Speaker 1 (00:01):
All right, everyone. Thank you for joining us. As you probably know, every week or so, I tend to speak to the different teams on the ground, the boots on the ground that we work with and right. And there’s always good information that comes out of those meetings. And, you know, I always tell myself, I wish I can record every one of those conversations, but once in a while, I do bother to record them. And this is one of them. And today you know, I’m following on a conversation, James, the realtor we work with for a long time in the Dallas, DFW Metro James and I had a conversation at the beginning of this week and I told myself, I can’t just let this conversation go without sharing the information as much as I’m trying to bring information to you. It’s always best to hear it from the boots on the ground, from the people who’s, who’s in the field.
Speaker 1 (00:57):
So James and I going to have a, you know, kind of go over what’s going on, need the DFW market, where are we seeing some opportunities, maybe even discuss specific houses, that’s available right now, this conversation is being recorded July 2nd, 2020. So that means we are in the midst in the midst of the coronavirus “attack on”, on, on mankind, but things are still happening. So James, why don’t we start? I want to jump right in because, you know, I want to be very focused on, on making the most average conversation in the shortest time possible. Like people’s attention span is short. Why don’t we start, if you kind of telling us a little bit of, you know, what are you seeing patterns in the, in the, in the Metro behavior listings, you know, demand, supply all of that. And I know it kind of, it’s a mishmash between the general behavior one hand and some opportunities you’re spotting. And that was the reason for this, the trigger for this recording, you’re seeing that are not normally available to us investors available in the sense that do not make sense. So let’s start with kind of a little bit more general and if you can tell us what you’re seeing and then dive into what you mean by those rare opportunities before we talk specifics.
Speaker 2 (02:18):
First what I’m seeing is, and, and for those who, who have been getting properties from me for years now you’ve kind of seen a pattern, which is most of my houses have been in South of Dallas or South of Fort worth or, or in-between kinda in the Arlington, Texas area, which is in between Dallas and Fort worth. That’s what you’ve been seen for me for years because that’s just where the deals are. I go where the deals are, I don’t live around and I just have to travel there because that’s where the deals are. And that’s what we bought here in the last, I would say, and why this is the case.
Speaker 2 (03:08):
There are a million reasons why we just said we could speculate all day, why this is happening. What I’m seeing now is the North Fort Worth area, which is kind of where I live. And I know the area very well. I’m seeing houses numbers making sense now if we could get just a little bit of price reduction out of what they’re listed at, if we could get a little production price reduction out of it, we’re getting stuff that looked good on the simply do it excels. And that’s something that hasn’t happened in years. It’s been years since that happened. And the volume of houses on the market that are sitting is, has become a lot has increased the areas I’ve been dealing with. And again, if you’ve been working with me for a bit, you know, they’re South of Dallas and Fort worth, those areas are smaller than the area I’m talking about, which is North Fort worth.
Speaker 2 (04:08):
North Fort Worth is a huge area that encompasses two or three school districts. It’s a big area and there’s a lot of houses there and I’m just, I’m starting to see. And, and you’ve seen this week, if you guys have seen the emails, I’ve sent houses in areas that I normally haven’t been sending, which is North Fort worth that’s the big change North Fort worth for me. And those who have been looking at and commented. And we’ve actually you know, back and forth some investors the school districts, if you dig into them, they’re, they’re good school districts, they’re solid. And you really at the elementary, middle school level, you’re really high rated schools. And then you’ve got above average high schools there. So that’s what Danny and I talked about the other day that I thought was that was a real big change in the DFW market. Again, it’s been years since I’ve been sending houses from Keller ISD or Northwest ISD because the numbers haven’t made any sense. And they’re starting to make sense now. And I just think everybody needs to be aware of that. And really for those who like to do their own kind of research dig into that North Fort worth area, I think you’ll really like what you see when you do that.
