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

This blog was prompted by two of my clients who told me that I had been very active in helping investors buy properties in the Dallas area, and I should share my knowledge and experience by putting them into a blog. 

To make this more interesting we have decided to mix in some interesting case studies relating to renovations, tenants, property management issues, negotiations, and how we have helped our clients to increase value to their properties.

We have learned a lot with our clients over the past seven years. Between 2013-2018 we viewed close to 3,000 properties in total. On average, I was travelling 200 miles a day, and it was normal for me to check out eight to ten properties on a typical morning.

This built up our experience considerably; we renovated 100 properties from 2015-2018, some were just minor updates, and some were complete renovations. For me it was an adventure and a journey. I started my realtor business in 2013 because I could not find a good realtor to help me find a home to buy for my family. My wife then asked me why I didn’t just get my own license and do it myself. It turned out to be the best decision I’ve made. Since then we have sold over 100 homes to investors across the world. Thus far, we have sold properties to clients from 20 states and 12 countries. It was an amazing experience for us to meet with so many clients from all over the world.

We only arrived in America in August 2013 with almost nothing but a dream, and I became a licensed realtor in June 2014. I never realized I could do so much in three years. I am grateful to be in this country and to be fulfilling my American Dream.

Investor Story 1: Buying an Upscale Foreclosure Property in Rowlett

Investor: Australian Investor

About This Investor:

This investor is an experienced investor. He buys properties that need repairs—he is willing to take more risks and is not afraid of buying foreclosure properties. He owns several properties in the Dallas area.

About This Property:

This was a foreclosure property, but it was built by a reputable developer called David Weekley. David Weekley Homes builds nice homes and often in nice areas. This property was vacant for almost 12 months, and utilities were not even turned on for a long time. It was on the market for over six months which was very unusual for the Dallas market. When we first walked in, our initial reaction was complete surprise because of the size—the property was very large, over 1,900 square feet. It has two dining rooms which is unusual for three-bedroom properties in the Dallas area. Most just have a small breakfast area. The master bathroom was huge, and it had a patio at the back of the house as well.

Renovations / Improvements:

Improvements Completed in Phase 1: (First Year)

  1. New flooring for all the living and dining areas.
  2. Repainted the interior of the house.
  3. Installed a new fence (as it was rotten and damaged).
  4. Remodeled the shower area in the master bathroom by opening up a wall and widening the space, which increased the shower area by 50% and turned out to be a great idea.

The first year was mainly invested in improving the interiors (other than the fence). In the same year, due to the heavy storm which occurred in the area and caused damage to roof, we filed an insurance claim and replaced the roof.

Improvements Completed in Phase 2: (Second Year)

  1. We remodeled the kitchen by adding a backsplash and a countertop (this increased property value considerably).
  2. We remodeled bathrooms by re-tiling wall tiles on the main bathroom and replaced the bath tub.
  3. Appliances were replaced as the first tenant did not maintain the property well and had caused damage to the microwave and stove.
  4. Exterior painting: This is the first property we decided to repaint the exterior. The cost was around $1,600 to repaint all the exterior walls which resulted in significant change to the exterior. Some tenants thought the house was a brand new home because of the exterior painting.

Investor Comments & Lessons:

  1. Plumbing is a hidden cost. This investor told us that the plumbing has a lot of unknowns, especially when it comes to foreclosed properties, as the water was not activated for a long period of time, and as the result, a lot of soil was found inside the sewer line which caused blockages when the tenant first moved in.
  2. He advised that investors should perform a camera test to see if there are any cracks in the sewer line, and use high pressure cleaning to flush out the sewer lines to prevent blockage in the sewer line.
  3. Foreclosure homes often mean that the previous owner did not take care of the property well, so small maintenance items had been ignored. In this case many faucets were leaking and needed to be replaced. Also, HVAC was not serviced regularly, and we had to repair the system over two years.
  4. The third bathroom is a huge bonus and provides value. Very few three-bedroom houses have three bathrooms in Dallas; this was one of the main attractions for this client to buy into this property. This third bathroom has added probably 5-7% of value compared to properties in the neighborhood as this is the only property that has a third bathroom on the street of this size.
  5. We asked the insurance company to check and replace chimney siding and gutters at same time. The roofer also pointed out there were some damages to the chimney siding and gutters. The insurance adjuster agreed and provided an additional claim to cover these repairs. The gutters were repainted as a result and the whole house looks very different from the outside.

