Welcome to Sunland Realty Group’s blog! A Collection of Short Stories since 2013

Investor Story 11: Californian buying in Southwind, Arlington

Investor: Californian Investor

About This Client:

This is Client is from California and found us through our blog and Zillow profile. She has been a great client and even referred her friends and family to us. She seeks properties that are newer and require less renovation or repairs.

Why we have picked this property:

This is in the Southwind Subdivision, one of our favorite locations to invest in the Dallas metroplex area. We like the community and the location—it is a very popular neighborhood for families. Houses in this neighborhood typically price between $200,000 to $300,000, and we are very established in this area, so we receive inquiries from potential buyers and renters frequently seeking this area.

Renovations / Improvements:

We helped the client paint some walls—we did not change the color of the walls, although one room was painted red and eventually may need to be painted a more neutral color. We changed carpeted areas to laminate woods. This was applied to the living room and hallway areas.

Leasing:

There were many viewings for this property as it is located in a very popular area, but it did not attract applications. It was kind of a mystery as the area was in high demand. This happened around Thanksgiving time, so we believe it could have been one of the reasons, as many people were on vacation. After two weeks, we started to collect feedback from prospects, and we found that many of them did not like the carpet in the living room area, and that the property did not have a covered back porch. The feedback prompted us to replace the living room and hallway areas with new laminate flooring, and it made a big difference. Eventually, it was leased to a lady who sold her home just across the road. She operates a home-based daycare center, so hard flooring was a good idea in her case. She has been there for almost two years already and is likely to continue to stay there.

Key Points Learned from This Case:

  1. Tenants paying rent of $1,700 or above can be more picky in terms of flooring—it is highly recommended to replace old carpets to laminate floors or hardwood floors as they are much more durable and presentable.
  2. Vinyl is not appealing: One option was to replace carpet area with vinyl floors, but we noticed that was not presented well to Clients. While you can save some money, vinyl looks cheap and is not appealing for homes in nicer neighborhoods such as this one.
  3. Cover back porch: Once again, a covered back porch does make a difference. It is a nice investment to add to attract tenants and also to add resale value—properties with covered back porch areas can usually sell faster.
  4. Leasing out to previous home owners: This can make a difference, as they have “ownership pride,” and they treat homes as their own homes. This tenant started planting flowers around the front yard, even though she is just renting.
  5. Important to have a fireplace in the living room: A fireplace adds value, and this property has a nice fireplace in the living room. It was an attractive factor when we showed the property to prospects.

Photos AFTER Renovation:

Investor Story 12: 4 bedroom, 3 bathroom home in Mansfield

Client: Investor

This is one of my new clients in 2017. He was looking to build up a portfolio in Dallas area, and his strategy was to look for properties that can appreciate consistently over the next 10 years. I suggested Arlington, Mansfield, Burleson, and Little Elm to him as I think these areas meet this criteria.

About This Property:

This property is located in the Parkhill Subdivision of Mansfield area. This area is located near Walnut Hill Road of Mansfield, which is growing with many new shops opening and new developments that are under way.

There are four main reasons why we like this property:

  1. Area: This is what we describe as an emerging growth area—new developments around this area are priced above $300,000, making this area affordable compared to new developments.
  2. Layout: This property has four bedrooms and three full bathrooms. We were really surprised when we saw three full bathrooms as even larger homes don’t have three full bathrooms.
  3. Close to schools: It is right across the assigned elementary school, and the middle school is also within walking distance. High schools are within a short driving distance.
  4. Nearby apartment rents are very expensive: This is an interesting factor we considered, as we interviewed tenants in nearby apartment complexes. We were surprised to learn that a two-bedroom condo is already leasing out at $1,600 per month without any garage, and a three-bedroom condo or any condo with a garage is leased out at $1,800 to $2,200 per month. In 2016, I had three tenants move from nearby apartments because “it is cheaper to rent a house.”  

