Archive for the ‘austin’ Category

Have you begun to evaluate the performance of your real estate investments this year?

December 22, 2011

This is a great time to do a little homework concerning your investments and whether they are meeting the return guidelines that you have determined are appropriate for them.

Have you taken on some type of unstated risk and previously undisclosed risks?

Have you taken on too much risk in your investments?

Have your investments revealed that they are considerably more risky then you thought?

Are you being properly compensated for the amount of risk that you have taken?

Have the characteristics of the investment changed in such a way as to put at undue risk the total investment?

Is the investment performing in a way that is in line with its stated purpose?

Do you have a stated purpose for your investments?

Has that purpose changed?

Do you still trust the staff managing the investment?

Is the amount of debt appropriate for the investment?

Are the expenses in line with the budget? If so great is not what should be done to bring them in line or is this a reason to divest yourself of this investment?

What is the exit strategy for this investment?

What is the timeline for the exit of this investment?

How does this investment fit into my investment portfolio?

Is the overall market or demographics for this investment a good one or a poor one?

Are there some other evaluation criteria that apply to your investment that are not outlined above?   If so drop me an email so I can add them!

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jobs = rent increases

August 23, 2011

Marcus and milichap has publised their 3rd quarter apartment research report.   I says in so many words that Austin is experiencing a growth in jobs, a reduction in construction, an increase in rents and a reduction in vacancy.    Each of those things combined equals a good time to own rental property.

The report has vacancy rates of 4-6.6% depending upon the submarket and increases in rents from 2.7 to 5.6% over last years rents.   the only cloud on the horizon is contruction permits are up as they should be when things are working this good in a market.   Hopefully they will not over build the market and push it down again in a few years when more product comes
online.   For now things are looking good for the rental market in Austin and the surrounding areas.

 

Austin Investor Interests also published some data on the austin market.   Their info says that we have achieved a 95% occupancy and rental rates up over 9% to the highest rates ever for the city.    They also have a concern over what happens once the new contruction is finished and those units begin to be offered.   Normally to fill an apartment complex the tenants will get consessions.   (that is a dirty word and now I need to wash my mouth out).   In the current environment those dirty things are having an effect that is taking about 2% off of market rents in the past they have taken a bigger chunk out of the top line
when you consider them over the full year’s rent.

For more information visit the marcus and milichap website at  www.NationalMultiHousingGroup.com or  www.apartmenttrends.com or call me at my office at 512-782-8982 to talk shop!

Energy Audit in Austin TX

May 23, 2011

So last week I began the process of completing the energy audit that the city of Austin Mandates for all multi family properties inside the city.   The City passed an energy audit ordnance and it says that by June 1 you need to do an energy audit on your property and then you going to need to disclose the results to the prospective tenants.   So after calling a few energy audit companies.   I settled on one 1stchoiceenergy.com David Malone is the owner and they can be reached at  512-762-5000 and his website is www.1stchoiceenergy.com

It took them about an hour to do the energy audit they needed to go in each one of the individual floor plans that I have in each building.   Luckily enough for me at my small complex here in Austin. I have four buildings and they each have the same floor plan.   Once inside they look at the insulation in the attic and also do a duct test on the air ducts and also make an observation of the windows to determine what their energy efficiency.   Once I get the City and I get the results we will be able to determine where I can spend some money so that my tenants will save on their energy bill and where the city can reduce energy usage.   (I am still trying to see the return on investment for me I guess I am simple like that!)   My understanding is that if your property does not meet the minimum qualifications for energy usage then the city will give you about 18 months to go through and make some energy improvements and they have some rebate programs right now for property owners to help offset the costs!   I look forward to finding out about the rebates and the costs to complete some of the energy savings upgrades.

I understand that the purpose of the audits is to help Austin save energy and so by having more energy efficient and by building energy-efficient homes the city of Austin hopes to save little bit of energy usage and hopefully prolong having to build a new electric power plant.    Austin is a very “green” city as some of you may well know and so it is doing its best to help the property owners in Austin make energy improvements.   When single family homes are being sold, well before they actually go under contract the owners need to conduct an energy audit and disclose that information to the buyers.   All except the foreclosures, I guess banks cant afford to be energy efficient or cant afford the energy audits so they are exempt! (Of course I feel that if I have to do it then everyone should have to do it!)

