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Updated almost 6 years ago, 12/15/2018
Duplex, Triplex, 4plex in or near Houston
Hello everyone,
I am very interested in purchasing a small multifamily property this year. The goal is to live in one unit and rent out the rest. While I've been regularly checking HAR, I have noticed many of these properties are located in low-income areas. I am not sure if that is the case with all small multifamily properties in the Houston area.
For example, I came across a multifamily property near the intersection of 290 and beltway 8 (not sure about BP rules, so I won't post the exact address and location here). Would this be considered a decent area to buy and live in?
Feel free to give me any advice on purchasing small multifamily properties in the Houston area, and the locations/neighborhoods that provide good investment opportunities! I appreciate the advice. :)
Hi Syed, I have the same goal as you. House hack a 4-unit within the next 12 months. I recommend checking out www.city-data.com to check the area out. Also trulia has decent information via map view -> Local info. This has helped me get a better understanding of the Houston area.
"Decent" is different for everyone. No way I'd ever live outside the loop. I'd rather live in a "bad" area inside the loop than a good area in BFE.
3rd ward, riverside Terrace. Maybe considered "rough" but their 1-2 miles from $$$ areas and in an obvious path of professs.
But there are plenty of 4 plexes in Montrose. They're just expensive. I sold four of mine for $500k (bought for $260k. Even though the price to buy has doubled, rent has gone up maybe 20%. No idea why investors are paying these prices for so little relative rent)
@Cody L. I believe a lot of it is from foreign investors looking for appreciation. Cody, I've been lurking your posts for a little while now. 3rd ward seems to be the only place inside the loop that can be purchased under $150k atm, so I've been scouring for deals through HAR. I'd love your insight into that area. I know you've put your money where your mouth is.
@Syed Rizvi 290 and Beltway can be hit or miss. There's a few areas out there that I was almost interested in, but it just didn't meet my criterias, e.g. in my price range, cash on investment, etc.
@Syed Rizvi i have one in stafford / meadows place on the market 77477 duplex feel free to look it up and see if you have interest
Originally posted by @Cody L.:
"Decent" is different for everyone. No way I'd ever live outside the loop. I'd rather live in a "bad" area inside the loop than a good area in BFE.
3rd ward, riverside Terrace. Maybe considered "rough" but their 1-2 miles from $$$ areas and in an obvious path of professs.
But there are plenty of 4 plexes in Montrose. They're just expensive. I sold four of mine for $500k (bought for $260k. Even though the price to buy has doubled, rent has gone up maybe 20%. No idea why investors are paying these prices for so little relative rent)
I think the same thing all the time. I've kept looking and the numbers in the area don't work.
Gotta put my vote in for thirdward. Riverside is a pretty good area
I have the same goal. Move into a mutlifamily, rent out the rest. CityData is an excellent resource, but taking a drive around is better. I believe the highway construction in that area just wrapped up. My husband asked me to not even look along 290 because the freeway commute down 290 is awful and he hates the drive. It may be better now that the construction is done (I think), but I haven't looked since. I do have some friends who live out there, where Jersey Village meets Willowbrook, and they really like it. However, they both work from home.
I think once the rail meets the University the 3rd Ward area will really start to bloom. From a strictly investment-for-potential-appreciation perspective, it looks like a really sound part of town to invest in.
That being said, driving through 3rd Ward one may notice that there are far more easily observable drug dealers lurking on corners than most other parts of the inner-loop combined. It is also worth taking into consideration, that this neighborhood has been listed as the 15th most dangerous neighborhood in the U.S. (on a list compiled by the FBI) and is currently noted as an area to avoid by SmarterTravel.com.
"Houston has two of the most dangerous neighborhoods in the U.S., according to the Houston Chronicle. ... The areas to avoid are Houston’s Third Ward neighborhood near the University of Houston and Sunnyside south of Downtown Houston. These areas have a very high crime rate, especially for violent crimes. Another neighborhood not listed in the Chronicle report is the Southwest side of Houston. There is gang related activity, especially at night."
Alternatively, here's an article from the Houston Chronicle about redevelopment in the district. It's a very informative read and paints a rosy picture for the future.
http://www.houstonchronicle.com/local/gray-matters...
I might consider moving to either the north or west edge of Third Ward (near the Museum District, Med Center, or Midtown) if a really stunning opportunity presents itself. For anyone looking to invest in the area, I think it is worth perusing the Houston SE Management District website and exploring their programs. http://houstonse.org/
Since my personal goals involve using at least one unit as a vacation rental, and adding another baby to my family in the next 2 years, it is highly unlikely I will begin my REI adventure by moving into 3rd Ward. The personal risk/reward potential for me is way too heavily skewed to the risk side.
