Real Estate Investments for Keeps

Today I'm going to touch the tip of the iceberg and discuss a broad overview of investing in real estate. This blog will be followed by a series of other related topics to expand on the investment strategies behind renting single family residences.

There are two ways that I try to make money off of real estate:  Holding and Flipping.  Today I want to discuss holding.  There are many types of properties you can invest in.  Office, industrial, land, ground leases, retail, residential... It really just depends on what your risk tolerance is and how much money you have to play with.

For introductory purposes, lets discuss residential properties: Houses, town homes, condos, duplexes. My strategy is simple: Buy cheap, rent high. Of course these types of deals are hard to come by but that doesn't mean they don't exist. I once owned a property that I paid less than $35K for and made $950 a month off of it. Find me a stock that gives you that rate of return and I'll buy the whole lot!

I stay away from condos just because of HOA dues and CAM charges.  I just don't care for never ending increases on dues. This doesn't mean that there aren't some great condos out there. Renting condos in the uptown/downtown area are great investments. You make your money's worth in rent and the dues are just minuscule thereafter. I'm super picky so duplexes also get overlooked by me because I like owning the whole shebang. I don't like to know if the neighbor's house burns down... well so does mine. Again, that doesn't mean they aren't great investments. You can find duplexes in the $30-50K range in areas of East Dallas and rent them out for the same amount of money you can lease a house ($950-$1100).

Things to look for when considering investment properties is property value and condition. Money comes very cheap these days with interest rates being at an all time low. This being said, some properties might be worth the premium if you are financing your investments. Just make sure they will appraise and sell for the same or more down the road. If you are paying cash, you definitely want to make sure you are getting the best deal possible. Take a look at what a property is worth on the appraisal website and what the property might have been bought for initially. This helps determine value along with comparable properties that have sold in the area in the past 6 months. If you have a Realtor helping you they can pull this up in the MLS.

When buying an investment property, inspections are not required but I strongly suggest them. You want to make sure you know all the properties deficiencies so you can determine the cost to remedy them. Just like a home you would consider living in, buying a property with foundation, plumbing, or electrical issues might not be worth it. These can get very costly and completely throw off your anticipated returns. Since the purpose of these properties is to hold them and rent them out you need to make sure they are fit for living in. Once it is rented, it is still your home. You are responsible for the repairs and upkeep of the property.

It isn't a wise decision to buy and hold property in your personal name. Form a business entity and invest under that. I prefer a Series LLC. I'm not a financial expert so please don't just go off of my word. Talk to an attorney, financial planner, and your CPA on the best strategies to invest. This is a very detailed conversation and a blog for another day as well.

Well hopefully this spikes some curiosity and gets you thinking about investing in real estate. Next time I'll talk about the actual rental process and how you can get your property leased.  There is just so much to discuss about investing that it's hard to do it all in one post and keep someone's interest. It's more like writing a book!

Cheers!

Bina S Beechum

https://www.facebook.com/REwithBina

Getting Prepared to Sell

Are you thinking about selling your home?  Well there are actually some steps you need to take before you put your home on the market. You can lose some serious buyers and serious money if you put a sign out in your yard before your home is ready.

1. If you are thinking about selling your home you have to think about where you are going to live next. Have a general idea of the locations you want to move to and when you think you will be ready to make that step. This will help you in deciding when you should list your home for sale.
2. Talk to a lender. See if you qualify for the type of home you are looking to buy and how much you have left to payoff on your current residence. This will paint you a clearer picture on what you should be looking at and if you should even be looking to move. You might not want to move if you can't break even or cash flow on your property.
3. Interview a few agents to get an idea of what your home might sell for and find out what net amount you will walk away with.  I like to provide a high end and low end estimate so you can see the best and worst case scenarios. It isn't always wise to list your home with the agent that gives you the highest price. Ask for some back up information. Look at their trends, ratios, etc. before choosing.
4. It's time to put the gloves on and get to cleaning. You need to remember that you are trying to sell your house, not your lifestyle. Unclutter your home by putting away pictures, personal touches, toys, and so forth. You want the prospective buyers to be able to see how they will live in your home.  If you have accent paints or rooms painted for your children, you might want to consider going neutral.  Sure it is a small expense upfront but can make you so much more in the end. Do a gut check on your carpet and determine if you need it cleaned or replaced. Fixing your home so that it is aesthetically pleasing is key. The other repairs can be negotiated and done after a home inspection has been completed. 
5. As much as you might want to be home every time you have a showing, DON'T. Prospects like to talk about the home and discuss what they see. Being home makes it harder for them to focus on how they really feel about the home and puts too much of attention on you.

