All Forum Posts by: Adam D Rinehart

@Ho Chi Chris Cheung Fulshear is wayyyy out there for the Houston market. Developers are heading down I-10 with new developments so it is coming but it is still very much a rural market. The job market for your target tenant base will primarily be Katy, Richmond/Rosenberg, and to some extent Sugarland not so much Houston.

@Juan Abreu from what you have said and the numbers provided, this looks like many a 3rd Ward deal I've looked at. I'm not sure what value add you could do to the property to increase equity, but the current rents are a bit below the HUD FMR rate for 2 BR units. I have a 2/2 SFR and a 1/1 duplex in 5th Ward. The 1/1 fair market is $900 and the 2/2 is $1100. For context, I paid $100k for the duplex. And $87k for the SFR so $350k for a triplex is high unless you're in an area like Cody mentioned.

Absolutely fight the HCAD value. You are likely “benefitting” from new townhouse/condos being built in the area under the assumption of appreciation by gentrification.

@Kyle Keegan welcome Kyle! Based on your background in light construction/rehab and having liquid capital at the ready, I don’t think you’ll have any trouble partnering with someone until you get a feel for the game! Be wary of the people who call themselves wholesalers.

@Ryan Johnson you should be good for just a rehab. Or worse comes to worse get a site civil engineer to reconfigure the existing parking layout to get more out of what you have.

@John L. Yeah, I wouldn’t call that the galleria area. To piggy back on to your other post as to how successful investors got to where they are, a consistent theme is setting a minimum criteria to buy the asset class they want and maintaining discipline to execute that plan. You’re potentially talking about a $2.4M purchase that doesn’t seem to cash flow enough to justify tying up that much capital and speculating on appreciation or appraisal value. That’s a hard pass for me.

@John L. Where in The galleria are? I’m literally at the Starbucks on Post Oak and uptown Park Blvd typing this. I’ve never seen anything new for sale at that price. Unless it has a history of flooding or in a floodplain.

Be VERY careful doing this and make sure you know exactly where you are. I play in the Houston sandbox, but here's an example of a ordinance nuance that I saw come up recently cost a developer a lot of money. Houston minimum lot size inside the city limits for new plats is 3,500 sq. ft. but 5000 sq. ft. within the ETJ. The land planner was a new hire and not familiar with the local area. They incorrectly assumed that they were inside the city because the lots across the street from them were and had the developer believing he could get about 30% more lots than he really could. When the discrepancy was brought to light, it wrecked the developer's pro-forma. I have no doubts that the City of Austin, Travis County, and all of the other surrounding jurisdictions have similar criteria so take your time in the due diligence research.

@Aaron Gordy we civil engineers can be a helpful a partner in subdivision planning but you 100% need a local surveyor who is an RPLS that is familiar with the local platting ordinances and requirements. They are the ones who sign and seal the legal document filed with the court.

@Mark Sewell you can use a VA loan to build a quad plex. SIngle family lending goes up to 4 units as long as you live in 1 of them. I think you would have to sell the house you have now with a VA loan or refinance out of it in order to get a new VA loan. I don't think you can have more than 1 in your name at once due to the primary residence/owner occupied requirements.

@Begona Miron I think this might be more of a mindset/strategy question rather than a feasibility question. Here’s what I mean.

Infill new construction in Houston is a very competitive market played by people who, by and large, have a lot of money and a successful business model. If your goal is to compete with them and build a single family home on a single lot and sell it for profit, then yes, it’s very possible the sale price gets eaten up by construction costs, debt service, realtor commission, and capital gains taxes putting it out of reach of many solo investors.

However, if you build a duplex/triplex using an FHA construction to permanent loan, you start playing a different version of the same game. You would have to live in it for a year to satisfy the owner occupancy FHA loan requirements but you essentially are doing a new build house hack and the benefits of that have been thoroughly documented here. This strategy sets you apart from the developers because you have the benefit of time where they have the benefit of large access to amounts of capital. FHA loans are cheap due to the 30 year amortization schedule back by the government whereas private money/hard money used to develop is expensive and on a much shorter (1-2 years max) amortization backed by other investors looking for a higher return.

So now if you take your advantage one step further and live there for 2 years while renting out the other unit(s) and then sell it for a healthy profit, guess what? Those taxable short term capital gains you would have paid selling the property once completed 2 years ago now become tax free profits off the sale of a primary residence.

That’s my view on the situation, so take it with a grain of salt, but try not to look at any opportunity in a binary (can/can’t work) framework but rather a “how can I make this work for me” framing.