Renovations / Improvements:

This property is almost 1,900 square feet, and had three bedrooms on one side and one bedroom next to the kitchen. The property had different flooring all over the house—it had carpets in bedrooms, but different type of carpet for the living room and dining room, vinyl in the kitchen, and some tiles in the bathroom areas.

After discussion, we decided to change the living, dining, and kitchen areas to the same type of laminate floors. We encountered a small issue while installing laminate floors, as the previous owner installed three layers of vinyl on the kitchen floor, which made the area uneven. To avoid a potential tripping hazard, we installed a slope between the kitchen and dining area so that there is no gap between the two rooms.

For the carpets, we hired a professional carpet cleaning company to shampoo the carpets. We also hired the same company to do a carpet stretch. This is done by removing the carpet, re-stretching the carpet, repairing the holes and marks made by furniture, and then reinstalling the carpet. This can work sometimes for carpets, but it costs around $80 to $100 per room, so sometimes it may be more economical just to replace the carpet entirely with new carpet.

Air duct cleaning was done for this property as the previous owner had two long-haired dogs, and the system tends to suck a lot of hair into the system over time. Air duct technicians cleaned the system, the ducts throughout the whole house, and removed a lot of hair from it.

Leasing Strategy:

By the time this property was completed, it was close to the Thanksgiving holiday. We used different strategies to find tenants for this property. We used our cross-marketing strategies by reaching out to tenants interested in Mansfield properties from other neighborhoods.

In addition, we also reached out to prospects who had contacted us back in September and October in the prior year as some of their leases may be due for renewal. We also reached out to realtors who had just sold homes in the Mansfield area, as their clients who are selling may be looking for short-term rentals. We leased the property to a family who was looking for another four-bedroom property. They are both teachers at a high school, and they loved the third bathroom—that was really the unique point of this property. They also loved the new flooring and kitchen layout.

Total cost for this property came to around $195,000, and we signed a two-year lease at $1,850 per month.

Photos AFTER Renovations:

Investor Story 13: A hidden gem in Arlington

A Beautiful Hidden Gem in Southwind Addition in Arlington

Client: Local investor, building a portfolio

About This Client:

This was a new client in 2017. She was building up a portfolio and was buying up to five properties. She only wanted to invest in properties in good areas, with a typical price range of $200,000 to $250,000 for each property.

After our initial assessment, we showed her properties in Plano, Mansfield, Arlington, and Little Elm areas. The property in the Arlington area fit her investment criteria the best, and we picked this property in the Southwind Subdivision for her as it offered great potential.

About This Property:

Properties in the Southwind area usually sell very fast, but this one was on the market for more than 20 days for the following reasons:

  1. Selling agent took terrible photos—some of the photos were even upside down. She took photos on a very dark day, and they looked terrible on the website.
  2. Previous owner did not maintain the property well—carpets were very dirty and the walls had all kinds of cracks.

This property had an excellent layout. It had four bedrooms plus a huge study area, two living rooms, two dining areas, and a great kitchen. It was located in an excellent neighborhood within walking distance to schools and community facilities.

Renovations / Improvements:

  1. We changed all the carpets in the living area, hallway, and study to laminate floors.
  2. We changed carpets in bedrooms to new carpet—it was a debate if we should replace them with carpets or laminate floors, as many American families like to have carpets in bedrooms as it does get cold in winter in Dallas.
  3. We painted all the walls to a neutral beige color, which made the whole house look much brighter, and it also removed pet odor.

The floors and paint had a transformational effect on this property. We leased the property out at $2,000 per month, compared to a total cost of $240,000 for this property. Later on, we had a tenant offer to lease the property at $2,200 per month for a nine-month lease as they are building a new home in a nearby community. The quality of tenant for this property is really good—this shows that you can achieve good rental yield on more expensive homes and get higher quality tenants.

Tenant Issues:

We leased out the property within the first weekend as we had over 10 showings that weekend and everybody loved the property. We decided to lease to a couple who agreed to pay six months rent upfront.