Anyway, enough of my ranting about that.   So the audit cost me about $40 per door so not extremely expensive until you start adding up the number of doors!   So I will give you an update on when I know more about the repairs needed and the rebates from the city.   Come back and see how this new adventure plays it self out!

My first eviction saga…….

May 9, 2011

(Normally evictions are a pain but not a SAGA) It all started when a tenant did not pay and performed what I call a Midnight move out. That is when they move at midnight so no one would see what was happening. Well this tenant did not take everything. So I called her and said hey do you want this stuff?

Yes I will get it in a couple of days.

NO you can come get it from the front porch b/c I am setting it out as we speak.

Well you can’t do that, I say read your lease you already abandoned the unit and you already gave me permission to set out your stuff if you abandoned the unit.

((Tenants never read the lease but always know how things are supposed to happen))

So I instruct my staff to set out the stuff and remind them of the general rule of not disturbing the peace if she shows up just be nice and calm and I leave. Well she comes right over with the police!

Of course my staff calls me and says what do we do? I say well don’t argue with her just leave the stuff and tell the police who you are and what not. So they leave and the tenant wants them to put the stuff back inside to which they don’t have to call me for the answer to whether or not they will do that.

NO! They wont put it back inside!!

The next day when I come back I tell them to do it again and of course the police come back again with the tenant. I think her friends who were the neighbors were calling her to let her know if someone was in the unit. I love the neighbors to be friendly I just don’t want them to team up against me!

So the officer comes and tells me that I cant just put her stuff out even though she has moved most of it and just left some junk. He says I have to evict her and I let him know that I will do just that since she is intent upon having her way.

((She does not realize that an eviction will result in a judgment, which is worse then just a collection account from a landlord for her credit))

So I go to court fully expecting to see her. It turns out that she was trying to cancel her lease but instead of reading it she relied upon the info that she got from the Austin Tenants Council concerning canceling the lease.

((I guess this is one of those you get what you pay for situations))

So she missed the court date but I will come back to that in a little while. But she files an appeal and a pauper’s affidavit to go along with it.

Now she has a little problem with this pauper’s affidavit, the jest of it is that she is no pauper!

She bought a new car ((I supposed with the rent and tax return money)) Additionally she has a job!

In the Great State of Texas if you want to appeal an eviction you have to post a bond in the amount of the judgment. That is unless you are a pauper. What is a pauper? I general terms a poor person who cannot pay. Well why would a pauper want to appeal an eviction? If they could not pay in the first place what makes them think that they could pay later?

Since this was a first for me I had to take out my trusty RED BOOK from the Austin apartment association and see what needed to be done about this! The red book said file a challenge to the pauper’s affidavit immediately!

So that is exactly what I did!

When we get to the court for the hearing she is not there, but at the last minute she shows up! Man I am disappointed I thought I would not have to fight and go thru all of this stuff.

Well when she finally comes in after pausing at the door unsure of whether or not to come in we get started in the roughest, meanest, longest paupers affidavit challenge of the century!

Here is how it went down. The Judge swears us in and then says I am going to ask you a few questions about the appeal and paupers affidavit.

Judge: Did you know that you would have to pay the rent in order to file an appeal?

Tenant: No, but …..

Judge: Did you pay the rent?

Tenant: No, but…..

Judge: I was out when this went to court for the eviction and my substitute was here but why didn’t you come to court on that day if there was a problem?

Tenant: Well I was here but your staff sent me to the wrong courtroom. ((A little background here is good. This is the main court house for the county it has 4 floors and at least 25 court rooms and several floors next door with several court rooms per floor as well.))

Judge: Who sent you to the wrong courtroom?

Tenant: Your clerk… Judge: Bailiff go get all my staff in here this minute I want to know who sent you to the wrong court room!

Tenant: I don’t want to get anyone in trouble…..

Judge: Nonsense I want to know who sent you to the wrong courtroom! Staff comes in and one of the clerks recognizes the tenant.

Clerk: Your honor she looks familiar but you know I see lots of people and this was 2 weeks ago, but did you have a criminal case as well on the same day?