If you are thinking about listing a home in the Dallas area, reach out to me. I come with my own contractor/cleaning crew and oversee the work. My goal is to make the process of buying and selling your home as seamless as possible.

Cheers!

Bina S Beechum

https://www.facebook.com/REwithBina

How it All Began Part 2

Time for an update on my first listing as a Realtor.  You might recall I took on my former residence as my first listing. I figured this would be the best way for me to learn about the seller's market and marketing tactics that work.  I'm happy to say it was off the market in less than 50 days.  Not the number I was going for, but still glad it was under 60.

I had many emotional ups and downs during the time it was on the market and I learned a great deal of knowledge.  First off, the neighborhood my home is in is very unique.  As are all neighborhoods, so having an expert be able to inform you about the trends of the area is very important.  After my initial study, I decided to price my home $5,000 more than I thought it was valued at.  Reasoning behind this was the amazing seller's market we are experiencing.  I thought, what the heck, why not try for it.

I didn't get the amount of calls I was expecting the first week it hit market so I decided to pull back to my original estimate.  Now, this neighborhood is full of multiple price points.  There have been some foreclosures, total renovations, partial renovations, and homes that still look like they were from the early 80s with no upgrades at all.  Price points range from $130s - $310s.  Yes, there could be a $130k home next to a $300k home and from the outside you would not be able to tell the difference.

I strongly felt my home fell in the middle.  It is a 3,000 square foot, three bedroom home with three living areas and no pool.  After numerous feedback calls I learned what I already knew AGAIN.  People expected a 4 bedroom house or the possibility of a fourth bedroom when they see that kind of square footage.  In this case, no living area could be converted to a bedroom.  No way possible.  If it could have been then I would have wrote that in the description.  This was a 3 bedroom home and I was getting so irritated with all the agents bringing 4 bedroom buyers to see it.  However, all agents told me that the home showed beautifully.

The second issue I faced was the number of homes in the neighborhood that had pools.  I can't argue that pools add value to a home.  How much value depends on the pool.  I felt that my home was comparable to a 3 bedroom home with a pool that was not very upgraded.  These homes were priced in the $220s and some below.  If you have a smart agent they will advise their clients what to offer on a home based on comps in the area.  If they did a market study of my neighborhood they would probably agree that my home was not going to sell for more than the upper $220s.

Lastly, I think the biggest hurdle I had to face was the surrounding area.  The neighborhood is very well kept but it does have a number of apartments surrounding it and not everyone is impressed by that.  Especially when they are older apartments from the 1970s.

I decided that I could probably make some good money just leasing the house again and try to sell it later.  This way I wouldn't have to continue paying two mortgages.  After the first 30 days the listing was active I decided to list it for lease as well.  In the first day it was on the renters market I receive 4 interested lease parties I was like WOAH! I probably didn't list it high enough.  I had also dropped the price of the home that weekend as well so I ended up having 5 showings in one day with a few scheduled for the next.  This type of interest got me thinking maybe the price is finally right and I need to hold off on leasing it.  I took the lease listing off the market temporarily and kept pursuing the sale.

I was really hopeful that one of the parties that came to the home was going to put an offer on it.  I was wrong.  I let the entire week go by and then decided to put the home back on the market for lease but for $100 more in rent.  After doing so, I had two very strong applications submitted from potential renters within 24 hours.  I ended up going with the renter that was interested in purchasing the home shortly after her lease commencement.  This way I got the best of both worlds, extra cash flow for the next few months and the sale of my home at a price I accepted.

I guess everything always works out in the end but during the process it can definitely be difficult to see.  Next time I'll go about telling you all the ways I learned to market a home and put it in my YouTube video as well.

Ciao!

Bina S Beechum

https://www.facebook.com/REwithBina

Sellers Market: Tips for Multiple Offer Situations

Are you currently in a situation where everyone seems to want to buy the home you have your heart set on? Don't panic. This seller's market is causing a frenzy of multiple offer situations. Here are some tips to consider when put in a multiple offer situation.

