Spring/Katy/Cypress Market: Buy & Hold Single Family Properties

[Wale Lawal]

I am currently looking to begin my buy & hold investment Single Family portfolio locally in the North Houston Market.

I have narrowed down my options to few cities like Katy, Cypress, Spring, Conroe, The Woodlands and Some Part of Houston to look for distressed or minor rehab single-family properties for BRRRR.

Ideally, I am looking to find investments with a 12%+ cash on cash return in a class B neighborhood. 

With this in mind, Does anyone know any reputable wholesalers and brokers that can help with my search? 

Please feel free to recommend experience people with good business ethics in the North Houston market.

I am also open to owner finance deals with a win-win approach.

I anticipate your help.

Thank you

Wale

[Adam D Rinehart]

I think you are chasing a unicorn, honestly. I live in this area, specifically, Cypress. I also "work" in this area. The areas that you are looking for 12% CoC are some of the fastest growing and desirable markets in the region primarily due to an abundance of new home construction. I know this because I'm the developer's engineer for numerous ones including a 600 AC master planned community. Finding a distressed property is almost non-existent because there's enough buyers available with good paying jobs that are paying retail for what's available waiting for what's coming. Of the area's you listed, the only one that's forecast to have a year over year decrease in home value is Katy at -1.1% but none of them have a measurable % of negative equity. Check these reports out. Take Cypress for example. The current average home value is $252,700 while the average rent is $1,787. Let's assume for simplicity sake that you find one of these average homes and are able to buy it in cash for $212,000 ($40k discount aint bad) and it only needs a fresh coat of paint and new carpets in the bedroom ~$7,500 worth of work. Renting it out at the average rate and assuming 0's across the board (vacancy, cap ex, management, etc) you get a 7.63% CoC return after taxes, insurance and HOAs (you can't get away from them out here). Assuming everything else remains the same, you would have to buy that house for $131,500 to get a 12.05% CoC return from the average rent. You could get there the other way by raising the rent, but I imagine your vacancy would be 100% at that number and your actual CoC would be negative because you're still paying taxes, HOA dues, insurance, and now utilities to keep them on for showings.

https://files.zillowstatic.com/research/public/realestate/ZHVI.Houston.394692.pdf
https://files.zillowstatic.com/research/public/rental/ZRI.Houston.394692.pdf