Houston, TX- 5 Properties- Kevin Wood

[Kevin Wood]

Followed the heading posting above. My 2nd post on this particular is not to ask for advice on a condo, but to share the first 5 properties my business partner and I purchased. All are located in Houston, TX. All are currently rented with the exception of one property where sale is conditional on new carpet, new paint, and rented. Not included here are holding costs at 8%. Insurance amounts are high. All costs are yearly. Here is a rundown of the properties operational costs. We have vacancy estimated at 8% and closing costs etc. :

#1 3 Bedroom 2 Bath

Purchase Price- $88,473

Rent Per Year- 12,806

Mortgage- 4287

Insurance- 500

Taxes- 1,914

Maintenance- 957

Management- 1,025

Miscellaneous- 1,000

#2 3 Bedroom 2 Bath

Purchase Price- $73,727

Rent Per Year- 10,113

Mortgage- 3,572

Insurance- 500

Taxes- 1,541

Maintenance- 770

Management- 809

Miscellaneous- 1,000

#3 3 Bedroom 2 Bath

Purchase Price- $93,388

Rent Per Year- 12,696

Mortgage- 4,525

Insurance- 500

Taxes- 2,056

Maintenance- 770

Management- 809

Miscellaneous- 1,000

#4 3 Bedroom 2 Bath

Purchase Price- $69,795

Rent Per Year- 6,996

Mortgage- 3,382

Insurance- 500

Taxes- 1,500

Maintenance- 729

Management- 795

Miscellaneous- 1,000

#5 2 Bedroom 1 Bath

Purchase Price- $58,982

Rent Per Year- 8,777

Mortgage- 2,925

Insurance- 500

Taxes- 1,287

Maintenance- 643

Management- 702

Miscellaneous- 1,000

[Steve Rozenberg]

I would be careful with condo's. Every time I have owned one and managed one we have had a few issues that we can not get around.

First, the HOA unless you can own the whole structure you can not control the HOA costs and they can go up anytime. I had 5 units I owned one time in Humble. When I bought them the HOA fees were $127 per month. After 3 years the HOA rose to 295 per month per unit. While this did not make it negative cashflow, it came very close. I was not able to raise the rent accordingly so my business model took the hit. When I investigated why they went up since there was no natural disaster and the place looked exactly the same as when I bought it they told me that since other people were not paying they had to raise the dues on the people that were. And basically since I was an investor in their eyes I had all the money and was S.O.L...

The other issue we have with condo units is they do not always allow you to advertise the property with signs, which makes local traffic basically nil to none. The access issue with  getting into those units is always tough for prospective tenants to view the place, as well as agents sometimes get denied access as well.

Lastly some complexes only allow a certain amount on non-owner occupied rentals so if you are coming in above that number they do not allow you to use it as a rental.

Again this is just my personal experience owning these types in the past as well as managing them. When people as our opinion of buying a condo I try to explain that they need to be ready for these types of issues and know what you are buying and the business model around that type of product.