1. Know your market.  Ask your agent to show you what other homes in the area are selling for and how quickly they have sold. This will put things into perspective for you when making an offer.

2. Know your own wants and needs. It will be easier to face a multiple offer situation if you know what you want prior to submitting an offer.  What is more important to you? Home price? Closing costs? Speed of closing?

3. Start Low. Don't start your search at your upper limit. This is a seller's market.  If you find a home you love and there are many others that want it too, be the smart buyer and offer slightly more to secure your contract and still make appraisal.  Leave enough wiggle room so that you are not throwing your budget. This seems to be harder for some than others. 

4. Show Ability to Close.  Submit offers with some credibility to make your offer more appealing.  Sellers do not only care about the price, they want to know you can close.  Attach proof of funds, approval letter, evidence of good credit, etc. 

5. Know your Timing. It can get very costly if you need to be out of your current residence because your lease is expiring or you are being relocated and you have nothing finalized on a new home. Have a Plan B in case Plan A falls through.

You MUST realize this is not a buyer's market anymore.  You do not have the negotiating power you did a year ago. How many homes will you let slip through your fingers before you make a realistic offer on a home? Be prepared to make full price offers! Get pre-approved before starting your home search. Learn about the neighborhood and the trends before the search so you are informed and prepared to make realistic offers.

Bina S Beechum

https://www.facebook.com/REwithBina

Real Estate with Bina's YouTube Debut!!!

Hey Everyone,

Check out my first YouTube video on some helpful tax tips to current home owners in Texas.

Real Estate with Bina on YouTube

Full Blog on Homestead Exemptions to follow!

Texas Homestead Exemptions

So here is a breakdown of what homestead exemptions are and what benefits they provide to homeowners in Texas.

A homestead is considered a separate structure, condominium or a manufactured home located on owned or leased land, as long as the individual living in the home owns it.  It can include up to 20 acres if the land is owned by the homeowner and used for a purpose related to the residential use of the homestead.

You can apply for an exemption on your principal residence. Homestead exemptions remove part of your home's value from taxation, so they lower your taxes!

Example:  Your home is appraised at $100,000 and you qualify for a $15,000 exemption (this is the amount mandated for school districts), you will pay school taxes on the home as if it was worth only $85,000. Taxing units have the option to offer a separate exemption of up to 20 percent of the total value.

To qualify, a home must meet the definition of a residence homestead: The home's owner must be an individual, not a business entity or trust, etc. and use the home as his or her principal residence on January 1 of the tax year.  

There are several types of exemptions you may receive:

School taxes: All residence homestead owners may receive a $15,000 homestead exemption from their home's value for school taxes.

County taxes: If a county collects a special tax for farm-to-market roads or flood control, a residence homestead owner may receive a $3,000 exemption for this tax. If the county grants an optional exemption for homeowners age 65 or older or disabled, the owners will receive only the local-option exemption.

Age 65 or older and disabled exemptions: Individuals 65 and older and/or disabled residence homestead owners may qualify for a $10,000 homestead exemption for school taxes, in addition to the $15,000 exemption for all homeowners. If the owner qualifies for both the $10,000 exemption for 65 and older homeowners and the $10,000 exemption for disabled homeowners, the owner must choose one or the other for school taxes. The owner cannot receive both exemptions.

Optional percentage exemptions: Any taxing unit-including a city, county, school, or special district-may offer an exemption of up to 20 percent of a home's value. But, no matter what the percentage is, the amount of an optional exemption cannot be less than $5,000. Each taxing unit decides if it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which an owner qualifies. The taxing unit must decide before July 1 of the tax year to offer this exemption.

Optional 65 or older or disabled exemptions: Any taxing unit may offer an additional exemption amount of at least $3,000 for taxpayers age 65 or older and/or disabled.

You may file for any homestead exemption up to one year after the delinquency date. The delinquency date is normally February 1st. If you are 65 or older or disabled, you qualify for the exemption on the date you become 65 or become disabled. To receive the exemption for that year, 65 or older or disabled homeowners must apply for the exemption no later than one year from the date you qualify or one year after the delinquency date, whichever is later. If you miss the deadline you may apply for the following year.

source: http://www.window.state.tx.us/taxinfo/proptax/exmptns.html

This is a ton of information on home exemptions. If you realize that you haven't filed for your exemption yet go to your county appraisal office and GET ON IT! You will have to fill out an application and bring your driver's license and vehicle registration receipt to prove that the home is your principle residence. A link to the exemption forms for the Dallas County Appraisal District is below:

DCAD Exemption Forms

If you are trying to file for a past exemption in Dallas county you can go to their main office at 

Dallas Central Appraisal District

2949 N. Stemmons Frwy

Dallas, TX 75247

Happy Savings!