However, during the second month of the lease, the wife was going through a medical complication, and they had to move to another city for treatment. Unfortunately, this caused an unexpected disruption to the lease as she passed away a few days later, and lease was terminated.

Fortunately, the property’s condition remained the same, and we found a new tenant right away. We leased to a family moving from California who had been paying higher rent. The family has a combined household income of $12,000 per month and they moved to Dallas because they had been transferred by their company in California to Texas in order to set up a new headquarters here.

Photos BEFORE Renovation:

Photos AFTER Renovation:

Investor Story 14: A foreclosure property in Mesquite

Investor: Australian Investor

About This Client:

This is my client’s first property in Dallas. He bought six properties in Dallas in two years and built a portfolio for his children.

Q&A with the Client:

Question: What’s unique about this property?

Answer: This was a foreclosure property and was priced below market value. We could not buy the property during the first 21 days of listing as it was given first preference to homebuyers. We waited 21 days, and eventually got the property.

Question: What is the location and layout?

Answer: It is located in Mesquite in a nice subdivision called Creek Crossing. When we went there, I felt it was a nicer community compared to other ones—it was peaceful, and I saw many families in the neighborhood. This was actually one of the smaller homes in the community, as many homes here were sold for more than $200,000. It was a typical three-bedroom, two-bathroom property, and I liked the property as the kitchen area was big and it has two dining areas. Most three-bedroom homes here only have one dining area. The master bedroom also had a separate shower area, and already had tiled floors and tiled walls.

Question: What were the main concerns when you saw the property initially?

Answer: Thomas pointed out the HVAC system may need to be replaced as the external unit was missing at the time. It raised a concern to us; we worried that maybe it was stolen, but it was confirmed that was not the case. Thomas also saw some ant activity, and he suggested to have a pest technician to confirm if there were termites.

Question: Were there any major issues during renovation?

Answer: Thomas and I both decided we should use laminate floors for the living area and bathrooms—we did not like vinyl as it did not last long. We did not change carpets in the bedrooms initially as they were in acceptable condition. However, when a tenant moved out after 18 months, we decided to replace carpets with laminate floors.

A major issue that occurred was with the plumbing in the master bathroom. It seemed the pipes were disconnected somehow, and this caused plumbing issues. It was discovered later that the pipe for the master bathroom was not connected correctly to the sewer line.

Question: Any other things you would like to share?

Answer: The City of Mesquite required a rental permit. They had a more stringent policy for rental properties. They required a city inspection, and they had to “greentag” the building or they would disconnect water. They looked at very specific items such as smoke alarms, trims, and cleanliness. The property needed to be in relatively good condition to pass inspection, and this did cause some delays as my tenants had already moved in at the time of re-inspection. That caused some inconvenience. My suggestion is to schedule the city inspection as soon as the property is vacant, and address all the issues requested by the City Inspector before tenants move in.

Question: How is the rental market in Mesquite?

Answer: Thomas found a tenant who was willing to pay much higher rent than the previous property manager—we were able to get $1,450 per month compared to $1,250 per month from the previous tenant. Rental demand in Mesquite seems to be stronger than other areas, but there is also a very large portion of tenants that are Section 8 tenants. In terms of tenants, we leased to a young family in our first year, and then we leased our property to a couple who was building a new home nearby. The current tenant is really great—they look after the property like their own property, and they even bought rugs for their furniture so that they would not scratch floors.

Total Cost: $135,000 (purchase plus renovations)

Current Rent: $1,450 per month

Layout: Three bedrooms, two bathrooms, one living room, and two dining rooms

Photos BEFORE Renovations:

Photos AFTER Renovations:

Investor Story 15: Buying a 1970s home in Garland

About This Client:

An Australian client building his portfolio in Dallas. This was his second property he bought. It was a three-bedroom, two-living room, two-dining room, three-bathroom property. It was an older home, built in the 1970s with a massive backyard. It was built by a reputable builder with a lot of details and decoration inside.

Question: Tell us why you picked this property.