Speaker 1 (05:23):
Okay. So, so I want to make sure I follow what you were to think here. I know, well, we’re more operating in this Metro for years that the DFW Metro is very much pockets, for example, Arlington, which is right there in the, in the center of the Metro. So to speak, there are some parts of Arlington that are nice and okay. And some parts are, I wouldn’t say necessarily bad, not as good. So it’s a kind of two different pockets, you know generally speaking. And what you’re saying is I want to make sure we fully, that there are certain of those pockets, mainly the North Fort Worth area that you’ve been eyeing for some time. And they never remember this. So it will probably be people here who are not even familiar with simply do it or what we do, but that doesn’t matter right now what you’re saying. You’ve been eyeing those areas and the numbers when we analyze through the simply do it Excel, the numbers don’t really work cashflow wise. Although you like the areas now that is, seems to be changing. And those areas, it’s not necessarily a significant drop in price, but it’s enough of a drop to make the numbers make sense all over again in an area that you feel is attractive for. Meaning price point, schools, rent-ability, and cashflow, of course, right?
Speaker 2 (07:01):
Yes. All of the above for those areas, all the above for North Fort worth. Those were, those were about 10 years ago, opera, lifetime opportunities, the people who got into them and the people who are in the investment, I just think they were lifetime opportunities 10 years ago. And nowadays now with the price drop and what, when I really see a pattern, the pattern of what I see when, when I think things are real are shifting. It’s not. So this random house in this one area is on the market for a hundred days. Oh, that doesn’t tell me anything. Maybe you can get a deal on that house. Good. What tells me a lot is when a house comes to the market day, one in a good price range for the investor where they just get to that, you just get a little bit out of that price that they listed it at. That tells me there’s, there’s a shift going on. Not that one. It’s not the Rondo a hundred days on the market. One it’s the one day one that almost makes good sense. That tells me that that’s the realtors, the realtors are sensing something going on and they don’t want to overprice themselves out of the market. They want to get, they want to get it sold for their seller. That’s what I see.
Speaker 1 (08:23):
I understand that. And that makes it so it’s like right off the bat, it’s already kind of borderline attractive for our numbers. And maybe if we make an offer just as a, it’s a, it’s a bit lower than asking, maybe even respond quickly, that will sweeten the deal for us investors.
Speaker 2 (08:41):
Yes. And it’s been years, I’ve done this enough to where I can calculate it in my head without doing it on the Excel. And for years I’ve just looked at emails and just opened them and said, Nope, Nope, Nope, Nope, Nope. I’m starting to open them and go wait a minute. And I’m running the numbers. So we’re, we’re, we’re close. We’re never, we’re not at the point where, Hey, if we offer a list price, we’re gonna, you know, it’s not at that point, but if we can just get a little bit out of it, and I think there’s enough uncertainty in the market where we’re putting an offer in lower than list where we need it to be or where it makes sense for some cash flow right off the bat. I think we’re, we’re having an opportunity to get some of those, which we haven’t in years.
Speaker 1 (09:31):
Okay. Now when we talked earlier in the week, you also mentioned that you think it’s a short window of opportunity. You don’t know obviously how long that will last, but something tells you the, you know, some sense, some logic, some, you know, experience are telling you that this, this opportunity in those areas that we find attractive is not going to be there for a long time. Obviously you don’t know the future, but why do you, what makes you come to that assumption that there is a short window of opportunity, again, not for the DFW Metro at large specifically those areas that you’ve been watching carefully. And now you’re excited about the opportunity of going in there. Cause it, cause it makes sense.
Speaker 2 (10:22):
Well, first day for one Danny usually this is a time of year where it’s, I’m almost on cruise control because this isn’t like the investor time of year. This is usually peak buying time. And people paying out the wazoo for a house that’s not happening right now. And it hasn’t happened for a long time. And this of course is COVID season 2020 where things are going. I don’t know. I don’t think anybody knows, but normally school starts up in a month. Normally people are scrambling to get a house and make things happen. So when school starts that’s, that doesn’t seem to be happening right now that doesn’t the urgency of buyers here is not, doesn’t seem to be the same, which is leaving the opportunity for the investor to get back in. And again, normally this is peak buying season. This is the height of everything.
Speaker 2 (11:22):
Now in leasing, it’s off the chain. We’re, we’re all over the place. I mean, it, I can’t, my phone’s beeping right now. I’m getting texts right now from houses we have on the market that hasn’t changed one bit, but the binds change and that’s been a that’s been a change because usually, I have to kind of wait until school starts. And then you’ve got those sellers who, who didn’t get their house sold. And school started. Now we’re looking at the price, but who knows when school’s going to start? I don’t know, but to see, and this area houses that make sense on July 2nd is I’ve, it’s never happened to me. And this area since, since I’ve been doing this just for the investor, not, not for, not for my, not for my residential people for the investor to where do they even have a shot or getting a house in an area like North Fort worth.
