Richmond, TX · Member since 2017 · 34 posts · 10 votes
I want to start investing in real estate investment in houston. I read few books and they all mentioned that get good deal to make money in real estate. I am starting first time and I am confused that should I wait for good deal forever or just start with some good remodeled house? What do you suggest to beginners?
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
9y
You don't need the best deal of all time, but you do need a profitable deal.
Would I pass on a 12% CoC deal to wait for an 18%? no way.
start grinding out deal analysis daily, then when a good deal comes your way, you'll recognize it and you can pull the trigger. Beginners want to wait around for some unicorn deal but what you really want is to get something bought that is profitable so you can look towards buying the next one.
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
9y
You don't need the best deal of all time, but you do need a profitable deal.
Would I pass on a 12% CoC deal to wait for an 18%? no way.
start grinding out deal analysis daily, then when a good deal comes your way, you'll recognize it and you can pull the trigger. Beginners want to wait around for some unicorn deal but what you really want is to get something bought that is profitable so you can look towards buying the next one.
Richmond, TX · Member since 2017 · 34 posts · 10 votes
9y
I keep looking all available houses in particular area where community and schools are the best. I hardly find any good deal there and before I go ahead and submit my price, it goes to pending sale. It happened to me twice already in 2 weeks. I need something close to my home as first investment home and in good neighborhood so I won't end up in bad experience in my first deal.
Lender · Philadelphia, PA · Member since 2014 · 92 posts · 45 votes
9y
As a beginner it is important not to rush into any deal. If you are going to Wholesale, that's fine because it's essentially no risk involved. But if you're planning to fix and flip a property, you want to be sure that it's a great deal or you'll be out of business just as fast as you get started!
I would suggest getting a mentor or attend your local REIA meeting and develop relationships with active investors. Inquire about market trends, hot areas, reliable contractor's and etc. You are only as strong as your team, so make sure you have everyone you'll need to complete the project lined up ahead of time. Vet them out thoroughly!!!
Last but not least, be sure the numbers make sense! My calculations are simple, never purchase above 65% of ARV minus repairs. If you stay within these guidelines, you should have a profitable deal each time.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Shal Patel I would say look for balance: a good ROI, a good area, good condition. A great ROI is probably in a bad area or needs some work. The great homes in the great areas will likely be bought by people who want to live in them and can pay an "emotional premium". I'm speaking in generalities but you can take more risk (lower quality area) when you have a few "good" properties cash-flowing that can support any hiccups. You can buy a great property in a great area for appreciation of you have those cash-flowing properties as a back-stop.
However, all of this boils down to your strategy. A "good" deal for one person isn't the same as a "good" deal for another. Investment parameters between investors are far from uniform. Figure out what yours are.
Vendor · New York, NY · Member since 2017 · 217 posts · 88 votes
9y
Anyone who tells you to wait is screwing you over. The benefit of real estate investing versus an index fund say, is that real estate is more of a business. As long as you handle the business appropriately and with a conservative eye, you can hedge a lot of risks. Meanwhile, in an index fund you're subject to market and other microeconomic factors. In saying that, don't let the opportunity cost stack up, find a good deal and go for it!
Richmond, TX · Member since 2017 · 34 posts · 10 votes
9y
My basic numbers are like this for rental income in great Houston neighborhood.
Property value = 130,000
Rent income = 1350 per month
3-2
Tax n insurance would be max 350
Is it good or bad deal?
I am trying to buy in low price but before I put offer it goes to pending sale.
Investor · Portsmouth, VA · Member since 2015 · 16 posts · 6 votes
9y
How much $ or what are you investing? Time and expertise and credit or what? I get asked to be a Good Real Estate agent and ask them what a Good real estate agent is? Who sent you to the reia? How much did you give them to train you? Absolutely stay away from paying large fees to gurus for video training. Save credit and cash for purchase and repair. Good advise in above posts.
Investor · Winchester, VA · Member since 2017 · 104 posts · 70 votes
9y
I am in no way an expert but it appears to me that you make money on this. If you finance, your loan will be for 104k (20% down) which means a payment around $500-600 depending on rates/credit score. This doesn't include taxes, insurance, repairs, property management and such.
I keep looking all available houses in particular area where community and schools are the best. I hardly find any good deal there and before I go ahead and submit my price, it goes to pending sale. It happened to me twice already in 2 weeks. I need something close to my home as first investment home and in good neighborhood so I won't end up in bad experience in my first deal.
TIME KILLS DEALS.
submit offers LIGHTING fast, there are mass amounts of people trying to buy the same houses as you. Deals that I bid on are gone within a day and many times only a few hours. losing out on bids is common, so get used to it. On average you'll bid on a few dozen houses before you close.
Broaden your search criteria. You are being far to restrictive. As a investor you need to be more flexible to find the right deal. As stated no deal is perfect so be prepared to compromise on your criteria to where the numbers work.
