Wholesaling to a developer in Houston, TX - The Heights

[Dustin Oien]

Hello BP community! 

I'm looking at a potential wholesale deal in The Heights area in Houston, TX. Average price for new construction in this area is between $600K-$1M. What I am curious about specifically is this: How much would a home builder look to profit off of a build in this part of town, and what should i anticipate their build-out costs to be per sq. ft? My initial instinct is leading me somewhere to the ballpark of $250 per sq. ft.  

I'm trying to determine this info so that i can benchmark this into my wholesaling strategy in this particular part of town. It's a super hot are of Houston and home prices continue to rise as old homes are being torn down and new ones rebuilt in their place. 

If anyone has any knowledge of not only this are of town specifically, but also building costs in a hot market such as this, that would be of great help! 

thank you in advance friends!

[Account Closed]

@Roi C.

Hi Roi, I am not referring to the visual impact of the townhomes. There are some areas where replacing, for example, hurricane damaged structures with modern homes above flood-hazard level would undeniably be an improvement to the community. The trouble is that gentrification is often synonymous with displacement and erasure. At many levels, the Houston community is having a complex discussion about revitalization vs displacement. As local investors, I believe it is important we understand the impact our activities can have on our neighbors. 

Here a plan that was offered to the city to address the situation.

https://texashousers.net/2016/02/26/the-opportunit...

Here is discussion on this topic in the Chronicle after interviewing experts at Rice U.

http://www.houstonchronicle.com/local/gray-matters...

This is a particularly hot topic in 3rd Ward, where a grassroots movement is working to manage gentrification in order to revitalize the community without displacing residents. 

https://urbanedge.blogs.rice.edu/2016/05/25/third-...

Independence Heights is getting a Whole Foods. The corporate office initially promoted the store under the name "Garden Oaks" which is a more affluent neighboring community. This is an example of the kind of erasure commonly associated with gentrification. Residents called them on it though, and Whole Foods quickly changed the name.

 http://www.houstonchronicle.com/news/houston-texas...

And since I'm a data nerd, here are the HAR statistics for this area:

HAR shows some extraordinary statistics for this area. "The home values range between $26 - $135 K. Median sold Price/SqFt is $166.67. Median Appraised Value is $ 63.44/ SqFt."  

However:

"Quick overview of current real estate market:

• Independence Heights has 11 Homes for sale with Average List Price $ 633,624. 
• Independence Heights has 2 Homes for Rent with Average List Price $ 1,875."

http://www.har.com/pricetrends/independence-height...

^...This is how people get priced out of their communities. Until I went looking for data to help me illustrate my point, I did not realize that gentrification has already hit this neighborhood like a cudgel. Nothing gentle about it. 

This clearly was not the best discussion forum to post all this in. It has nothing to do with the original post...but since you asked, there it is.