Bina S Beechum

https://www.facebook.com/REwithBina

Home Inspections - Focus on the Guts!

Buying a home can be very exciting and nerve wrecking at the same time.  When you first find that house that you think will be your new home you go through the exciting negotiation and acceptance process.  This is just the beginning, the very beginning. Next comes a nerve wrecking part; the home inspection. When you submit a contract, your Realtor will probably have a 10 day option period in there so that you can back out if the inspection comes back unsatisfactory and both parties cannot agree on terms of repair. If this is the case all you will lose is the option period money and cost of inspection. Trust me, this is way better than buying a home full of problems.

My first bit of advice is NEVER buy a home without an inspection. There is only one time that I would pass on an inspection before closing and that is if you are purchasing a new home. Normally, if you purchase a new home from a builder you will have a builder's warranty on the home for the first year.  If this is the case, then I would get the inspection done in month 11 so that your builder has a list of all the things in the home that needs repair before the 1 year warranty has expired.

Now, lets set some expectations upfront. You cannot expect a seller to fix every single thing listed on an inspection report.  The inspectors job is to point out EVERY deficiency (minor or major) in a home based off CURRENT building codes. If a home was built prior to 1990 it might be fully functioning but fail a number of items on an inspection report since it is not built to the current code. This being said, lets focus on what is most important to the home buyer... the guts.

The guts of a home are comprised of the following:

1. Foundation
2. Roof
3. Plumbing
4. Electric (HVAC)

Foundation is a definite deal breaker to me. I would not let my client purchase a home that is cracking in half. There are many things to look for when reviewing an inspectors comments on foundation repairs. First off, if the foundation is marked to be deficient and NOT fulfilling its functional purpose, an engineer needs to be contacted for further review. I would not call a foundation company since they are going to be biased. Your realtor should be able to give you a few engineers to reach out to. Minor cracks in the walls or tiles are not something I would ask the seller to repair, however, if the tile is broken ask the seller if they have any spare tiles so you can replace it yourself. Finding matching tile can be very difficult, if not impossible.

The roof is a big concern because it can be very expensive to fix. More importantly, you might not be able to get the home insured if the roof is damaged. This means you can't get a loan, which means you can't buy the home, but also the seller can't sell it to anyone financing the home. More than likely the seller's have their home insured and will be able and willing to fix this to get the home sold.

Plumbing can be a nightmare and for me a major reason to back out of the contract. Leaks in a home are bad news all around. Active leaks can mean major repairs are needed and even potential mold in the home. I personally would not buy a home with active leaks without a mold inspection being done as well. Water heaters can and should be fixed but missing stoppers are not worth asking for.

Electric issues are major as well. Seller's should be willing to pay for repairs to the HVAC unit, appliances, major electric issues such as cut lines, etc. Do not expect a seller to bring the home to code with a new breaker box or adding of GFI switches. This was not required when the home was built and could hurt more than help if you change it in an older home.  I also would not ask the seller to pay for switch plates or light bulbs.

It is best to ask for repairs on anything that is material to everyday living in the home. If you can't live without it, fix it. Loose door knobs, paint work, carpet, minor cracks in wall, missing door stops or outlet covers, are not things you should expect the seller to fix. I know they are annoying but they should not make or break the deal. If two or more of the major components of the home are deficient I would consider backing away. Some homes are just not worth the headache.  

Bina S Beechum

https://www.facebook.com/REwithBina

http://www.youtube.com/channel/REwithBina

Home Loans - FHA Changes

Are you in the market for a new home?  Have you already spoken with your lender about what you can qualify for?  If not, take a step back and start there.  There are many types of loan structures you can choose from but you have mainly 4 options when buying a home:

1. FHA Loans
2. VA Loans
3. Conventional Loans
4. Cash

I wouldn't advise on option 4 unless you were purchasing investment properties.  If you have that kind of liquidity real estate is a great investment with good returns, but that is a blog for another day. 