Outcome:

Initial Cost: $160,000 in purchase

Renovations:

Phase 1: $10,000 (Year 1)
Phase 2: $10,000 (Year 2)
Current Value: $230,000 to $240,000
Rent Achieved: Year 1: $1,400 a month

We then took over property management, and we replaced a tenant putting them on a three-year lease term.

Rent Achieved: Year 2: $1,700 a month
Rent Achieved: Year 3: $1,800 a month

Photos BEFORE Renovations:

Photos AFTER Renovations:

Investor Story 2: Buying a Townhome in Richardson

Investor Type: Overseas Asian Student

About This Investor and Her Requirements:

This is an overseas student attending the University of Texas, Dallas. In our first year, we had helped several overseas students invest in properties near the University of Texas at Dallas. This is an interesting case, as this was also our first case where we got leads from a Facebook campaign.

Overseas students sometimes have different requirements—they are more inclined to purchase properties near their university. In this particular case, she also wanted to live in this townhome while renting out other rooms to her friends.

Safety is a concern for this investor, as she lives by herself. Therefore, it was important to pick a safe community for her. Another concern was the home ownership–investor ratio, as it would affect the future potential to sell to homeowners.

About The Property:

After searching nearby properties, we identified a two-bedroom townhome in Richardson for this investor. It was priced within $120,000 and market rent was $1,250 per month. It was within a five-minute driving distance from UTD. It was situated in a quiet community and only had around 40 townhomes in the entire community.

We chose this property for this client for the following reasons:

  1. Two bedrooms, one upstairs, and one downstairs. This gave her privacy while she leased the downstairs room to a roommate.
  2. Two separate bathrooms, again, one upstairs, and one downstairs: This was a great layout because many townhomes only have one and a half bathrooms, and usually the full bathroom is upstairs.
  3. Open space kitchen layout: This property has a kitchen near the front door instead of in the middle of the property.
  4. It had a small front yard which gave some extra space for the occupants to put some furniture and plants, and had a fence.
  5. Only shared one wall with a neighbor. Many townhomes are constructed in the middle of a row, which shares two walls with neighbors. On this particular property, it only shared one wall with one side.

Key Points Learned from This Case:

  1. While townhomes may look identical outside, the layout can vary considerably inside, such as bedroom locations and kitchen layout.
  2. Understand special assessment: HOAs can impose special assessment from time to time, and in the second year, this client received a special assessment. She needed to pay an extra $200 per month for six months. This assessment was designed to repair foundations on all properties in the community.
  3. Does HOA cover roof repair? For this particular community, it does, and therefore, insurance is lowered as roof repair is covered by the HOA. This varies from community to community, and many do not have roof repair covered as townhomes are individual homes with individual roofs.
  4. Homeowners vs. Investor ratio: Once again, you need to ensure that it is majority-owned by homeowners so that home buyers can use a conventional loan to purchase the property in future.

Photos BEFORE Renovations:

Photos AFTER Renovations:

Investor Story 3: Buying a Foreclosure Condo in Garland

This is an interesting case study. It was one of the first condos we invested in, and there were several lessons to discuss in this case.

Investor: Australian Investor

About This Property:

It’s a one-bedroom condo, 750 square feet in Garland. This was a foreclosed property and was bought for $38,000 from a lender. It required a complete remodeling inside. There was no attached garage. The investor bought this property as an “experiment” to test how it works in renovation and what cost was involved, so it was very much like a case study.

Renovations / Improvements:

As the unit was not very big, the renovation cost was not extensive. Here are the key items you can do if you are buying a smaller condo:

  1. Kitchen is the key selling point for a condo—it takes around 30% of space of this unit. We retiled the entire kitchen area.
  2. Light fixtures make a big difference in a condo, again because of the small size. We changed them to pot lights.
  3. Paint color: To make the rooms look bigger, we chose a color called “beige land.” It’s a light-neutral color. This condo has large bay windows, so this color worked really well. Some tenants thought the condo was over 1,000 square feet.
  4. Bathroom was also re-tiled and remodeled, again, using vinyl floors in one area. So in the end, we just used laminate flooring and tiles for this condo.

