Houston we have a problem

[Joe Kim]

I'm curious how other investors are feeling about Houston and Texas markets.

Currently in my small to medium size portfolio of 9 properties over 5 states, I'm most worried about my Houston and texas properties.

#1 Had my first eviction in Houston early this year

#2 Every single of my houston (3) and 4 total texas properties had lease end and had to find new tenants which is highly costly.

#3 Rents seem to have flattened in houston market

#4 terrible storms with associated damage

#5 exorbitant rises in real estate tax especially in Houston...as much as $220/month increase in tax expenses for a tiny 100K home eating away my cash flow.

#6 Had negative cash flow for the 2015 year in 2 out of 4 texas properties.

Right now, I'm not a fan of texas at all.   I'm holding on to these properties largely because I'm so tired, I cannot bear the stress of selling at this point.  As long as I can get tenants in place, I will hold on until I can regain the will to cut my losses and move onto different markets.

Now, for those watching to get in -  I bet Houston especially will have some discounted deals in the next 1-3 years from now.

I finally get how you wholesalers get deals from "motivated" sellers.  I'm starting to feel motivated. 

[Account Closed]

@Jay Hinrichs,

When my partner and I first started doing syndications, it didn't feel right to charge all kinds of fees so the deal structures were quite advantageous to our investors.  Even our lender said if it weren't a conflict of interest, she and her boss would invest with us.  Since our acquisition underwriting was quite stringent, we didn't get enough deal flow so we terminated our syndication biz after our 3rd deal.  We could have done a lot more deals if we didn't care about gambling/investing with OPM, but we don't think we could sleep at night.  This is why I'm disappointed when I hear people who invest out of state and get ripped off by all parties involved.  What kind of people that are knowingly ripping off others for a living?

Our syndication model was designed to make everyone a lot of money.  My partner and I were literally working for peanuts, but we knew we would be making millions in year 6 and beyond.  If you ask people would they work for free for 5 years, but you'd pay them $1M in year 6, $1.5M in year 7, $2M in year 8, etc.....what would they say?  Unfortunately, everyone wants to get paid NOW.  Even our investors felt we didn't charge them enough money.  :>)

I've shared my syndication model with @David C., and he was blew away by how lucrative it could be. I've had former investors who have been asking me to JV with them on deals they found. They said it's so hard to find a trusted partner. I've convinced one individual that she should do the off-market deal herself. It's a sweet 4-plex one block from downtown Campbell. Talking about a phenomenal location. I couldn't partner with her because it's not right for me to go into a deal w/o my current partner.

I've been considering coming out of retirement and helping other local BP investors to get out of the rat race. My model conservatively shows that each investor would own 24 rentals in the Bay Area in 10 years with a $350k investment. Talking about a lucrative ROI. These rentals would be minting serious money by then. How many people own 24 rentals in the Bay Area? Hmm...Talking about pride of ownership. :>)