Remember it is an investment, you are not going to live there but someone will.
Real Estate Agent · Hamilton, NJ · Member since 2013 · 464 posts · 311 votes
9y
@Shal Patel if you wait forever to get a a good deal you'll end up never getting started with REI. You said you have read a few books... Ask yourself this question and answer it honestly, do you feel comfortable and confident in getting started right now or do you feel as if you need a little more education first? Remember, REI is a long term play meaning you won't get rich or build an insane amount of wealth off of purchasing just one property. It'll take time and multiple properties to build up wealth.
By no means am I saying that you should purchase a deal that is negatively cash flowing but everyone needs to start somewhere.
Investor · Spring, TX · Member since 2016 · 11 posts · 3 votes
9y
looking at your assumption for taxes and insurance it seems quite light. I would expect taxes at best 2.5%, realistically 2.75%, and depending on if you are in Harris County and North or South if I-10 would affect your insurance but $1000 annually would be the absolute best you would want to assume for insurance (north of I10 in Harris county).
Richmond, TX · Member since 2017 · 34 posts · 10 votes
9y
@Christopher. I would love to start as soon as I find profitable deal. Even if I make 200 right now After paying 20% down, I am happy with that. Atleast I am not loosing. Let's see how it will go. Thanks guys for your feed back and motivate me to become pro like you.
if you're just starting out, i would suggest trying to find a slightly distressed duplex/triplex/quad and do some househacking. rent the other floors/rooms out to pay for the work you need done on your place.
This will allow you to learn many aspect of the business.
how to identify what to remodel and the amount of work involved in it
learn to find tenants and collect rent
learn to deal with keeping records
it doesn't have to be an amazing deal, just something that you can afford and when you get renters, they'll help you pay it down. the education that you get from something like this will assist in understanding how to make a potentially bad deal into a somewhat good deal.
Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
9y
Your first deal sets the table for your investment career, so choose wisely. Should you wait for a unicorn deal? No, if you do that you'll never get started. At the same time don't rush into a mediocre deal just to do one. Waiting a little bit to find a good deal could mean that much quicker to your next deal.
How does that 130k for $1350 in rent compare to other properties you've seen and analyzed? How many have you analyzed?
In most cases; doubt, indecision and fear come from a deficiency in your education and knowledge.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Better to pay a fair price for a wonderful piece of property than a wonderful price on a fair piece of property. Focus on quality, make sure you are willing and able to hold through thick and thin, and make sure you pay at least a fair price. Beyond that, any forced appreciation you can create or deal below fair market value you can find will insulate you to some degree from short term market fluctuations, as do your down payment and cash reserves, so it is a question of how much "insulation" do you need to sleep comfortably. Please understand that residential property is valued based on sold comps, not ROI, not CoC, not CAP rate, etc., etc. Therefore, a "deal" is based on price relative to sold comps. Not saying you should not also consider those other things if they are important metrics to you, just that those are not what the market uses and therefore has absolutely zero bearing one way or another on if you found a deal or not. Food for thought: you can meet your CoC goal and still over pay OR you can not meet your CoC goal and have the deal of the century (relative to market comps) sitting before you, and all points in between. You can still make money on the second, but with the first you just painted yourself into a corner with only 1 exit strategy.
Investor · Canton, MA · Member since 2017 · 11 posts · 6 votes
9y
You are getting good advice here. Two pieces I will re-enforce:
@Thomas S. Says to consider House Hacking. I think that in your position this is a MUCH better idea then jumping headlong into trying to flip a place. Buy and Hold tends to be MUCH more forgiving when things don't go right because you have time to recover. It makes learning less painful.
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
9y
You should look long and hard at house hacking. If you own your primary residence, you should buy another house and rent out the first one. This is the cheapest money you will ever get and you already know the neighborhood and the property condition. The metrics are different since the money is cheap and low risk.
The property you buy, should have the same plan. Most mortgages require a one year owner occupied commitment. The next property you consider should be a duplex or at least make sure the numbers work. Since you only plant o be there for a short time.
I have done this twice and was going to do it for a third time. The market in the beach town I live has become overpriced for investment. I only buy investment property in other parts of town.
Austin, TX · Member since 2016 · 42 posts · 13 votes
9y
Lot of good replies. I will say that that it's going to be hard to find the perfect deal when you competing with other experienced investors with MLS access that notifies them as soon as the deals hit the market. Do you have a realtor that can setup notifications for you?
Definitely check out your local REIA and talk to other investors, and check out some of the topics they discuss. There is a meetup in my area next month where they talk about analyzing a deal in 10 mins, which might be useful in your situation.
You make your own luck by putting yourself in the right position to receive it. You will find your deal as long as you are constantly putting in offers everyday. Be sure to tell everyone who you are and what you are trying to accomplish. Your next deal might also come in as a offmarket referral.