The result was very impressive, and we were able to lease out the property over a weekend, receiving multiple applications. We leased the property out at $750 per month, which was the highest rent achieved for this condominium for a one-bedroom unit.

Key Points Learned from This Case:

Let’s discuss issues investors faced with this project. There were a lot of ups and downs.

  1. HOA issue: This condo was managed by a private HOA, meaning that it was a resident owned HOA. There were “factions” within the HOA, even though the whole condominium was just around 32 units. HOA members had disputes with each other, and they had taken on each other – nobody was taking responsibility and this caused almost two months of delays on closing as nobody was doing the HOA Resale Certificate.
  2. Beware of HVAC issues when it comes to condos. This condo was located on the second floor, and the unit needed replacement during the second year of occupancy. The cost to replace this HVAC unit was even higher than for a house due to the distance from the outdoor unit to the indoor unit, and they had to run cables from downstairs to upstairs. So if you invest in a condo, be prepared that the HVAC replacement cost can be more significant than owning a house.
  3. Understand the lender’s rules and requirements. Fannie Mae loans require owner occupancy to be above 50% for the entire complex. In another words, if there are more investors owning units in this apartment complex, then you are unable to sell it to a buyer using conventional home loans. In this particular case, the ownership was 48% (homeowners) and 52% (investors), so we faced an obstacle when we tried to sell this unit. The buyer needed to change his loan type as he was buying for his son. He was able to refinance his home and took money out and paid cash in the end, but this delayed the entire transaction for almost six weeks.

Overall, it was a successful turnaround case study despite the challenges we faced initially. Rent was overall good – a good tenant lived there for two years, paying $750 per month, and the property was sold for $75,000 in the end. This was a good case study of how you can successfully invest in a condo in Dallas.

Photos BEFORE Renovations:

Photos AFTER Renovations:

Investor Story 4: Buying a Nice 5-Bedroom Home in Little Elm

Investor Type: Australian Investor Using His Retirement Fund

This is one of my major clients from Australia who bought six properties from me in one year. This was one of his first investments. He is 70 years old, likes Texas, and he shifted his portfolio to the U.S. as properties in Australia are extremely overpriced.

About This Property:

While he was in Dallas, I mentioned Little Elm to him. He wanted to invest in a property within Frisco ISD, but he does not like Frisco that much. As a result, I picked this property in Little Elm which is assigned to an excellent elementary school and high school.

The property has four bedrooms, one big study, two dining areas, and two living areas. It has a sitting area next to the garage and kids workstations between the rooms. The master bathroom has separate shower, dual vanities, and bay windows.

The property was not maintained well when we visited the property. It had very strong pet odor, and for some reason, the occupants did not take out their garbage, so it smelled awful inside the property. In fact, it smelled so bad that at one stage we thought there was a plumbing issue, but it turned out to be a garbage disposal issue, which was a very small cost to replace.

This is a very beautiful community – it has a very big community park with swimming pool, basketball court, tennis court, and a clubhouse. During winter time if the weather is cold enough, they turn the basketball area into an ice skating rink. This community also provides families with various activities like Christmas parties, July 4th fireworks, and the HOA fee is very reasonable at $500 per year.

When we went back after closing, it was a very pleasant surprise. The seller moved all the garbage out, and the property looked huge. The condition was really good and the smell was gone. Initially, we planned to allocate $20,000 for renovations, but this was reduced to $6,000 as the condition was better than anticipated.