Let's break down the other three.

FHA Loans are insured by the Federal Housing Administration and are popular because of low down payments, low closing costs, and easier credit qualifying.  You can put as little as 3.5% down towards the purchase of your new home.  FHA backed loans don't come free.  You have to pay 1% of your loan amount at closing, a mortgage insurance premium (MIP), to obtain mortgage insurance from the FHA.  You also have monthly premiums as well.  

If you haven't been paying attention to the news, on April 1, 2013, these premiums have increased and are now required to be paid beyond a 80% loan-to-value (LTV), whereas before, you only paid them until you reached a certain LTV ratio. I'm sure you can see how expensive this type of loan has now become.  The new rates are below:

• 15-year loan term, LTV greater than 78 percent, less than 90 percent: 0.45% annually
• 15-year loan term, LTV greater than 90 percent: 0.70% annually
• 30-year loan term, LTV less than, or equal to, 95 percent: 1.30% annually
• 30-year loan term, LTV greater than 95 percent: 1.35% annually

On June 3, 2013, the FHA is going to to make these additional changes:

• 15-year loan terms with a LTV less than, or equal to, 78 percent will be assessed a 0.45% annual MIP
• FHA mortgage insurance premiums will not cancel for loans with a starting LTV exceeding 90%
• FHA mortgage insurance premiums must be paid for a minimum of 11 years for loans with a starting LTV of 90% or less

This isn't the first time that changes have been made to the program but if you are curious about the underlying causes you can get more information at Biz Journals - FHA Loan Changes.

VA Loans are a benefit to active duty service members, veterans, and National Guard and Reserve members.  These loans require little to no money down and do not require a private mortgage insurance (PMI) since they are guaranteed.  There are requirements to meet to qualify for these types of loans including but not limited to: length of service, credit score, and income. There are many programs out there for the heroes who are serving and have served our nation. You can visit VA Home Loan Benefits for more details.

Finally, conventional loans.  A conventional loan is a mortgage that is not guaranteed or insured by any government agency.  They are typically made by institutional lenders such as banks, credit unions, pensions, etc. Lenders have many different programs, some which require you to put as little as 5% down and others as much as 25% down.  Depending on the guidelines, you might not have to pay any PMI on your loan as long as you put at least 20% down. This might be a larger cash requirement upfront but can save you hundreds and thousands in the long run.  The upfront cash is equity in your home so you will get it back when you sell your home or if you need to pull money out in a refi. 

Lenders have become quite annoying with all the requirements needed for getting a loan these days.  It is not as easy as it once used to be.  Money is coming cheap right now but it does not come easy.  To help make the process more seamless make sure you are working with a good lender.  Communication is the biggest factor here.  Find a lender that is easy to get a hold of, not one you are trying to chase down the day before closing.

I have closed on a few investment properties and refinanced my personal home all within the past 8 months and I can't begin to tell you how annoying the process was.  It wasn't really anyone's fault just the system.  All I can say is, make sure you provide your lender with all the information requested and be prepared for their underwriters to come back and ask you for more.  

If you are looking for a good lender or would like to shop rates, reach out to me and I can send you to a few of my close contacts.  

I'll leave you with a simple payment equation:

Total Monthly Payment = Principle + Interest + Taxes + Home Insurance + (PMI or MIP)

Cheers!

Bina S Beechum

https://www.facebook.com/REwithBina

http://www.youtube.com/channel/REwithBina

HUGE SAVINGS ALERT!!!

Sometimes we forget that saving money is just like making money or at least keeping money we weren't trying to spend. I would like everyone to take a few minutes out of their day tomorrow and look over their current home insurance policy. You might surprise yourself with how much you could be saving.

Now, I'm not trying to sound like a Geico commercial but you could be saving up to 15% on your home insurance by switching to another provider.  Every year your insurance company reassesses your coverage and takes inflation and the new index into consideration and raises your rate. Some people have very poor coverage or insane deductibles just to keep their annual premium low.  If you are in this boat, I'm sure you freak out every time you hear the sound of hard rain.

