Thinking Like Your Buyer: Roads

Real Estate and Roads

As a real estate investor, contemplating houses to buy and remodel, or to fix-n-flip, you need to think like the house buyer you hope to sell to eventually. But, you want to do this before you buy an investment property to protect your profits from the fatal sink holes that can literally eat up all of your investment dollars and leave the house you want to sell on the market forever.

Of course, deals come where deals come, and they are not always in the greatest neighborhoods, or at the right time of year, or under ideal conditions.

I was thinking about real estate sales and roads when I found a great tutorial on buying your first home in the online journal The tutorial was written by Amy Fontinelle. It offers first-time buyers an interesting mix of things to look at when purchasing a house, they may live in for years.

Ask yourself, who do I think is going to buy this house I am investing in. If you cannot picture anyone, or the bird is so rare you haven’t seen one like it lately, you might want to walk away from the deal.

Picture Your Buyers

When you think about your buyer, do you think of someone who was last seen in a truck that looked like chocolate, mud from roof to wheels, because they like off-road racing?  Even if they do like to race on the dirt hills, do they want to travel over them several weeks of every year to get to work?

Do you think your buyer will likely be a young working professional who will want to arrive at work quickly, with a clean car and a clean coat?

Do you think your buyer drives a car with heavy duty tires that can take the wear and tear of a gravel road?  Will they be driving a 4-wheel drive with high clearance? Or, will they be driving a small vehicle with two-wheel drive and low clearance.

Mud on the Running Boards

No matter who you are picturing, always consider the quality of the roads or your buyer is likely to be in a conversation like the one I heard this week.

“The boss here,” says a man, nodding his head at his wife who is seated at the same table, “is the one who made me pick a house on the black top.”

“Ah, I wish, I had thought that out,” says their friend shrugging into his coat as he signs his bill that is laid out on the table next to them. “Have you seen all those gravel trucks going by lately.”

“I’ve been replacing a lot of wheels lately,” snickers the local car mechanic leaning out of a nearby booth to join in the conversation while his family snacks on nachos before dinner.

As she swings by with a loaded tray, the waitress adds, “I had to back up and leave my car at home today because I could not make it over a washed-out part of the road. I’m glad I did, or I’d be in your repair shop right now.”

“I had to catch a ride with my neighbor who drives a jeep,” she finishes.

Washboards and Potholes

You may not often find yourself in small towns on the edge of  open country, but even in the city, roads are very important and in the Spring the potholes can easily eat axles and wheel rims. Take a good look at the roads yourself and ask yourself, are the ditches and gutters cleaned out, does the water pool on the crown, are there washboards and pot holes that have just been covered with gravel or tar and not cut out. Is the road gravel?

Talk to the neighbors. A good question to ask is “Was the road passable in the Spring?” “In the winter is this hill icy?” “Has anyone you know of ever slid down this driveway into that creek?”

The house buying advisors tell house buyers that they need to pick a neighborhood that is the closest fit to your lifestyle and personality. Their list of things to consider is quite extensive, and it definitely includes the quality of the roads.

Although I just heard about some quirky houses that sold to quirky buyers who thought they were “cool,” I’d say if the house is on 13th street, next to a railroad, a sink hole, and a cemetery, was once owned by a mass murderer, and for sale cheap you want to walk away. Be careful with your money. IMG_00003829

Let me know if you have found any deals this month that you cannot walk away from. I hope that I can be of help to you this month.

I can be reached at
Austin, Texas

References: How to Buy Your First Home: A Step-by-Step tutorial. Amy Fontinelle


BE AWARE: Part 2

What does a Horny Toad Have to Do with It?