Renovations / Improvements:

  1. Painting: Walls were painted in different colors for every room. It was a mix of blue, purple, brown, yellow, and something in between. The client decided to paint all walls with one consistent color.
  2. Laminate floors for bedrooms and hallway areas: This client insisted on change flooring to laminate floors for all his rental properties, as carpets don’t last very long, especially if they have pets.
  3. Repaint walls and shelves of study room: When we first visited the property, the study was full of boxes and we could hardly determine how big the area was. It actually had built-in shelves already, so we repainted all the shelves (it was a lot of work, as they needed to be sanded down and repainted several times). This study turned out to be a major selling point, as it could be used as a study, fifth bedroom, or third living room. Very few homes in this neighborhood have a study area.
  4. Replace cheap faucets with better quality ones: This was really the builder’s fault. Many builders try to save on cost and use low quality faucets. As this is an expensive home, we thought we should match with similar quality materials. We replaced many faucets to better quality ones which made the master bathroom and kitchen look more upscale.

Key Points Learned from This Case:

  1. First impressions are not always correct: This was definitely a surprise when they moved out, and it was on market for over 100 days because it was not presented well initially.
  2. Layout is the most critical part of the property. As long as you have a good layout, you can do a lot. I like this property as the study is a separate room, and it has built-in shelves.
  3. Sitting / shoe area next to garage is a major selling point. Many homes do not have this unique feature anymore, and this was a top selling point when we advertised for rentals. It was actually a key factor as the wife said, “Now I have a place to put the kids’ shoes.” We actually used this as a case study for our clients, that this can be a good investment feature to add to their property, and it cost very little to do it.

Total cost was less than $275,000. We leased out the property at $2,200 per month, and we signed a tenant on a three-year lease. They have three kids attending the school, and in fact, they already lived in the community. This area has more capital appreciation than rental yield—the property has been appreciating at around 10% per year, and it is already valued above $300,000 after just 12 months.

Photos BEFORE Renovations:

Photos AFTER Renovations:

Investor Story 5: Beautiful Home in Southwind Addition in Arlington

Investor Type: Californian Investor

About This Investor:

This client lives between China and California, and she was buying several investment properties in Dallas. Her goal was seeking properties that can be maintained easily, and she preferred to buy properties that are less than 10 years old.

We recommended properties in the Mansfield ISD area, and this particular property is located in Southwind Community. It is a community located in Arlington, but it is assigned to Mansfield ISD. Brown Elementary School is a well-known elementary school for this district, and this community is famous for its local residents,  excellent HOA community, and close location to various amenities.

About This Property:

This is one of our most active areas. I have personally sold eight properties in this community in 2017, so we got to know this area street by street. This is a three bedroom, one living, and one dining area property. We liked this property for several reasons:

  1. It is away from transmission towers—part of this community backs to a greenbelt which has several transmission towers.
  2. It has a covered porch which was added by the previous owner.
  3. It has a remodeled fence.
  4. It has a new sprinkler system installed.
  5. Hard floors in the living room area.

The location and condition were main features. This property was leased out even before closing, and it happened around Thanksgiving break which is usually the slowest season for leasing activities.

Key Points Learned from This Case:

  1. Neutral color is very important for presentation. In this case, a neutral grey/blueish color was used and made a big difference to presentation.
  2. Texan families love covered porch areas. This was unexpected. We listed two properties at the same rate at the same time, and this property was selected because it had a covered back porch.
  3. Hard flooring is a good investment to consider as hard floors are easy to maintain, scratches can be removed by polishing, and they are less likely to be chipped or damaged by pets.
  4. School district is important, but not all tenants have kids. Some of my clients insist on buying properties that are assigned to top schools. It is interesting to see that there is a very large proportion of renters who do not have school-attending children. In the case of Southwind Community where I leased out five properties in 2017, none of the tenants had children at school age, but they still wanted to live in a community with an excellent school.
  5. Pets are a very important factor when it comes to leasing. The majority of Texan families have pets, and in fact, a recent study shows more than 70% of families in Dallas have pets. As a result, investors need to understand that this is a decision-making factor when it comes to renovation, especially flooring.

Photos AFTER Renovation:

Investor 6: A Property with Just One Bathroom

Investor Type: Local Investor, Portfolio Client

About This Client:

He is a local client, an experienced investor, and is not concerned about taking additional risks. He is experienced in buying properties that need some fix ups, and he was seeking a property to add to his portfolio. The property we found fit into his budget, and he was aware of potential risks associated with it. He was looking for lower-end properties in relatively safe areas, and he also looked at opportunities where he could add value to the property.

