houston sucks right now

[Michael H.]

HOUSTON SUCKS!

born/raised/ and ivested in houston my entire life. ive been selling all my single family one by one in the lasat 2 years. nothing makes sense to buy. taxes and insurance hit us hard like many others.

i'm not an LP or private lender kind of guy so ive been just stacking money into a money market fund and waiting.

what is everyone else doing to find cash flow?

[Rachel H.]

@Michael H. You may want to wait until the market cools off a bit. Those I know who've been successful in the Houston market usually are doing off-market deals. 

I left the single-family home business as a real estate investor back in 2007 when I started investing in mobile homes. I'm still in the niche as I think there will always be a market for affordable housing. I really enjoy it!

Like any niche in real estate investing, it has its ups and downs. But overall, it's been profitable. 

I think the insurance rates in Houston may be a bit of a challenge now as a buy and hold investor. I can understand your frustration. 

For me, I've shifted to wholesaling mobile homes which I really enjoy. Personally, I haven't encountered challenges with insurance companies yet as a real estate investor. 

Best of luck with things! 

[Zachary Russell]

Quote from @Michael H.:

HOUSTON SUCKS!

born/raised/ and ivested in houston my entire life. ive been selling all my single family one by one in the lasat 2 years. nothing makes sense to buy. taxes and insurance hit us hard like many others.

i'm not an LP or private lender kind of guy so ive been just stacking money into a money market fund and waiting.

what is everyone else doing to find cash flow?

The market is getting squeezed a bit, alot of loans are coming due in a few months in the multifamily market so im expecting to see alot of units hit the market when they cant get another loan and cashflow them.

[Gino Barbaro]

@Michael H.

I've heard that from a lot of our members in the Houston market. The only thing you can do is wait. Asset prices will come down, and you have the advantage of underwriting deals with actual expenses.

Can you imagine buying 3 years ago with much lower insurance and tax expenses. They're getting crushed right now

[Parker James]

Funny headline. Actually made me laugh out loud.

We are here in the Houston area as well and are experiencing the same thing. Think Gino said it best. Just wait until there is a deal out there worth pursuing. Currently, nothing is penciling out so I don't think you are alone. 

[Paul Azad]

The FED Should start cutting rates Soon, out of choice or out of necessity. If out of choice, the 10 year yield should drop another 75 to 100 basis points, bringing the mortgage rates down, and if we go into recession then they will cut out of necessity bringing the 10 yr yield down 150 to 250 basis points at least, and also leading to rising unemployment and declines in property values, although HCAD will take their sweet time to adjust as always. 

Until that happens, with either scenario, a way to increase your cash returns could be to buy EDV, it's a Vanguard exchange traded fund that holds 20 year and 30 year zero coupon US Treasuries, such that whenever the 10/20/30 year bond yield goes down, its value goes up. For example, 30 year dropped about 50 basis points from 7/24 - 8/2 and EDV just went up about 14%, and last Nov/DEC long bonds dropped 1% and my EDV went up 30%. It should give a good return, over next 6-9 months with either a gradual FED rate cutting and a great return with a Recession. 

another option is AGNC/NLY. 2 mortgage Reits that own billions of agency MBS, so as rates fall, their underlying bond assets will rise in value dramatically causing stock their prices to rise, and they pay hefty dividends while you wait, AGNC paying me >14.4%

if staying in cash consider USFR pays 5.4% taxable, or BKN 5.6% tax free as munis

GO TEXANS! CJ!!!

[Daniel Tanasa]

Quote from @Michael H.:

HOUSTON SUCKS!

born/raised/ and ivested in houston my entire life. ive been selling all my single family one by one in the lasat 2 years. nothing makes sense to buy. taxes and insurance hit us hard like many others.

i'm not an LP or private lender kind of guy so ive been just stacking money into a money market fund and waiting.

what is everyone else doing to find cash flow?

Hey Michael,
I agree with you, we're getting squeezed from 3 sides right now. Even in this scenario I think there are deals to be done, as long as you buy for the right price and employ the right strategy that will allow you to cashflow. I personally doubled my portfolio in the last 1.5 years. I think Houston has so much potential and so much growth in front of it that I think it's still worth it to try and work two times harder to find the deals that will make sense.