Tenant: Yes I had another case as well and I went to that courtroom and by the time I made it back here this was finished.

Judge: What is the docket number for the other case?

Tenant: I don’t know but have the paper work in the car my boyfriend can go and get it.

Judge: Good go and get it but lets work this thing now. You filed this papers affidavit is all of this info correct?

Tenant: Yes….

Judge: How were you paying the car note and rent before this time b/c I don’t see any income on here?

Tenant: Well I have a job but its only part time? And the car note gets paid..

Judge: The car note just gets paid…. Please take a second and fill this out completely.

Tenant: Ok here you go.

Judge: You don’t make enough money to pay the rent and all of the other expenses that you listed and you already said that you understand that to win an appeal you have to pay the rent but you have not done so. So why do you want to appeal?

 Tenant: Well there were some things that did not get fixed in my unit and I sent the landlord notice.

Judge: Ok well I see….

(( Now here is where I am thinking that I will get a chance to SLAM her)) In the meantime I have been just sitting there looking out the window trying not to the speak when I was not spoken to. My mother raised me right (don’t speak when you are not spoken too) I am ready to ask her when she bought the car I already know that it was after her midnight move out so she cant claim that she is a pauper, b/c paupers don’t go buy new cars? Since it was around tax return time I was also going to ask her about that as well, and her boyfriends income since they were living together. Additionally, about her income since she always had the rent until now and where she was staying since she was not paying rent to me she must be paying someone. Etc etc etc

I was ready for war! So I look at the judge for my queue, but he says……

Judge: I don’t think you are credible and I am denying your paupers affidavit! Mr. Seay you are free to go unless you want to stay to see this other stuff

Ron says: No thank you your honor Can I get a copy of your decision today or will it come in the mail.

The moral of the story is dont use your rent to buy a new car!

Texas apartment data

January 31, 2011

Occupancy 93.3%!!!

November was 93.1%

I am full in austin meaning 100% occupancy.   Now I need to get full and paying but being full is a good start.  Check out the write up from ALNsystems.com about the Austin, San Antonio, Dallas, Houston, and Fort Worth markets.   I attached them as a PDF to this post.aln apartment data 1-11-11

Business Digest: Treasury’s $600 billion bond program still needed, Fed says; New-home sales in 2010 drop to lowest level in 47 years

January 27, 2011

Business Digest: Treasury’s $600 billion bond program still needed, Fed says; New-home sales in 2010 drop to lowest level in 47 years.

Here is what the article says about housing: ”

HOUSING

New-home sales in 2010 drop to their lowest level in 47 years

Buyers purchased the fewest number of new homes last year on records going back 47 years.

Sales for all of 2010 totaled 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs for the five previous years when the housing market was booming.

The year ended on a stronger note. Buyers purchased new homes at a seasonally adjusted annual rate of 329,000 units in December, a 17.5 percent increase from November’s pace. Still, economists say it could be years before sales rise to a healthy rate of 600,000 units a year.”

The new housing sales are the big number to pay attention to because they are a trailing indicator of economic activity.   The logic goes like this:   New Job, New Car, New House!.   No new houses means that something is broken and has continued to stay broken for the last 5 years.   What does this mean for real estate in your area?   It depends on the local economic activity of your area.   In Austin we are experiencing slow job growth (2% in 2010) and lower unemployment 7.3 (or something like that for 2010).   If new houses are not being built for those new jobs then we should be seeing rents increase or give-a-ways drop off, or a combination of the two.    Have we been seeing those things happen?

YES!!!!   YEAH for the rental real estate game!

I hit a telephone pole that’s why I can’t pay my rent

January 17, 2011

“I hit a telephone pole that’s why I can’t pay my rent. ”   Yep thats the latest excuse that I heard as to why the tenants could not pay thier rent.   They even attached the picture below…..

My advice to them was to follow Ron’s rules and things that make you a better landlord and investor: Rule# 235,876   Slow down and pay your rent in the mail!   

You never hear of the mail man hitting a telephone pole that’s why the rent did not get there on time.

7910 Rosenberry for sale $175,000 or trade or something creative!

January 12, 2011

What can a real estate trade look like.    I purposed a trade for a 4-plex on a street where I own several other properties.