In Part I of Be Aware, I discussed performing a due diligence assessment with regards to past and present environmental hazards in the vicinity of the property you may be considering. In this part, I want to point out another aspect of the due diligence research you do that revolves around the plants, animals, and habitats that may be on or near the property you are considering making a loan on, developing, or remodeling. The animals and plants that inhabit that property need to be accounted for, not only because we value them, but because their presence may affect the dollars we need to spend on a project. As I have said before, hard money loans are offered based on the value of the property. So, you want to look carefully at anything that affects the property value now and in the future.

In Texas

As a landowner, you will be obliged by law to work around habitat or vegetative species that are considered endangered. According to the Texas Parks and Wildlife website, endangered species are plants or animals that will likely become extinct within the foreseeable future. Threatened means that a species may become endangered within the foreseeable future.

In Texas, plants or animals may be protected under the authority of state law and/or under the Federal Endangered Species Act. Examples of federally listed species in north Texas are the black-capped vireo, golden-cheeked warbler, and the Texas poppy mallow. Some of the state listed species are the Texas horned lizard (horny toad) and the Texas kangaroo rat.


The Texas list deals only with the status of the species within the borders of Texas. The Federal listing means that an animal is in trouble throughout its entire range which may cover several different states. Federal law not only protects the individual animal, but also protects its habitat. While TPWD enforces regulations pertaining to state listed species, the U.S. Fish and Wildlife Service enforces regulations pertaining to federally listed species under the Endangered Species Act.

Real Estate as Habitat

In the business of real estate, habitat is the concern. Loss and/or fragmentation of habitat is the number one cause for species declines in Texas. For example, the black-footed ferret is one of the rarest mammals in North America, yet it inhabited prairie dog towns in North Texas as recently as 1963. While prairie dog towns still exist, they are too small and too few in number to support a population of ferrets.

To sum it up, just as you would review the local area of your planned real estate transaction for hazardous concerns that will affect the property, you need to research the animals and plants that live on the property and their habitats that might be nearby.

Don’t forget to look for wetlands and ponds when you walk around the property or when you look at the topographical maps. Working around wetland and rivers requires special permits and special protective construction measures that need to be worked into the cost of the construction or remodeling projects.

A County by County List

Visit the Texas Parks and Wildlife website for a county by county list of endangered and protected species in the area you are planning to work in. Each county’s list can be downloaded onto an Excel Spreadsheet. See


The Texas Parks and Wildlife Department also offers private landowner tools for things like habitat conservation plans, safe harbor agreements, candidate conservation agreements, and landowner incentive programs at

Remember. I’m not giving legal advice, just pointing out areas you should research  before you buy a property or loan money and put your name on a deed. Be sure to be aware of the physical reality of the property itself.  Look at it in real life and on the internet.


Austin, Texas


Texas Parks and Wildlife website at

Photo Ben Goodwyn [GFDL (, CC-BY-SA-3.0 ( or CC BY 2.5 (, from Wikimedia Commons

Doing the Math: Purchase, Rehab, Refinance, Cash Out

The markets have been extremely volatile lately and they say the anxiety meter has shot up to screaming level.  However, according to Caleb Silver, Editor-in-Chief, Investopedia is not predicting a major market decline.  And, whether the market is up or down, I am here to help you find ways to put your money into other types of ventures, like fix-n-flip real estate projects big or small. It works like this:

  • You Purchase
  • You Rehab
  • You Refinance
  • You Cash Out

Silver also says in his daily e-mail that “Seasoned investors have learned to moderate their expectations and build their portfolios to endure all kinds of markets.  It takes discipline and a lot of learning to do that well, and even the best of them still get their faces ripped off now and again (a technical expression for suffering massive losses). Still, having unreasonable expectations is the first step to setting yourself up for disappointment.”

Ah yes, setting yourself up for disappointment: I remember Christmas mornings when I was a child as a time of too much expectation.  By the time Christmas morning came around, my expectations were sky high and no matter what great present my parents or Santa Claus brought me, I was going to be disappointed because nothing could live up to the fantasy in my head.  So, the day was never as much fun as it should have been.

