Killeen Trip

I have been house-hunting outside of the Austin metro area the last couple of weeks, trying to find some multi-family housing. I've been especially keen on looking at areas north (way north) of Austin, and found some interesting finds in a town called Killeen, TX.

For those that aren't too familiar with Killeen, it's a nice-sized town that is home to the Army's Fort Hood. Fort Hood is a HUGE installation and there are thousands of soldiers stationed there, so it's easy to say that Killeen would be a big rental market.

I had found five properties while researching the town - one SFR, and four 4-plexes. The pictures on the web for the properties showed them to be in poor-to-fair condition, so I wasn't expecting a diamond in the rough by any means. When we got to the first property, I had quickly begun to understand why they were being sold so cheaply.


4-plex #1
There are burglar bars on the doors and windows for a reason. The area looked scary during the day time, so I can only imagine what it looks like at night. Next!

The next property is the lone SFR. It looked decent from the outside, but I couldn'y peek in the windows to see the inside. It had a small backyard and was located about a mile or so north of the 4-plex above. The neighborhood looked SLIGHTLY better, but still rundown.


SFR
Matter of fact, I hope I don't offend anyone reading this, but the whole town looked depressing. From the area I drove around, it looked to be about 80% duplexes, 4-plexes, 8-plexes, and apartment buildings, which I think is logical given Fort Hood is right next door. What I couldn't believe is the number of condemned/vacant properties there were.

We went and saw 4-plex #2 after the SFR. It was located about 1-2 miles north of the SFR, and I couldn't believe the area when I got there. The 4-plex itself looked in good shape, and anywhere else it would have been a superb purchase. But the street it was on was a complete disaster. There were probably 5-6 4-or-8-plexes there and HALF of them were vacant, boarded up and/or had broken windows, etc. I didn't even get out of the van to take a look as there was no way I was going to buy that 4-plex.

The following was the "best" 4-plex I found. It was located further east than the previous three properties:



4-plex #3

The last property was the final 4-plex. It looked in terrible shape. The window in the front left unit is broken, and I peeked in to see trash everywhere. The second picture shows the rear of the building, where you can see the indows paritally boarded up. The other half of the windows are broken as well:



4-plex #4
Right next door to this 4-plex was another 4-plex that looked in equally bad shape (see what I mean about the town having a lot of vacant/trashed properties?). Matter of fact, neither property had any notification of an address, so I'm not even sure which one is the actual 4-plex #4. LOL!


Another 4-plex
Now, seasoned rehabbers (and even novices) would love to have these properties. The problem for me is (1) they are located about 50 miles north, so I'd be hard-pressed trying to both rehab and manage the places, and (2) the city seems overly saturated with rental housing. Rents for those particular properties are in the $200-$400/month range, depending, so the properties would have to be bought dirt cheap in order to make any cash flow. Given the location of most of them, too, I figure a lot of cash flow one DID make would be put right into maintaining the property.

Some Interesting Finds

While perusing some real estate agent websites yesterday, I came across the following:

* 10-unit Bed-&-Breakfast, located near a ski resort. $179,900

* 9-unit Apartment building, 3 units need some work. $118,000

* 13-unit Apartment building. $232,000

* 8-unit Apartment building. Some units need a little TCL. $99,000

After digging a little more, the 10-unit B&B is located about 25 miles from a ski resort, so I would hardly say it's nearby. When I first look at apartments, the first thing I calculate is the price-per-unit. Ideally, I'd like to find something <$10k/unit, but those are extremely hard to find on the MLS. The 10-unit, while not really an apartment building, comes in at about $18k/unit. The 9-unit averages to about $13k/unit. The 13-unit is roughly $18k/unit. And, finally, the 8-unit comes in at about $13k/unit. Again, I don't go SOLELY by these figures as a lot of variables could make even the higher-priced ones lucrative - it's just a first guage. I asked the listing agent for the 8-unit to send me a spec sheet on the property, which she faxed me yesterday. I actually saw the 9-unit listed a while back and asked the listing agent for some info, but I can't recall where I put it (my memory is going).

The reason I like both the 8-unit and 9-unit is the fact there is a university located nearby each one, which makes it ideal for college students. The two things I'm questioning are (1) what is the extent of the repairs needed, and (2) both have been listed for a while now, but have had no takers - why?