About The Property:

The property was located in Mesquite. The area was a quiet neighborhood with smaller and older homes. The majority of homes in the area were built in the 1950s and 1960s, most of them had been updated already. A large number of properties in the area had converted their garage into an additional living room or bedroom. For this particular investment, the school district was not critical, as its main goal was adding a property to a portfolio.

The previous owner had converted the garage into a second living area. The combined area was 1,100 square feet including the converted living area. The living room was of a good size and the kitchen had a good layout, which is why this investor decided to purchase this property.

Renovations / Improvements:

This property was leased out immediately at $950 per month, which was a good return compared to the purchase price of around $75,000. However, older homes have a higher risk of having plumbing issues, and within the first two weeks, the sewer line was clogged, and $2,500 was spent in replacing the sewer lines underneath the house. One side of the sewer line was recently replaced in 2015 but not the front side. Once upon a time, there appeared to be a large tree at the front, and the roots had damaged the sewer line, as these trees had been there for over 50 years.

Fortunately, this was the only repair needed during the first year. The tenants stayed there for over a year and moved out in early 2017. The investor wondered about the following options—let us discuss these in detail, as it is an interesting case study.

He had the following two options:

  1. Keep the layout as it is, but improve the interiors, update the electrical units, and lease it out as a three-bedroom, one-bathroom property, or
  1. Change it to a three-bedroom, two-bathroom property, which will add more value to the property.

Adding a Second Bathroom – Process Involved:

He decided to try the second option. The overall estimate was not significant—it would cost around $5,000 to add a second bathroom, in this case, converting the master bedroom closet area. This, however, faced an obstacle when it was done halfway, so the project needed to be cancelled. The investor decided to allocate the budget into improving flooring, electrical, and the HVAC unit.

Adding a second bathroom was a much harder project, even though there was no addition to the property. The process was very lengthy, and it required multiple inspections, and also multiple drawings. The whole process would take months, meaning the property could not be occupied at the time, and resulted in a lost opportunity to make income.

The Outcome:

This property was substantially improved by replacing the flooring with laminate flooring. We also changed the furnace, installed a new window unit for the second living room, and a closet was added so that room could be used as a bedroom if needed. A new electrical panel was installed to provide more power to the house. The outcome was very positive. The rent was increased by $300 to $1,200 per month, and the value of the property increased significantly.

Key Points Learned from This Case:

  1. Adding a second bathroom does add functionality to a property. However, one needs to weigh in processing time and cost versus opportunity cost. Inspections can take months as they needed to inspect every stage.
  2. Simple improvements such as updating appliances, new flooring, and new kitchen countertop would be a much quicker process to increase value.
  3. It is okay to consider properties that had converted the garage into an additional living room or a bedroom if that is a common practice in the area. You do not want to be the only property with a converted garage on the street. Converted space can either add or decrease value to a property if it is different from everyone else. It is a double-edged sword sometimes.
  4. It is important to replace old sewer lines for older homes as they can create major issues, and it’s best to replace them while the property is vacant. It is a deferred maintenance—do not take your chance, it is something that needs to be done eventually.
  5. Older homes can create higher return on investment. If it is planned carefully, they could generate greater rental yield and also higher capital appreciation once updated. Risk and reward are proportional.

Photos BEFORE Renovation:

Photos AFTER Renovation:

Investor Story 7: Buying a Property in Mira Lagos, Grand Prairie

Client: Local Investor

Experience: Very Experienced

This is a beautiful home in the Mira Lagos subdivision. Below is a Q&A with the investor about why he chose this property and we can learn from him sharing his experience with us.

Question: How many properties did you own in the Dallas area prior to this one?

Answer: This was the eighth property I had invested in the Dallas area. I bought all my properties from Thomas, and I discussed with him that I wanted to build a portfolio to 10 properties eventually.

Question: Why did you choose this area?