Answer: Thomas’ team picked this property for me. I couldn’t  see the property first-hand as I was in Australia at the time. The main attraction to me was it had three full bathrooms, which was very rare, and the second living room could be either used as a family room or as a study. The second living room was really designed as a guest room as it had a separate full bathroom.

I personally like homes built in the 1970s, as they used better materials and have better layouts. This property also had many windows and a very nice backyard.

Question: What renovation or updates did you do for this property?

Answer: Actually, not much. Thomas suggested just to repaint some walls in the master bedroom and living areas—he mentioned the rest could be deferred. We found a tenant right away, and they did not request any updates or repairs when they first moved in. During the first 12 months, there was a plumbing issue, and it was determined it was caused from tree roots. We took down the tree and used high pressure to clear the sewer line, and that seemed to fix the problem.

Question: What are some problems faced with older homes?

Answer: Plumbing was the main issue. We had different property management at that time, and they just repaired items as they happened. In hindsight, if we had just replaced old faucets and old shower heads at the beginning it would have been more economical. Tree roots were the main reasons causing these plumbing issues. There was a very big tree at the back of the house, and its roots extended all the way under the garage, driveway, and also underneath the house.

I suggest to take down big trees as they grow very fast, and they can cause damages to the foundation and sewer line. You should also do a camera test to check on sewer lines—it takes a video and shows if there are any damages and if the pipe is disconnected.

Photos BEFORE renovations:

Photos AFTER renovations:

Investor Story 16: A Northern Californian Client buying 2 properties

Client: This Northern Californian client  was interested in buying two properties in well-off areas in Dallas to generate positive cash flow.

After assessment, we picked two properties for him. Both properties are assigned to good school districts and are relatively modern.

Property 1: A property in Fort Worth assigned to Northwest ISD

There were several properties to choose from in Fort Worth, and properties in this area either attend Northwest ISD, Keller ISD, or Fort Worth ISD. Northwest ISD and Keller ISD are really good school districts. They picked this property from our selection because of the location which was very close to the high school, and the elementary school was just around the corner. This area also has many shops nearby, and there were a lot of employers moving to nearby areas, including Facebook, a number of major pharmaceutical companies, and transportation company headquarters.

In terms of layout, this was a three-bedroom, two-bathroom, and it had two dining areas. The property had a formal dining area as well as breakfast area. It had hardwood floors and a large, updated master bathroom.

While we were looking for tenants, we did experience a longer than expected time to place a tenant. The problem was that this area was entirely homeowners, and it did not have a very large demand for tenants. This can happen sometimes when you invest in an area where more than 90% of occupants are homeowners. Anyway, we did lease to a self-employed woman who was looking for a better school district for her children. She ran a lawn maintenance company, and she was able to repair most things herself.

Purchase price was around $200,000, and rent was $1,700 per month on a three-year lease.

Property 2: A property in Mansfield assigned to Mansfield ISD

For the second property, I advised the client to consider a four-bedroom property instead of a three-bedroom property. In this case, we identified a four-bedroom property in Mansfield. It had four bedrooms, two dining rooms, and one living room with a large kitchen. It was located in an emerging area of Mansfield, and I liked this particular neighborhood as it was close to the new hospital district for Mansfield. We saw many professionals working in the healthcare sector moving to the neighborhood.

A four-bedroom property is very attractive, as even smaller families want a four-bedroom. They could use the extra room as their study or guest bedroom. This property also had hardwood floors installed in the living room areas already.

Interestingly, during inspection, the inspector identified that the HVAC needed some servicing—it had small leaks outside, and needed to be cleaned. The seller was buying a new development, and he needed to close on the new home very soon, so he actually replaced the whole entire HVAC unit as a goodwill gesture to make sure our buyer did not back out from the contract. The whole entire system cost him almost $7,500—it was a brand new, energy efficient system with a five-year warranty.

