learned from them. However, some of the soundest advice you can find are the principles you can read out of books such as “Rich Dad, Poor Dad” “The Millionaire Next Door” and “The Richest Man in Babylon”.  Once you've made the connections, local professionals and your new contacts will be able to answer just about any simple question you have.  

3.     3. Once you have narrowed down the type of investor that you want to be; (i.e. wholesaler, landlord, flipper, owner finance, or silent/passive) network with like minded individuals and keep moving forward.  It’s at this stage that some investors get stagnant and stop wanting more. They get complacent with the meetups as their new after work social group and quit striving for personal growth.  NEVER FORGET...the goal is to get out of the meetups.  Only returning to tell your “from my humble beginning” stories. 

4.    4.  Learn how to evaluate deals.  If you can, gain access to the MLS in your area.  There is a great website that allows individuals to pull comps on deals in Texas with real time MLS data.  www.newwesterncomps.com it’s 100% free to try.  All you have to do is sign up with the Coupon Code: MobilComps11 and Rep Code: 1004.  There are also classes and meetups that you can take for under $50 that break down what to look for when evaluating deals.

5.     5. A successful investor will always have time to show someone how good they are at their job.  While networking, find investors that will let you walk through their current projects so you can grow accustomed to seeing dilapidated houses.  Ask about pricing.  Take trips to Home Depot, scratch and dent appliance stores, flooring and material outlets etc…   You will be surprised in the difference an investor can get a house rehabbed for to what a homeowner can. 

6.    6.  Connect with local wholesalers and small banks in your area.  Small banks are going to service their own loans and might be a great place to look for the occasional home run foreclosure.  Wholesalers in the area are going to have many more deals than a local bank will but they will also have a large buyers list.  As a newer investor to their list, you will have to be able to make a quick but informed decision. 

7.    7.  Evaluate every deal.  Even if it’s not in an area that you are interested in.  Ask questions on how values were determined.  You will gain confidence in your decisions so when the time comes to make a decision on a house that is in an area of interest to you, you are able to be informed and act decisively.

8.     8. Never swing a hammer.  Especially if your background is in construction.  If you have the hands and experience in construction, then use that experience to judge quality and set expectations for your contractors.  Always get your general contractor to sign a contract that has a completion date and a per diem for every day that he goes over schedule.  By this time, you have networked with enough investors to know what to expect from the contractor you chose.  Your time can be spent more wisely as a leader looking for the next deal. 

9.     9. When looking to sell or lease your property out, finding an agent to help you is easy.  Finding the right agent is a little more complex but not hard to do at all.  Most listing agents spend their time farming a certain small area.   Drive the neighborhood and check sold comps in the area to see whose name appears on most of the listings.  You will see one name that appears more often than any other and that should be the agent to list your house.  For each subdivision in an area it could be different.  Unless you can negotiate a reduced commission and price your house aggressively with the difference, there isn't a strong reason that you have to use the same agent every time. 

                                                       This process should only take a few weeks or months to execute and a deadline that feels comfortable should be set for completion.  Your team will determine your success so choose wisely.  

JD Castillo
 214-650-5493



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