Answer: This is very interesting. My seventh property was in the Arlington area in the Mansfield ISD. While Thomas was placing a tenant for me there, several tenants asked if we have properties in the Mira Lagos subdivision, so we had a waiting list of tenants wanting to move to the Mira Lagos subdivision already. Thomas was already very active in Grand Prairie, so he mentioned to me that this area has excellent schools and very nice community facilities.

Question: Tell us about the property and the condition.

Answer: This is a four-bedroom, one-dining, one-living room property. The living room has a fireplace. The master bedroom is at the back of the house, and the kitchen is also at the back of house. I like this kind of layout as the fourth bedroom is a flexible room, so it can be used as a study or as a fourth bedroom. I like properties where the kitchen has windows, so that it doesn’t get greasy. I found that as a problem for some properties when the kitchen is in the middle of the house. Also, this kitchen has an island in the middle.

Question: What other features you think are important and attractive for this property?

Answer: I found Texan families really love a fireplace. I have a property which doesn’t come with a fireplace, and it was a reason why some tenants didn’t want it. Texan families also love a covered back porch, they use them a lot during the summer. This property already had a covered porch, which is a reason why I chose it. This property also has a front foyer area and small hallways, which means a higher space utilization rate. The master bedroom has three bay windows, which makes the room very sunny even in winter.

Question: Have you done any renovations? Please let us know what you have done.

Answer: Thomas suggested to use a neutral color for the property. Our painter was already doing a project in a nearby property, so we asked him to use the same color for the walls. We used beige color for all the rooms. This made a really big difference when we showed properties to tenants—they loved the neutral color. We changed carpets to laminate floors, and we used an espresso color, which matched existing floors in the living area. We were debating if we wanted to change the kitchen countertop to a granite countertop but decided to wait until later. We also painted the garage walls, and we painted the garage floor with a heat resistant paint, as it is hot in summer in Texas, and it is usually 10 to 15 degrees hotter inside the garage.

Question: How did these renovations help in terms of finding tenants?

Answer: It was very positive. We received five applications in the first week, which was impressive considering it was around Christmas time. We decided to lease to a lady who used to live in this area. She lived by herself and had two small puppies, but still wanted to live in a nice, four-bedroom home. She told us that she was already paying close to $2,000 in rent per month in North Dallas, so this was a much better deal for her. We leased to her at around $1,900 a month. Our total cost was around $220,000, so the return on investment is pretty good. We also signed a two-year lease, and she already asked twice if would consider selling the property as she loved the property that much.

Question: What is some advice you would give to other clients in this area or layout?

Answer: My advice is as follows:

  1. If you can buy a four-bedroom property, then buy it. The demand for four-bedroom properties is much higher than for three-bedrooms, even for small families like my tenant. You will be surprised how many tenants still want a four-bedroom property, even if they just have one or two occupants. This was a big surprise to me.
  2. A covered back porch really makes the difference. It was never a big deal to me personally, but this is the third time that many tenants mentioned to me that it was one of the reasons why they chose it.
  3. Laminate floors are really good for maintenance, which is why we replaced all the carpet areas and have two boxes of materials as spare ones. One thing about laminate floors is they change the style almost every quarter, so they do run out very quickly. Make sure you order an extra one or two boxes in case you need to replace them.
  4. The surroundings are very important. This house is located in an area where there are a lot of larger homes—some are over $400,000 or $500,000. Tenants want to live in an affluent area, and this ambience helped them increase their budget because they wanted to live there.

Photos BEFORE Renovation:

Photos AFTER Renovation:

Investor Story 8: Four-Bedroom, One-Study, Three Bathroom Property in Richardson

Renovating a Four-Bedroom, Three-Bathroom Home in Richardson

Client Type: Local Buyer

About This Client: Very experienced, he buys properties that require renovations.

Q&A with the Client:

Question: Tell us about yourself and why you picked the Richardson area.

Answer: We picked Richardson as we already lived here, and our kids are attending schools in the area. This property is assigned to JJ Pearce High School. This is a very established neighborhood, most homes were built in the 1970s, even some in the 1960s.

Question: Tell us why you have picked this property.

