BRRRR Strategy in Houston with condos or townhouses?

Question

I'd appreciate any feedback on using the BRRRR or rent and hold strategy in Houston using condos or townhouses.  I'm a newbie with limited funds, and I'm having trouble finding single-family houses with numbers that work.  My realtor mentioned that he has investor clients buying condos, but I don't know much about them.  I've always heard condos are not a good investment, especially in Houston.  Thoughts?

Vijaianand Thirunageswaram · Answer

Guys, any strategy is good if the numbers work. As others have said above, HOA fees are major deal breakers. But as @Chris Hopper said there are condos which can work even with HOA fees if they are bought discounted. I closed one condo for an investor in Bellaire area 6 months ago for $55k and HOA fees are decent not too high. He is making decent cashflow. This deal came through me via wholesaler. Deals are out there but they are not common as you think. MLS is hard to find.

Please don't mistake me guys. The major problem I have seen with many new investors in BP is, they just want to sit at home and want deals to come to their hands. It's not going to work that way guys. You gotta work for it. Attend as many networking groups you can, make contact with wholesalers and others in the business. You have to put some work to it. I know many of you are full time job holders, but you can still do it. You just need to prioritize and time management.  Don't just look for deals, look for people who can bring deals to you. That's how you will be able to make this work properly.   Just my 2 cents.

Chris Hopper · Answer

I've done lots of condos/townhouses and they work fine.  It's mostly the lower end stuff that you can do good on - in the 60k and under range.  I had quite a few that I was all in at 30-45K and had them rented for 1000.  Unfortunately had to sell them to fund some other bigger projects!  They are out there, just keep looking and stay with the lower end for cash flow.

Jessica Wygal · Answer

@Tom Parris I love the idea of the long term furnished rentals for corporate folks. I am seeing it a bit more here and there and am super intrigued. Do you know anyone who has succesfully done it?

Tom Parris · Answer

I have 2 condos myself, and they work very well. Just make sure it makes sense after the HOA dues are paid for. They may not be the heavy hitter performers on cash flow, but great steady properties if the community makes sense.

Just remember, what you spend in HOA dues you realize those savings elsewhere, like maintenance, capex, lawn maintenance, etc. Sure you spend a little more, but HOAs do have a good way of protecting you and your property. I would definitely find some local contacts that know the condos that have a good history, and understand condo financing.

If you want to try and get a little more money out of the property, try doing a long term furnished rental. That totally depends on whether there's a need for corporate housing, but if you can pull it off, you'll certainly increase your return. In my market there is a little need for it, but you can achieve getting $200-$400 more per month because the place is furnished. Furnish a property for another $5000, the furniture is repaid pretty quickly and you can realize profits that much sooner.

Austin Smither Langley · Answer

@Brian Reichardt @Patrick Garrett and @Tuan Vu, condo deals like can be found in all corners of Houston.  The $60k range will be harder to find inside the 610 loop though.

Association fees will be there, but just take them into account when you run your numbers and these deals can still make a lot of sense at the right price and rental rate.

Patrick Garrett · Answer

@Chris Hopper can you recommend any areas for those types of condos/townhouses in the 60k range?

Ryan Johnson · Answer

All depends on what the monthly maintenance fees are. Many condos can be bought cheap but have high maintenance fees that kill cash flow. A good one popped up in mls in med center recently for 50k. Sold day 1 lol.

Tuan Vu · Answer

I've been keeping an eye out, but haven't seen many deals that make sense lately. Some of the association fee's are outrageous and if you have a vacancy for 2 or 3 months that can have a big impact on your bottom line. My agent (who's also an investor) recommended I look at some modular (manufactured) homes. Supposedly they're more affordable, no monthly maintenance fee's, and rent well.

Mark Sewell · Answer

I'd like to talk to your agent's other clients that are out there buying up condos or townhouses as well, because I've yet to run into anybody that makes this claim.  Of course, no realtor would ever make stuff up.  A few months back I posted a thread about this myself, just wondering the same thing out loud.

I think the knock on these units are the condo fees and the fact that rules and fees can change at any time.  You just don't really quite own what you think you own, if that makes sense.

BRRRR Strategy in Houston with condos or townhouses?

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