Speaker 1 (12:15):
Okay. Now when you say the seeing activity, you mean potential renters that are calling, texting whatever. You know, I, you know, to ask to find information about the house that we already own in the management pool and it’s up for lease, right. The lifting of activity. Okay. Yeah. Okay. And I think it’s very important to, to mention if someone is not familiar with the setup, James is a realtor who’s handling me primarily purchases in some sales, we’re very focused on purchases, but he works in the, in the under or in the property management company. So the part, so he’s part of the property management company. So he knows very well and is also very involved with the leasing activity. Although that’s not the main core work, this is definitely part of what’s going on. So he’s not disconnected from that aspect of the business, so to speak.
Speaker 1 (13:20):
So he knows who the world what’s going on now. James, let’s, let’s take an example. Let’s use a house that you, I think you sent me a bunch this week. Not think you did send me a bunch this week. Let’s pick one, tell us a little bit, you know, kind of, what are we getting like when I go home, you know, what’s the price point? What would you offer? What are the specs how are the schools you know, kind of a little bit, you know, it’s, it’s a, it’s a verbal conversation? We are, we have nothing visual. So try and help us visualize what are we getting here?
Speaker 2 (13:54):
Okay. So there’s one I sent today. I thought it would be kind of the easiest one. I don’t, I don’t even think it’s the best one I sent today as far as like, just the best, but just, just it tells it’s an area it’s North of Fort worth, but it’s kind of the, in the extreme, it’s to a one to seven till in Sanger, Texas, which is North of Denton, Texas which is extreme North Fort worth. But this house has been on the market. 92 days. I haven’t been to the house, but just looking at the numbers, it’s a three-bedroom, two and a half bath. It’s over 2000 square feet, which anything, three-bedroom if it’s over 2000 square feet, I really like it. I use 25% down and it’s a great looking house and it’s just a house that in an area that just normally wouldn’t be there at this time. I’ve got an Excel. Let me pull it up real quick.
Speaker 2 (14:58):
So it’s, it’s offered it, it’s offered it at two 16 and I, I have an offer of two Oh five, which would, which was, again, it doesn’t give, it gives about 150 bucks a month cashflow. Again, everybody wants 400 bucks. I get it. But to get this in this area, just to my, my thing is if you want the areas, you’d have to kind of that first tenant, you know, take it a little bit, take the lower cash flow, but as rent increases, your numbers look better. And, and any investor that we’ve worked with when their house comes back up, I always raise the rent and I’m going to say nine times out of 10, they get that number. And they tend to lease faster, but, but that’s, that’s just a house in Sanger, Texas. That, I mean, that’s just an area I would have never looked at before, or just kinda moved on, but this is a nut and it was built, the house was built and it was a built-in 2004. That’s just one of the houses that I’ve sent. I’ve sent more than that. And again, it’s kind of hard to, with, you know, on audio, but, but that’s just, that’s one house that I, I think it’s it’s a great area and possibly being on the market for 90 days, we could possibly get a deal on it.
Speaker 1 (16:27):
The main message is that if we, if I, as an investor is very much focused on the cashflow still, this would not make a cash cow, actually, most of the properties, I wouldn’t qualify them as a cash cow, but if we’re looking at the holistic, the whole aspect of the deal, it’s about the cashflow, but all, but also about the fact that we’re able to buy in a quality area, a quality type of property age-wise location wide school-wise and maybe the first year or two will be a little bit, you know, kind of more challenging cashflow wise, but no guarantee, but most likely over time, it goes up and the cashflow improves obviously, and also the value of the house. Plus the fact that we are trying to buy it below its official market value, or definitely below the asking, correct? Yes,
Speaker 2 (17:24):
Yes. DFW is, is, and again, I’m not a professional in any other area. So I don’t know, DFW is a, it’s kind of a slow burn. You start out, we want to get to, we want to get you some cashflow. I don’t send you anything. That’s a negative cash flow. I want to get you some cashflow at first, but I sent them in great areas that do appreciate, and, and the people who have bought multiple houses from me understand that. That’s why they kind of keep coming back because they see what goes on. But DFW is a slow burn. You’re not going to, it’s just not a $500 a month off the bat kind of place, not where I work anyways. If we get in, we’re lucky and we’re lucky to hold it for seven, eight, nine, 10 years, and always say, you’ll love the results after 10 you’ll.
