Purchasing in Houston, TX -- In's & Out's

[Benjamin Torres]

Good Afternoon All,

I am part of a group of investors seeking to build pipeline in Harris, Montgomery, Fort Bend, Brazorla, & Galveston counties beginning in December 2020.

So, we are looking to build relationships and begin to more fully understand the beast that is Texas real estate.

We understand Texas is a nondisclosure state. Also, we understand the insurance upticks due to wind, hail, & flood (especially towards the Galveston). Are there any other bits of information or research recommended before entering the market?

Take care,

[Timothy Church]

@Christina Johnson

What he means by non-disclosure is that the county that controls property taxes (ie the government) isn't given the details of the sale of a property. Therefore they cannot use those details to raise your property taxes as they do in other states. It isn't to do with agents not disclosing information about a property. It is that the title company isn't going to give the county the sales info and if a tax assessor comes to the door and asks what you paid, you are not required to tell them.

@Benjamin Torres

Overall, Texas is great for investment as it tends to be a state that leans towards the landlord side of things. This does, however, differ a bit from JP to JP. I know I have a couple of properties in a different district that the JP is more tenant-friendly but thankfully I haven't had to follow through with any evictions there. Always good to see how the JP leans just in case you do have an eviction.

Another good place to look in Texas is the tax auctions if you have the capital to buy in cash. There is a two year redemption period in which the first year the owner can buy back for what you paid plus 25% and the second year plus 50%. As long as you keep repairs below those marks and rent them out, it can be lucrative. I know here in Galveston not a tremendous amount make it to the auction as we have lots of door knockers that will go to houses as soon as the list is posted to try to scoop it up beforehand but you might have great luck in the other areas.

The only other point that pops into my head is to look at the market expansion rates. I know in the Harris market rental rates can be interesting as Houston is constantly expanding with new construction going up every which way. Galveston on the other hand is completely landlocked into the number of homes we can have. Watching the new construction and subsequent rental availability is definitely something to keep an eye on.

Best of luck with investing! Hope y'all are able to build up a solid pipeline!