Now wouldn't you be so much more comfortable if you knew you had good coverage and you weren't breaking the bank to have it? I know I would be. Let me share a little back story with you of what happened to one of my clients. We are inching closer to closing on her home and of course the lender is requiring insurance on the property.  My client called her current car insurance provider and they came back with a quote of $158 per month on a 2,200 square foot home.  She didn't know whether that was high or low, she just thought that it was okay and would have been fine paying it. Then she contacted one of my preferred insurance agents and was quoted...wait for it...wait for it... $77 per month with way better coverage!

That is a savings of OVER 50%!!!

If this hasn't convinced you then I don't know what will.  Saving nearly $1000 a year could really come in handy. I'm not saying that you are going to save that much but I am saying that it is definitely worth checking into.  Great thing about insurance, you can switch at anytime.  There is no termination penalty. So what is there to lose other than possible savings?

Now, I'm sure you are wondering who my contact is and if I'm going to give you his information. Well, I AM!  If you think there is a possibility for some savings every month than please contact my good friend, Mark Barnes.

Mobile:  (972)742-8984

He has already been forewarned to make himself available.

Happy Savings!

Bina S Beechum

https://www.facebook.com/REwithBina

http://www.youtube.com/channel/REwithBina

How It All Began Part 1

Do you have a passion for something but feel held back from making it a reality? Maybe you want to be a chef, painter, or actor but your current circumstances make you feel like you can't risk stability for passion.  I do and I'm finally trying to pursue it.

I just gave birth to my third child, Elijah, 4 1/2 months ago.  I did not have a strong desire to go back to work for my employer since I had never experienced what it was like to stay with my babies and watch them grow. I am blessed that my husband and I started investing in real estate early and have a decent side income from it.  This definitely impacted my decision to become a full time real estate agent. 

My husband and I decided it was finally time to sell our home in North Dallas.  With the market being so hot for sellers and the shortage of homes in the area we feel confident we will get a good value for our home. So naturally, I started interviewing Realtors.

I met with three different agents that had experience in selling homes quickly in the neighborhood my property is in.  I can't stress how important it is for the client and agent to have a good relationship with one another.  I immediately ruled one of the agents out due to a difference in opinions and the other I wasn't sure I was going to enjoy working with.  So I decided to give the last one a chance.  Things could have gone very different for me if things didn't happen the way they did with her.  She was very welcoming and nice.  We took time to go to the property and browse the other homes in the neighborhood to help assess the value of my home.  I thought it was a done deal.  I was wrong.

One of my biggest requirements in any relationship is communication and doing what you say you are going to do.  After that day, we both had a to do list to get the house on the market.  I fulfilled mine but I didn't hear back from her.  Granted we had to wait almost a month to actually list the home because it was occupied by tenants.  I still expected her to get back to me with the things we discussed in the interim.  Since I didn't hear back in a timely fashion, I started to think, "Why don't I just reactivate my license and sell our home myself?" and I did just that.  I went to Champions School of Real Estate, took all my required continuing education courses and re-sat for my exam and I PASSED!  

In the process, I found a sponsoring broker that I could hang my license with.  I am now an active agent for Small World Realty.  As mentioned in my first post, my real estate experience has never been in residential sales.  I purchase single family homes for investment purposes and have sold new homes for a builder.  Dealing with all the red tape TREC puts you through to make sure you are not breaking any laws when representing someone is very different. So what could be better than learning how to list a home the right way than practicing on your own home?  Nothing!  So I am doing just that. I am fortunate to have a great sponsoring broker, Robert Meche, who is walking me through every step of the way.  My first listing is coming to the market soon!  

To be continued...

Bina S Beechum

https://www.facebook.com/REwithBina

http://www.youtube.com/channel/REwithBina

Mineral Rights in Texas Real Estate

Living in Texas, I'm sure property owners have pondered about mineral rights and what they can do about them when buying and selling a home.  Well, I helped a friend find a home in Grand Prairie and the mineral rights were retained by the seller.  Since my background is mostly in CRE and New Home Sales, I was not sure of the impact that this might have on my client. Of course, I consulted with my broker on my client's best interest and then did some digging on the internet for further explanation so that I was better informed.

The Barnett Shale development has had some significant impacts on Real Estate transactions in North Texas.  More and more people want to retain their mineral estate when selling their home.  This can be bad news to the prospective home buyer if not addressed properly.  Let me start off by stating, I am not an expert in contract and title law nor am I a lawyer in anyway.  If you are currently having this issue please consult your attorney for advice. 