That was really nice of the seller, and my buyer was happy to proceed with the transaction. We leased the property out to a family who moved from San Antonio on a two-year contract, and paying $1,850 per month. One thing I am going to suggest to my clients in the future is to add a covered back porch. This property already has a very nice front porch installed, and a covered back porch will definitely add value to the property.

Photos BEFORE  renovations:

Photos AFTER  renovations:

Investor Story 17: Adding a back porch in Texas

Back Porch is a Great Investment

Investor: Australian Investor

This was my Australian investor’s second investment in the Mansfield area. This was another nice property located in the southern Mansfield area, and was very popular for families moving to this area. Mansfield had been ranked as one of the best cities to live in the U.S., and its population was increasing consistently.

About This Property:

This area was a very hard area to buy a property in. I sold eight properties in this subdivision in 2017, and it had been one of my top locations to sell to investors. I picked this property as I saw the following unique points.

  1. Kitchen layout: It had an island in the middle of the kitchen, and the kitchen size was much bigger than other properties I sold in the area.
  2. Closet area in master bathroom was bigger than other properties I sold in the area.
  3. Master bathroom had dual vanities, while most properties in the area only had one vanity area in master bathroom.
  4. Sitting area near front door for kids to store shoes and hooks for bags.
  5. Potential to add a covered back porch: This was a key strategy to improve property value.

After closing, the client decided to change all flooring to laminate wood and replace all carpet to laminate wood., We also added a covered back porch, which cost around $1,500, and it became a key feature in attracting tenants. We received six applications for this property, and we picked a tenant that agreed to pay a full year rent upfront.

Key Points Learned from This Case:

  1. Covered back porch is certainly worth the investment. I would recommend this to all clients that have an area available to install a covered back porch. However, when it comes to resell, you need to order a new survey as it is considered as an addition to the structure.
  2. Additional laundry room is very attractive. Many homes in this area only have a tiny laundry area, which sits next to the garage, and they cannot place the washer and dryer side by side. This property has a large square laundry room, which is 10 x 10 in size, with shelves.
  3. Use rent payment timing as negotiation. When you have multiple applicants, you can ask if they would like to pay rent upfront—this particular tenant offered a full years rent in advance.

Investor Story 18: Buying into Burleson

A Cute 1970s Property in Burleson Area

Client: Californian client working in Silicon Valley

Client’s Criteria: This was not an easy case as the client only wanted to invest in properties at $150,000 or less, and there were not many choices in newer areas, so we had to seek somewhere else for him.

The Property and the Area:

Burleson was selected as it was highlighted as our next growth area. The first reason being that it is further north of Mansfield area, and as price in Mansfield area continues to appreciate, families are moving further north. Burleson is very popular for families as it has good schools. The second reason is because it was within 20 minutes driving distance to major employment centers and our tenants worked in Burleson, Mansfield, Fort Worth, and Arlington areas. Burleson was also developing a brand-new hospital district which created many new jobs.

About The Property:

This property was built in the 1970s. It was not a big property, just around 1400 square feet, and it was remodeled with brand new windows and a new kitchen. Although the ceiling height was not very high, it had a vaulted ceiling, and bay windows which offered a lot of natural light. It even had a covered back porch, and a nice open backyard. The neighborhood was one of the oldest neighborhoods in the area, most properties were built in the 1960s and 1970s.

This was not a big property and the master bathroom was not very big. The previous owner decided to remodel the bathroom, and they took out the bar stop and replaced it with a new shower area. The shower walls had gray tiles with new frameless glass doors. I liked the design as it opened more space for the master bathroom. They also installed a new vanity outside the shower area.

While we were looking for new tenants, we found that a lot of young couples were interested in this type of property. The first prospect to ask about the property was a young couple who owned a coffee shop nearby. Then another couple asked as the husband was working for the University of Arlington, and the wife just accepted a new job with the Arlington school district. They both currently lived in the City of Rowlett which is 60 minutes away from where they worked, which was why they were looking for somewhere closer.