The house shown above is for sale or trade.    What is a real estate trade?   Most people can only think in terms of cash from a lender to a seller for real estate transactions but in fact Trading something of value for real estate happens all the time just not as frequent as a cash sale does.   There are lots of things that would stop a trade from happening.   Like realtors who want some cash and can only think of one way to get it.   From the seller’s proceeds!     Most banks want to turn over there money and write new mortgages so they like to get paid off when sellers sale property especially if thrcan loan that money out at higher rages of interest.   Most sellers like to get loans out of thier names when they sell a property and dont want the hassel of keeping up with a property or potentially taking it back from a buyers who did not pay the mortgage or having to catch up on the mortgage when a seller fell behind.    These are just a few of the things that need to be addressed when you trade a property but nevertheless trades still happen.   Why?

Sometimes there are things more important then cash!   Like what you say?   Getting out of ownership of a property.   Out of ownership of a property is just that no longer wanting to own a property.   There are not property problems just ownership problems.   There are times when not owning a property is better then owning it.   Divorse, death, cash short falls, balloon payments comming due, increases in interest rates and payments, etc etc etc.

A trade is not for everyone there are some people with no equity who need to just get a cash sell and be done.   And there is always a cash price that every property will sell for.   The sellers may not always like that cash price but there is a price nevertheless.   When I first purposed my trade the sellers did not like the idea!    In fact they rejected the ideal all together.   However after they took time to analyze the market and the property in particular they realized that maybe just maybe a trade may be in thier best interest in the long run today.   

If the mortgage market continues to deny access to real estate investors with more than 10 properties then there will always be a market for trades.   If we see a double dip in property prices and another increase in the supply of available properties there will be a market for trading properties.  

Does a trade require an appraisal?  NO, only two people need to agree on the properties value; the seller and the buyer.   Does the property need to have outside consultants evaluate or approve of the condition, marketability, or use of the property.  NO only the seller and the buyer.   In some ways trading a property can be easier than a cash sell and faster.   

Lastly, lots of people are familiar with the 1031 exchange rules.   A trade is an exchange and may qualify for a 1031 exchange depending upon the particulars of the trade.   the 1031 exchange rules are modeled off of concept of the trade.

The 4-plex shown above is similar to one that I would like to trade the house for.

21903 Cold Springs for sale or trade

January 10, 2011

This is a property with 2 houses on one lot.   The small house needs work.   Click on the following link to see the listing details and some pictures.

I will trade it or use it as the down payment on a larger property.   It is listed for sale for $125K.    I will owner finance it and will buy it back after a trade.   I will deliver it free and clear of any liens or can leave the financing that is currently on it in place.     Do you have an income property that you would like to trade or a development project that needs new life.   Call me lets talk about what the different options are for your project and my project.   There are houses in the area that sell for over $400K and this parcel already has the utilities in place if you desired to replace the houses and build a large house on top of the hill.

Customer Full – Residential to see the data that is in the MLS concerning the house.

CAll me at 512-782-8982

Offer on a foreclosure in Austin

January 9, 2011

This week I made an offer on a foreclosed property this week.  It was listed for 69K but I only wanted to offer 45 to 50K.  Why such a low offer on an already reduced priced house?    The house originally had a loan on it for over 133K and I only wanted to offer 45 to 50K b/c of the foundation issues that will require a foundation repair and will forever impair the salability of the house.   In addition the plumbing will most likely require some repair if not today sometime in the near future b/c of the foundation work that is needed.    Can this house be financed today?    AS is?   NO WAY that is why it is not work the 69K that the bank is asking.   This house will require cash and cash always requires a discount to the list price or asking price or the true value of the house.   AS they say CASH is KING! or as I like to say Ron’s rule # 3458921 to making your self a better real estate investor:   ”

“Remember the golden rule:  HE who has the GOLD (in this case CASH) makes the rules.”

Here is a like to some info on the house from my website and the MLS:   Customer Full – Residential

There were a few other offers on the house so we will see what happens with this offer.

If you would like to know more about how, why, when, where, and how to make great real estate investmtents please email me and lets discuss your overall plan and how real estate fits into it and what types of things would work best for your investment style. 512-782-8982 in my office number.


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