Texas BRRR under 100k?

Question

Hi folks, here's a spicy BRRR question for ya -- forget about BRRR for under 200k.

Is there anywhere in Texas one could actually do a BRRR with:

+ less than $100k in to get the property

+ less than $30k in rehab to get it up and running for rental

+ follows 1% rule

+ money to buy + rehab is 75% of ARV or less?

Pete Harper · Answer

@Sarah Klein There are still a plenty of 1% plus deals in Texas for under $100k. You need to look in some of the smaller markets outside of the major metroplexes. We bought a duplex in Bryan for $98,500. Put about $8,000 into new roof, painting and flooring. I now rents for $1350/month. We’ve found similar 1% plus deals in Killeen, and I-35 corridor (Belton, Temple and Waco).

Tyler Bains · Answer

I second @Matt Moreland, Lubbock has a strong market and the price point is much more favorable over the DFW, Austin, or Houston markets. I would look at outskirts towns around the metro areas and obviously Lubbock is at the top of my list.

Keep your thumb on the markets wherever you end up deciding on and establish a good working relationship with a REALTOR and also reach out to some wholesalers as you can find value add opportunities through both channels.

Matt Moreland · Answer

@Sarah Klein

Hey, Sarah!

Great question.

We certainly see these play out here in Lubbock, and more often in the smaller communities surrounding the city as well.

Although not as likely to see the same appreciation as a property in a market like Dallas or Austin, the ability to scale in these tertiary markets is drawing in investors from all over and is making these deals harder to come by each month as more outside investors flock to the market. Curious to see how long until these deals become just as hard to find here.

Account Closed · Answer

Yes, if you're out in the DFW area then like Bruce mentioned, you can find them out in the rural areas. Celina, Gunter, Pilot Point, Greenville, and Sherman just to name a few. Side note: I'm not entirely sure what's happening in Pilot Point but I've had a handful of lease leads that are horse trainers moving to the area. Hope to know more about that sooner rather than later.

Bruce Lynn · Answer

Yes...but probably not the big  cities....you'd need to look at smaller more rural cities....and with that comes added risk.

Less contractors, sometimes more city busy bodies, fewer buyers perhaps, less accurate numbers in my opinion (ARVs can be somewhat deceptive), sometimes longer time on market, so longer holding costs.   Rent numbers are even more hit and miss.  If you need PM that can be an issue too.   You also need to think about your time depending on where you live.  If you like to do some work yourself, or even if you don't, do you want to drive 1-2 hrs after work to meet someone, contractor, cleaner, landscaper, etc, do some work or check on it, then drive 1-2 hrs home 2-3 nights a week while rehab is getting done or you're getting it rented, or making tenant repairs or make ready?

Look 1hr or so away from the big cities....if you can, look at the cities where there could be growth from the big cities....all the cities between Austin-SA, Austin-Houston, SA-Houston, Austin and DFW.   Maybe smaller cities around Lubbock or College Station.

Jarrod Covey · Answer

@Sarah Klein piggy backing off of @Pete Harper's post, the Bryan-College Station MSA was the second least impacted relative to unemployment throughout this pandemic nationally. Small town barrier to entry at 100k without the risk of the small town cons @Bruce Lynn points out. As for central Texas, the best option if the 1% rule is top priority would be both Killeen and Copperas Cove.

Pete Harper · Answer

@Sarah Klein

Same search in McLennan County, TX (Waco) yields 31 properties.

Lubbock County, TX yields 42 properties that meet your criteria.

Pete Harper · Answer

@Sarah Klein

I just ran a Trulia MLS search for properties in Bell County TX, SFH, under $100k, 2+ Bedroom, 1+ Bath and found over 20 properties ranging from $27k to $100k. I even found a duplex for $65k.

It’s pretty easy to meet your criteria.

Evan Shiels · Answer

I am going to parrot @jarrod Covey here. The area between Belton and Copperas Cove has many SFHs going for around 100k to get in the door that can be renoed under 30k. There has been a bit of a spike in prices over the last four months or so because of the COVID shock on housing prices, but as more properties have hit the market, the prices are cooling off as well. There are many that can be had for a fraction of the 100k max, but results will very with renos on these lower end properties. As for the ARV being at 75% of total cost, there are a few that can be had here, but if you are looking to BRRR, it will depend on the neighborhood and we are looking at a year wait in the neighborhood for forced appreciation to get you there. 2020 has been great in the Greater Fort Hood Area for it, but I suspect that next year's foreclosure market will wipe out some of those gains, but in the long term I have not had too many issues with the 190 (I-14) beltway.

Texas BRRR under 100k?

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