Speaker 2 (18:18):
You’ll love where you’re at seven, eight, nine years when you sell. Because that’s what we’re trying to do. And this North Fort worth area is just, I just think the area that’s, that’s, it’s a, it’s, it’s not a new area. These houses have been around for a bit. I’m gonna say Oh, five Oh six Oh seven, but there’s, there’s, it’s just, it’s an amazing area. And any drop, any opportunity to get into North Fort worth. I just invite anybody to dig into North Fort worth. Look at what’s going on there. Look at the schools. I think you’ll agree with me.
Speaker 1 (19:00):
I do agree. And I, I want also to mention that when we talk about cashflow, it’s very important to emphasize that we don’t take an approach of optimism. So we try to be very realistic with the numbers. If the expenses, obviously the rent, we’re not trying to make it to beautify it. So it looks great on paper. And then the reality kicks in. It’s a completely different story. We’re trying to make the reality. And that’s usually what happens, reality and analysis blend versus actual, as close as possible. I think over the years, I can tell we’re very good at doing that. I would say even overly cautious to a certain degree, but that’s okay. We’re not doing any worst-case scenario. We’re just trying to be realistic with a tendency to some con to some conservative numbers. So if we don’t know exactly the rent, we’re going to knock it down a little bit, to be on the safer side, we’re not going to kill it, but we’re not going down a little bit.
Speaker 1 (20:04):
So to be on the more conservative side. But we do expect again, no guarantees, but that’s just how our history is. That’s the number between the analysis Excel. When we run them, in reality, are very similar and that’s something I like to hear, or in reality, even many times exceeds not tremendously exceeds, but you know, 50, a hundred bucks more a month more than we planned for. And nobody’s going to be mad about that. Of course. So that’s what we’re trying to do. I think that’s a very, very good point. If we’re focusing on the cashflow, it may be tricky if we’re focusing on the quality of the area, the location, the house, the size, et cetera, that would be a more you know investment. So it’s quality over its quality and resilience over cashflow. And I don’t know, that’s scary. I could be very good. James, any, anything else that you would like to add?
Speaker 2 (21:04):
No, I just think the one point I said earlier which I can’t express enough when houses are coming to the market, not at the extreme highs that they have been, that tells me that there’s a shift there’s something going on, how long that will happen, how long that will last. We don’t know, I can’t predict the future, but there’s some opportunity now. And when houses are coming to the market lower than they have in a while that people are, people are, are aware of something going on and the numbers will probably start shaking out. We’ll get us, we’ll get our June report here in a couple of weeks. It’ll probably show that. But you know, again, it’s not the random hundred days on the market house and you’d get a deal on you’re smart. You’re, you’re actually starting to get deals on houses that come straight to the market. And that’s been a long time coming for the, for, for the areas I’m sending. It’s been a while.
Speaker 1 (22:11):
Got it. Good. Very good. So let me just wrap up this conversation with knowledge and information. That’s what we try to do that if you are one of our active investors and you are getting or not getting the emails from James about those opportunities that I know is digging hard to find you can contact James directly, or you can contact me directly. If you are someone who’s listening as a, as a random listener, and you want to learn more about us just check the different links that they have included in this podcast. Our company name is simply do it. We are online on YouTube and podcasts. We have a website, so just feel free to get in touch with me and we will get you up and running and looking at properties and learning how to evaluate and, you know, working with excellent people like James. And they know he’s a team that is handling both the transaction side of it, the purchase side of it, and also the ongoing management of it. So, James, thank you very much for taking the time and for providing those insights, you know, local insights. It’s I think it’s always beneficial and, and helpful to hear from the people on the ground. Very good. Terrific. 4th of July weekend and we’ll talk soon. Okay. Thank you very much.