In Texas, all minerals are considered part of real estate. Most focus on oil and gas when dealing with property in Texas.  A real estate sales contract typically includes both surface of the land rights as well as the mineral rights below. However, ownership of the minerals, subsurface rights, can be separated from the ownership of the surface rights, leading to a dual ownership of portions of the real estate.  Subsurface rights can be further separated but that is a more complex topic than I'm trying to explain.

A buyer can object to any defect or encumbrance to free and clear title on the property in a well drafted contract. They have the right to terminate the contract and receive a full refund of their earnest money if the seller is unable to cure the title objection.  If the buyer fails to terminate the contract, they must take title to the property with whatever pre-existing mineral rights are held by others.  The seller is obligated to disclose, in writing, that they want to retain mineral rights. A verbal statement does not hold up and will result in the entire estate being transferred to the new owner.

The deed conveys title from the seller to the buyer and will state the details of mineral ownership.  Many times a seller might not even be aware that they do not even have the mineral rights to their property because the developer of the land retained subsurface rights when selling the land to a builder.  If you are dealing with this please seek the advice of your attorney.  Real Estate agents can get themselves into big trouble if they do not properly state the seller’s interest in the sale of their estate.  Stating that the seller wishes to retain "all" or "half" of a mineral estate is not clear and can lead to termination of the contract by a potential buyer.

One of the concerns my client/friend had was the impact of the seller retaining the mineral rights while she owned the property. She didn't want the seller to be able to bring a drill onto her land and start digging away.  This pertains to the surface rights of the property. This is not a major issue in a subdivision because of the restrictions on such land, but it can be a huge ordeal in a sale involving acreage.  If the buyer does not confirm in writing that the seller or any other owner of mineral rights has waived the surface rights to the property, they very well may be disturbed by intrusions.  To be safe, always make sure your Realtor has the seller waive surface rights to the property in question and have an attorney review the deed.

Another concern that was voiced was the impact of mineral retention on the future sale of the property. A future owner should understand that many previous owners with real estate in Texas have chosen to retain their mineral rights due to the proximity of oil and gas developments.  However, an owner of property that is involved in a dual ownership should always disclose these material facts as early as possible and make sure it is clearly written in the contract.  This can avoid upset buyers and termination of contracts.

I'm sure you are wondering what you can do to avoid legal ramifications in the sale of property with and without mineral rights... in the most simplest of terms, make sure the desires of the parties are clearly and completely stated in the contract. Make sure you work with your real estate agent to help you properly address these concerns and press the issue with the title company who is being compensated to have their attorneys draft the deed.  

Fun times!

Texas Mineral Rights

Bina S Beechum

https://www.facebook.com/REwithBina

http://www.youtube.com/channel/REwithBina

New Real Estate Blogger in North Texas

Hello Blogging World!

I am attempting to introduce myself to the blogging world of Real Estate.  My goals and hopes for this blog are solely to make the public aware of some interesting concepts of buying and selling homes in the North Texas area.  The purpose of this blog is not to become my primary source of income or gain some crazy internet recognition.  I have a genuine love and passion for Real Estate in Texas and I think blogging is going to be the best way to share it.

Lets begin with a simple introduction so you can get to know me slightly better.  My name is Bina Beechum. I am happily married and a proud mother of three amazingly beautiful kids.  I am a full-time mom, wife, investor, and real estate agent.  I have a Master's and Bachelor's degree from the University of Texas at Dallas in Management and Business Administration.  I have roughly 10 years of RE experience in the North Texas area.  Well if you care to know, some of my interests are dancing, traveling, eating (I love eating!), spending time with my hubby and kiddos, and sometimes exercising.  Wow, I think that is enough Bina overload for one day!

Look forward to some fun reads and videos on topics such as:

1. What to look for in a Real Estate Agent
2. What to do before listing your home
3. What is Staging and will it help me sell my home faster?
4. How to properly market and value your home
5. What to consider before purchasing a new home

These are just a start.  I have so many thoughts to share and I hope you find them interesting and enjoy reading them.  Please leave me feedback on what you would like to read about, what you think of my blog, and if there is anything specific you are experiencing that you need some information about.

Looking forward to sharing with you soon!

Bina S Beechum
https://www.facebook.com/REwithBina
http://www.youtube.com/channel/REwithBina