There will always be another opportunity to make money. More importantly, I have never felt more vulnerable than when I was buckling a screaming newborn into a carseat, while running errands alone, still physically weakened and recovering from childbirth, with my wardrobe basically limited to stretchy clothes (impossible to conceal a weapon.) I this scenario my back was exposed, I was unarmed, and my hands were full with the most precious treasure on Earth. The treasure in this case happened to be struggling against being buckled in, which prevented me from finishing the task quickly, and screaming at the top of her lungs, giving away my position. You know where I really don't want to repeat this experience? In my driveway, every single time I get in or out of the car, in one of the most dangerous neighborhoods in the whole country. Sorry if this last part was TMI.
Do I think 3rd Ward is a good prospect for "house hacking" for my personal family situation? No. Not even a little bit.
Would I buy a MFR along the proposed route for the commuter rail and/or within walking distance of one of the colleges for the purpose of renting all the units to university students? Yes, definitely.
I would be sure to encapsulate that property in an LLC and insure it really well to protect my assets. Then, I would pay considerable attention to securing the property, install some seriously durable flooring and a fire sprinkler system. Of course in this scenario I would budget for a property management company to handle tenants for me.
The Purple and Blue lines of the Metro rail will eventually run through 3rd Ward. Here is a map of the proposed route so far.
http://transitmap.net/post/124154822087/future-hou...
Liz
P.S. I didn't intend to hijack the thread.
Thank you for so much insightful information, @Account Closed!
- Real Estate Broker/Owner & Property Manager
- Sugar Land, TX
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I know MFH seems like good investment in many prospective compared to SFH for many of you here. But I wonder, without much experience in REI, how a newbie would be able to find and land MFH deal and further able to manage and work with it. I feel like SFH would be a stepping stone towards MFH.
May be that's just me. But it continues to puzzle me whenever I hear a new investor telling me that they want to get MFH to start without much exposure to REI.
@Vijaianand Thirunageswaram, I think it's about getting educated - whether through book knowledge, a mentor, or just through school of hard knocks mistakes. But I went from buying my first rental, realizing it wasn't for me, and then straight to MFH investing. So it's definitely possible if you are in the right situation and get the right education.
- Real Estate Broker/Owner & Property Manager
- Sugar Land, TX
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@Michael Le I totally agreed but if you read my question I am talking about new investors. I been Houston market for almost 10 years as an investors and handled almost 75 transactions myself. I do have quite bit of experience and education. I am ready to do it. I am not talking about me. I am talking about almost new investors who never even tried any investing and done any transactions. MFH is different in many ways but also complex in many ways compared to SFH.
@Vijaianand Thirunageswaram, I wasn't talking about you either. I was just talking about myself and in general. I went from having only had a couple of primary residences to doing my first SFR rental transaction and then to doing my first MFH transaction in a relatively short period of time. Frankly, I don't think my SFR transaction was necessary (other than from a confidence perspective) to go on to MFH.
- Real Estate Broker/Owner & Property Manager
- Sugar Land, TX
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@Michael Le Those transactions including Primary residence and one SFR has surely given your good amount of first experience and quite bit of connections to learn. But many don't even have that experience and just want to jump on MFH. I am not saying it's not doable but it's going to be a leap.
@Vijaianand Thirunageswaram At least part of the reason new investors are interested in MFH can likely be attributed to many of us reading the same books. I first discovered the term "house hacking" in Set For Life by Scott Trench. https://www.amazon.com/Set-Life-Dominate-American-... Amazon pushes this book alongside all the Bigger Pockets books and Rich Dad Poor Dad, so it's a safe bet that many people on this forum have read it.
Additionally, purchasing a duplex first and using the collected rent to pay down the mortgage quickly is how my father was able to buy his first few properties. It is a simple formula proven to work.
Since a small MFH (up to 4 units) qualifies for exactly the same kinds of financing as a SFH, it appears to me that starting in a SFH is a much slower path to financial independence.
Personally, my interests are vacation rentals and apartment housing. Beginning with the end in mind, MFH investing makes far more sense for me as it aligns perfectly with my long-term investing goals.
Liz
- Real Estate Broker/Owner & Property Manager
- Sugar Land, TX
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@Account Closed Those are really notable points. I totally agree with you. The problem in this current market, they are hard to come by. Even if they do, they are either gone fast or not in good area which investors would like to jump in. That's what makes it tough and tricky.
Why specifically do you perceive SFH to be a better beginner investment?
- Real Estate Broker/Owner & Property Manager
- Sugar Land, TX
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@Account Closed that's a good question. I feel it's simple logic, take smaller steps and later go bigger. Multiplex has lots of responsibilities to manage multiple tenants and other related issues which are multiplied as well. By doing SFH first investor get to experience them first hand in smaller scale and get ready to manage and handle more tenants and bigger issues. That's my view point as per my experience.
Originally posted by @Jake Milan:
Hi Syed, I have the same goal as you. House hack a 4-unit within the next 12 months. I recommend checking out www.city-data.com to check the area out. Also trulia has decent information via map view -> Local info. This has helped me get a better understanding of the Houston area.
Hi Jake, I ran across this post and am curious if you were successful in finding your 4-plex house hack?