We sold this property at $150,000, and we achieved the rent at $1,490 per month. That was anticipated as this property was not a very big property, and my client was happy about the outcome. Being an older property, I mentioned to my client it would be wise to remove the tree in the front yard, as it has big roots that can grow underneath the house and possibly crack the sewer line eventually. The lines in the 1970s were made out of cast iron, and they deteriorate. Tree roots may crack cast iron pipes and cause a slab leak.

Photos AFTER Renovations:

Investor Story 19: My Australian Investor’s First Three Properties in Dallas

This is my Australian investor’s story. He is sharing his knowledge and experience with us about what he invested in and why.

Question: Why have you chosen Dallas to invest?

Answer: Dallas is an excellent market. It is showing excellent population and job growth. It has very strong fundamentals and a very diversified economy. I was looking at Houston as well, but Houston is too dependent on the energy sector, and fluctuation in oil price will affect its economy. Dallas is much better—it has healthcare, aerospace, financial services, manufacturing, IT, and telecommunications. It has a much better economy compared to other cities.

Question: Which areas have you selected?

Answer: Thomas checked out many properties for me, and he sent me videos and analysis for two months. We then decided to invest in Garland and Mesquite for this portfolio. Thomas later showed me videos and analysis of other areas, so we built our second portfolio in those areas.

Question: Tell us about the three properties you bought for this portfolio.

Answer: These properties were all built in the 1990s.

First property was 1,500 square feet with three bedrooms and two bathrooms in Mesquite—we leased the property out at $1,390 per month, and our cost was around $150,000. It was kind of a basic property and came with a tenant paying $1,250 at the time. We then increased the rent to $1,390 per month. It didn’t have flooring—it was just painted on slab. The kitchen was actually a good size, and it had a covered back porch. We bought the property as it had immediate cash flow.

The second property was around 1,600 square feet with three bedrooms and two bathrooms in Mesquite, but it had a formal dining room next to the kitchen. Thomas’ suggestion was that we could convert this into a study or fourth bedroom if we want to, and that would increase the value. It leased out very fast as well. We chose the property as it offered potential value improvement. It’s interesting that all of our tenants did not have kids, so they did not require an extra room, and we did not need to convert the dining room into a fourth bedroom. We leased this property around $1,400 per month. The third property was very different. By then, we already had experience with the first two properties, and we decided to buy a property that required renovation. This property was over 2,000 square feet, and it was in a nice area of Garland. The property next door sold at 20% higher on a per-square-foot basis. This property was much larger, and it had an extra living room, extra dining room, and two kitchen areas, but it was not maintained well. It was very messy inside—all the carpets were dirty, and there were a few items that needed to be repaired. We bought the property for close to $180,000, so on a per-square-foot basis, it was under $100 per square foot. We then spent around $5,000 to change all the carpet to laminate floors, and around $2,500 to paint the walls. We found out that the HVAC was only replaced five months ago, and the roof was also very new.  The previous owner replaced the windows, so those were good savings. We leased the property out around $1,650 per month, and this property had appreciated much more than other properties because of the size.

Thomas and I are discussing how we can add value further to this property. The dining rooms are huge, and it has a separate family room and a separate living room area. One thought we have is to convert the large living room area into a fourth bedroom as it actually has its own plumbing, and potentially, we can create another master bedroom with restroom by adding walls and doors. I am not sure why this home only has three bedrooms as it is huge.

Question: Any suggestion for our clients and readers?

Answer: If you can afford it, then buy larger homes—they offer much more potential for value appreciation, and you can do so much more such as adding a new room. Smaller homes tend to have a little bit higher rental yield, but the net difference is very small. Larger homes can also increase rent much faster. I own some very small homes (less than 1,000 sq ft), and it is very hard to increase rent on those small houses.

The U.S. is a great place for Australians to invest. For Dallas, it’s three to four times cheaper than Sydney. Additionally, the Texas economy is growing consistently. It is already bigger than Australia’s and New Zealand’s combined, and growing at more than 6% per year. This is the type of market you want to invest in, and this is the kind of market where you can see capital growth and rent at same time.

Photos:

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