Anyway, these are the types of properties I was referring to in my E Pluribus Unum post. Preferably, 8-15 units, and worth the cost (i.e., good rental properties without a whole lot of repair work).

Two Lemons - Time To Make Lemonade

I happened upon two bits of news over the weekend regarding real estate in my area.

First, we went to visit my MIL over the weekend. She lives in the same town where I have House #1 (and bought/sold House #2). She had a circular that talks about the goings-on for the town, so I decided to read it. There was a story splashed on the front page that said (and I'm paraphrasing) that that particular town is the fastest-growing in the state of Texas! I kind of already knew it was growing pretty big, but I didn't think it was the fastest growing in the entire state. What's interesting is the fact that the town is starting to see some growing pains. As I've mentioned before, the City utility office seems to be running inefficiently, and I'm thinking the reason is they are running behind the growth. They need possibly 3-5 more people in that office to handle the calls and whatnot, IMHO. Additionally, for a city that is growing so much, it still has ABSOLUTELY NO grocery store (unless you count convenience stores). A couple of chains are supposed to be coming in within the year.

Second, I was reading the Business section of the Sunday paper, and in the front was a story about how foreign investors are starting to buy real estate in central Texas due to the lower-than-average prices AND the weakening currency. I'm not talking out-of-state buyers, but out-of-COUNTRY buyers. Interestingly, they listed Mexico as the biggest purchasing country.

Of course, all this looks like solemn news on the surface, but could be ideal for savvy RE investors - especially, in a market where foreclosures have been increasing (albeit, not that much in this area, though).

Eviction Halted

Well, the day after I sent the last notice, I received all the money from the tenant and everything is back on track. She still owes us for one-half of the sewer bill for November, but we are waiting for the sewer office to send us the correct bill. What they should have sent us was a REFUND, since we initially put a $100 deposit down and closed the account midway through November. Instead, they sent us a BILL for one-half month's services. Needless to say, our frustration continues to grow with those people down there. It is run through the city, so if I have 5 mins to spare some time, I'm going to write a steaming letter to the Mayor about the need to revamp their office as it is being poorly run.

Notice to Vacate

I sent the tenant a certified/return-receipt notice last week stating what charges she needed to pay and what the ramifications were if it wasn't paid by December 3rd.

Monday was also the last day for the tenant to pay rent for December or it would be late. My wife called the tenant that day to make sure she was going to pay (ha!). The tenant told my wife that *I* told her when she moved in that it was okay if she was a couple days late every now and then due to her getting paid on Saturday's sometimes. WTF?!?! I told her no such thing. My wife told her that I said no such thing and that since she would not be able to pay rent for December on time, she would be late again. She then went on to say she would be dropping a check in the mail for $xxxxx, which was about $1,000 MORE than she owed us. I told my wife afterward that she probably said that so we'd get a 'warm fuzzy' and she had no intention of sending it (or anything).

Well, we both figured it would take 2 days tops to get the check in the mail. Today has been two days, and - surprise! - no check. Therefore, I swung by the PO and sent another certified/return-receipt notice for her to pay us the total amount owed within 48 hours of receipt, or we would evict her. At this point, I know this will be an eviction, but I want to make sure I follow the correct steps so as not to get burned if she decides to take this to court. The last notice took one day to send her, so I'm figuring the 48 hour deadline will be Saturday. I already have a Notice to Vacate (the next step) drawn up and if I check the mail Saturday and there is no check for the full amount, I may just go over to her place with a witness and hand deliver the notice.

Once she receives the Notice to Vacate, she will have 24 hrs to either pay everything or vacate. Even if she fails to pay, Texas law says she can still stay in the property. If that happens, I have to go to the JP and file for an eviction suit. The clerk will then send the eviction citation to the Constable who will then hand deliver it to the tenant. If he is unsuccessful, he is then supposed to tape it to the door. The tenant then has 7 days to answer the citation. If they answer, then it's off to court we go. If they don't answer, then I have to file a Writ of Possession to get the property (legally) back. There's other caveats and permutations, but suffice it to say it'll be a mess.

I feel like tracking down her last "landlord" (probably just a friend) and give him a few choice words.