Answer: The number one reason would be layout. I found newer homes, such as those built in 1990s and 2000s, rarely have three full bathrooms. We wanted a property with four bedrooms and three full bathrooms, and a nice kitchen. This one already has three bedrooms on one side of house, and a guest suite with full bathroom next to the kitchen. This home also comes with a study, and we use the formal dining room as piano room.

Question: Have you done a lot of renovations?

Answer: Yes, we have invested $60,000 into renovations over three years. The house was in bad condition when we bought it as the previous owner did not do anything. She had five dogs and there was dog poop everywhere in the house. It was for sale for almost three months which was uncommon for properties in this subdivision. It smelt terrible, and all the carpets were ripped apart. We did see value and potential in the property.

Question: What were some big surprises during renovation?

Answer: Houses built in the 1970s have many positive surprises—once we removed the carpets, we found there were hardwood floors underneath in three rooms, so we just needed to polish them instead of replacing the floors—this saved a lot of money. The kitchen already had granite floors, and houses in 1970s also usually have two closets in the master bedroom. On the negative side, the windows were really old. We did not budget in window replacement initially, so that was a significant investment. Also, we noticed some movement in the foundation  in the second year, so we needed to install foundation piers. We found out two sides of the house already had piers installed by the first owner (not the seller who sold to us), so that was a good surprise as we only needed to add a few more piers to one side.

Question: What would you suggest to our clients who are looking at a house built in the 1970s?

Answer: I would suggest they do the following:

  1. Sewer line leak test – This is done by sending a camera into the sewer line and test to see if there are any cracks in the sewer line. They used cast iron sewer lines in the 1970s, and they do rust, and if there are big trees, the roots will get into the sewer line and cause blockage.
  2. Cleanouts – This is something we hadn’t thought about it before. Many homes don’t have cleanouts, which means it will be difficult to repair or clean blockages in sewer lines. A plumber can install cleanouts which are usually in flower beds or front yards.
  3. French drain is a very good idea to improve water flow. This particular home had an uneven backyard, and when it rained, water would pour up and flow into the back porch area. My gardener also knew how to install drains. He connected all the drains into gutters and connected them to the main sewer line of the city. We haven’t had any backflow issues since then.

Question: Anything else you think you can do to improve the value of the property?

Answer: Yes, we also changed our shower area to frameless glass and that has modernized the overall look of the bathrooms. There are three more things I really want to do later on if we want to sell the property. First we will be adding an island to middle of kitchen that will add more storage space and processing area. Second will be expanding the closet area in two bedrooms as they are not very big at the moment. Third will be adding a side fence, so that there will be more area on the side, but I am not sure if a side fence will actually increase property value.

The end result was impressive—an appraiser did an appraisal recently as we were doing a refinancing, and he added more than $100,000 in value. We are able to use the new appraisal for home equity, and use the additional funds to invest into another property.

Investor Story 9: 1970s home in Richardson

Client: Foreign Buyer

Type of Investor: Portfolio investor, she bought four properties from us in one year

Let’s discuss some interesting points about this property with the Client.

Question: Why did you choose this area? What are the unique points?

Answer: I picked this property based on several reasons highlighted by Thomas. 1) He lives in a nearby area already, and he knows the area really well; 2) It is within walking distance to the high school; 3) It is also within very short distance to University of Texas, Dallas, (only two miles) which means many students live in the area; and 4) The area is really quiet, but also very convenient, close to three supermarkets and lots of shops.

Question: What are some of your strategies about this property?

Answer: This property is more about appreciation. I know this area will achieve less rental yield, as cost is higher here. I believed this property would grow by at least 5% per year, which it did, and within three years, it had appreciated by 30% in value. This is because this is a well-established area with no new constructions. I liked the area because there were a limited number of properties in the neighborhood.

Another possible strategy is to lease this property to college students on a room-by-room basis as it is very close to the college; that would increase cash flow for this property.

Question: Tell us about the layout of this property.

Answer: The property is around 2,400 square feet. Properties built in the 1970s have well-defined layouts with separate rooms. It has three large bedrooms, and the master bedroom is at the back of the house with a very large master bathroom that was completely renovated. I also like the kitchen layout which is next to a formal dining room and has a large breakfast / second dining area. At the back of property, there is another very big second living room next to garage. That area can be used as a second living room or as a very large fourth bedroom or study. The living room is in the middle of the house with access to the back yard through the backdoor.