I’d say that Silver (good name for an investment geek) is trying to warn us . He says that Vanguard (a massive money manager) recently surveyed its customers and found that their expectations were way off from its own market predictions. Vanguard found that the average retail investor expects stock to return more than 10% a year on average and people with their money in pension funds expect 7.5% average annual returns.  Unfortunately, Vanguard expects a 4.6% return on stocks.

So put in your time studying so that you can put your money to good use making more money for you.  Think about your options and don’t freak out. As Silver says, “When the Anxiety Index picks up, volatility tends to follow.”  But as Friday’s Investopedia headline read  “REMAIN RATIONAL.” (see

Here is a rational option to study:

Purchase, Rehab, Refinance, and Cash Out of a Multi-Family Building

Loan Requirements

  • Min 5 units
  • Loan Amounts – $250,000 – $5,000,000
  • Interest Only – 2yr Term
  • 1st Lien Position Only
  • No Prepayment Penalties
  • Up to 80% for Purchase and Rehab
  • Up to 70% for Refinance and Rehab
  • 55% for Cash Out


  • Min FICO 670
  • Full Recourse
  • DSCR / Occupancy – No requirements while being rehabbed
  • Min Liquidity of 9mo of debt service + 20% of rehab budget

Appraisal Requirements

All loans require a full appraisal with internal property pictures and dated within 120 days of loan origination.

Lending Areas

All major metro areas and small market areas nationwide.  Non-lending areas include rural and high-risk areas.








Non-Recourse Loans for Self-Directed IRA

This loan is designed for an IRA that holds a property as an asset.  Generally, these properties are rental units and therefore, are long term holds.  The only type of loan an IRA may have is a non-recourse loan.  This loan is one in which the IRA account holder is not personally liable for repayment of the loan.  In the event of a default/foreclosure the lender can only look to the property as the sole source of repayment.

The following properties are eligible for a non-recourse loan:

  • SFR
  • Warrantable Condo’s
  • PUD
  • Duplexes
  • TriPlexes / Quadplexes
  • Multifamily (5 or more units)1-4 Family (min $50,000)


Altairisfar [Public domain], from Wikimedia Commons

Current Loan Options

  • 3,5 or 10 yr ARM
  • 10-20 yr Fixed
  • 70% Max LTV
  • Max Term 20 yrs
  • DSCR Min 1.2-1.25
  • Multifamily (min $300,000)
  • 5/1 ARM
  • 15-20 yr Fixed
  • 65% Max LTV
  • Max Term 20 yrs
  • DSCR Min 1.3


Austin, Texas



New Money Rolling in After the Wedding Day? Here’s the Agreement to Fix That!

When money comes into your marriage after the top of the wedding cake is long gone or collapsed in the bottom of the freezer, even a happily married couple may experience new uncertainties about how to make sure these new assets remain with their rightful owner should the marriage break up. As this recent article in (I)Investopedia, points out, the postnuptial agreement (postnup) is the legal tool made specifically to handle changing financial conditions in a marriage. Why is the postnup needed? Because… things change.

Rings 2

In the article “5 Signs You Need a Postnup,” Amy Bell reminds us that financial circumstances change during the life of any marriage, even a long successful one. Regardless of where the money comes from, say from the profits of a successful business or from a massive inheritance, new money flowing into a marriage might call for an agreement about how money will be divided if the marriage breaks up.

Without a written agreement spelling out your wishes, assets brought into the marriage after the wedding day would generally become joint assets and be divided equally or according to the rules imposed by the state you live in. The postnup agreement is a way to preserve assets for your own use or to ensure that inherited family money is passed down to your children from a previous marriage.

So, if talk of contracts and love made you change the subject before the wedding day, and you never signed a prenup, remember that the postnup is an agreement. While you are married, hopefully you can agree on what is fair if things should go badly later. And, despite the old saying that everything changes, the statistics on marriage longevity in America have remained not good.