Question: Tell us some unique experiences about this property.

Answer:

Older properties have surprises, and on a positive note, this property was already renovated. The previous owner was an older gentleman in his late 70s, and he used very high quality materials. However, he liked dark colors, so some areas had dark tiles, and some materials were not as contemporary.

Second, the spa in the backyard caused some issues. As it is already included in the property, tenants have the right to use it, and when it breaks, we need to repair it. A spa can cause consistent issues, and they are not easily maintained. They will have similar issues as swimming pools.

Third, the air conditioning unit was replaced during the first 12 months, even though it passed the inspection. We find that air conditioning units need regular service—I would suggest an annual tune-up, both in summer and winter. Sometimes it is more economical to replace a new unit rather than repairing them. When it comes to HVAC replacement, check on various vendors as there are many brands available, and the price can be very competitive between the technicians. Some will also offer 18-month or 24-month financing options.

Investor Story 10: Southwind subdivision in Arlington

Client: Californian Investor

About This Client:

This client was referred to us by her relative, and they have been investing in the Dallas area for two years already. The client is from Northern California, and she was referred to me by her relative who started investing in the Dallas area in 2016. She liked the fundamentals and also rental yield. We picked properties and found tenants for her.

This was her first investment—it is in the Southwind Subdivision, which is a very nice area in Arlington. This area attends Mansfield ISD. The elementary school is a very well-established school in the area.

Why we picked this property for her:

  1. Area: We are already very familiar with this area—Southwind is a popular area, and many families want to move to this area. It is assigned to an excellent school district, and there are many new employers moving to surrounding areas. A new hospital district was recently established in the area, which created many new jobs.
  2. Layout: This is a three-bedroom with a very big study, and it has an open layout kitchen and living room. The study is a very versatile room—it can be used as a study, a family room, or fourth bedroom. It already has French doors installed, and if needed, a closet can be added to make it into a fourth bedroom.
  3. Front and Back Porch: This property has a covered front and back porch, which provides a good sitting area to enjoy evenings.

Renovations / Improvements:

  1. Painting: There were too many colors throughout the house. There were blue walls, purple, red, yellow—it was too customized. After consultation with my team, we decided to paint all the walls just one color. We picked a neutral color, and it created an immediate impact to the property. The whole house looked much brighter after we painted, and the effect was especially noticeable for the study and living areas.
  2. Flooring: Too many types of carpets were used initially, so we decided to change them to one consistent laminate floor for all the bedrooms. We considered shampoo cleaning as the initial option, but the previous occupant had two very big dogs, and the odor was very strong inside the house. My client picked a nice red-oak color laminate floor which matched with the kitchen shelves really well.

Leasing Strategies:

Renovation completed the holiday season of Christmas. We marketed the property at the end of the year, and we received an application immediately from a family seeking a short-term lease. This family was looking for a four-month lease while they were waiting on their new construction. This is a very common request from families in Dallas right now.

With short-term leases, we consider the following factors:

  1. Why they need it: In this case, they sold their home in Arlington and they needed somewhere  short-term. This means that they have funds available as they just sold their home, which was considered a positive factor.
  2. Timing: With a short-term lease, you want the lease to terminate during peak time, which is March to September. In this particular case, it ended in April 2017, which was the beginning of the peak season, so it had a smooth transition into a new lease.
  3. Security Deposit: One factor to consider for a short-term lease was possible damage caused during the brief term. We had two options: first option was to charge a higher security deposit, and the second option was to charge a non-refundable security deposit. The tenant agreed to pay one-month security deposit and half month non-refundable security deposit as they understood this property was renovated recently.

This tenant ended up staying a bit more than four months as their new home construction was delayed, and they allowed us to show the property a month before their lease expiry date.

We were able to lease the property out the last week of their lease, and the new lease started in May to another couple. The new tenants are a young couple without kids, so the school zone is not important to them, but they still want to live in this area.

Photos BEFORE Renovation:

Photos AFTER Renovation: