All Forum Posts by: Adam D Rinehart

@Begona Miron It depends on what price you buy the lot for, your build price per sq. ft. and how close your sale price comes in to your ARV estimate. In general though, I would have to say yes just by looking at what's going on inside the loop especially in the Wards in areas that didn't flood. If it wasn't profitable, then those townhome developers/builders wouldn't be buying up anything they can get their hands on.

@Axel Norvell I'm a Houston native and just started investing in real estate within the last 3 months. In that time I closed on 3 properties, 2 of which are in 5th Ward. 1 is a SFH off the MLS using conventional financing leaving me with a mortgage less than most new vehicles for a house that will rent $1200/month. The second is a duplex through an investor I met here on BP off a listing in the marketplace and did seller financing.

I mention 5th Ward because it is essentially where The Heights was about 25 years ago, and you know first hand where it is today. There are a lot of value add properties in the area that also have a strong chance of appreciating as the gentrification picks up even more and developers snatch up the remaining vacant lots.

@Charlie Moore I have 2 LLCs currently. I started the first one for my side hustle engineering consulting after my CPA said it was time to start separating revenue and liability as projects got more complex.

I opened my second one just recently specifically for real estate investing that I can either deed the property into OR community banks like to see a business on the mortgage of a cash out refinance in their portfolio loans.

My first investment property was actually bought using an unsecured business loan to my engineering LLC based off the income it generated over the past few years. I used those funds to be a "cash buyer" to purchase the property in my own name. This was huge since there wasn't a mortgage and I didn't have to season anything before going to my local bank and do a 70% LTV cash-out refinance into my real estate LLC once the rehab is complete.

There are many reasons LLCs are beneficial, liability protection is only one.

Now that I'm a little over 3 weeks into the rehab and renovation of this deal, I thought I would share some photos and give you an update on the exit strategy. Photo 1 was the formal dining room at the front of the house just inside the entry. The drywall replacement on the ceiling was damage that I thought was from old roof damage due to improper flashing installation that had since been repaired. I was wrong. When we turned the water on, we quickly found the cast iron sewer pipe from the upstairs bathroom had a crack in it running for about 15' feet. Add another $500 to replace that, day 1. Photo's 2 - 4 are the current status of this room and the primary value add to the project, where this room is being converted into a 5th bedroom with an added private bathroom (3rd full) and closet.

Photo 1

Photo 2

Photo 3

Photo 4

In case you're wondering where the space came from to put the bathroom and closet, the answer to that was taking it from the existing "master" aka downstairs bedroom. See Photo's 5 & 6 to see how I walled this room off and converted the seated vanity area and 2nd closet for this room into the value add.

Photo 5 (The vanity area to the rear left and second closet barely shown behind it. The open door to the right is an additional closet space under the stairs)

Photo 6

The next value add I'm doing is adding square footage to the house by converting the garage into additional living space. I did this by removing the existing garage door rails, secured the garage doors (self tapping screws) to the existing framing in the down position, built an insulated wall in front of the garage doors and added an HVAC duct in the ceiling. Since this house is in a residential neighborhood with an HOA, any exterior modifications would require their approval. Going this route bypasses them all together since the exterior remains unchanged but I get an extra 400 sf of living area for consideration during my cash out refi appraisal. This area will serve as additional common area space for the tenants that also houses the washer and dryer as well as the water heater. I wanted to do this primarily so that the kids had a flex space to make their own (within reason) so that I would be able to compete with amenities provided by apartment complexes. See Photos 7 - 9. If I ever decide to sell the house and it makes more sense to market it as a traditional SF home, it wouldn't be too much cost to tear down the wall and install new garage door hardware to reclaim the attached garage.

Photo 7

Photo 8

Photo 9

So that's where the big items currently stand. My GC said we're about 3 weeks out from completion which triggered me to contact the bank I've already lined up and start the cash out refi application process. Their internal due diligence placed the ARV at $250k and will send their appraiser out once the house is substantially complete but not quite move-in ready. The remaining items are run of the mill renovation work but I'll be sure to post more pictures as the finishes start going in and the bathrooms and kitchen transformations are ready for reveal.

@Sam Ajouz I won’t do all the heavy lifting for you, several suggestions have been made already, but the master planned communities are outside of the loop in Houston. Very nice, well established communities/neighborhoods inside the loop are Memorial, West University, and River Oaks. Just be prepared to spend a lot of money. A LOT of money.

@Sam Ajouz you are essentially looking for a first cycle turn key property. What I mean by this is that every development typically follows the pattern where the residents are either the original owner or a buyer in some turnover cycle. That said, I’m guessing you are looking to cater to families. If so, there are 3 big things in Houston to look for (1) Floodplain/did it flood during Harvey, (2) School District, (3) Football/athletic program at the high school they are zoned too.

@Tamara Deering you nailed it on both counts, which is why I’m in 5th Ward.

@Will Gaston, appreciate the response. Quick follow up, is your requirement included in the lease agreement/amendment or separate document? The thought of having to chase a 2nd bill isn’t appealing especially if the bills are in my name and there isn’t much recourse on my end to force the issue.

I'd love to get into the Montrose area but I haven't found a way to make it work for me, yet. I actually lived in the area with my cousin and his fiance about 15 +/- years ago right after the town homes at the corner Montrose and Peden were built.

@Ramsey Blankenship there are several things macro and micro components that come in to play you didn’t mention but are important. Take Austin for example. The steady job growth has come from high paying tech jobs, not blue collar or retail jobs. Next, the supply of existing homes in Austin and the surrounding areas of Travis County was very small. Austin and Travis County are NOTORIOUSLY slow in plan approvals for new construction due to the strictest environmental ordinances in the state. So, a large influx of high paying tech jobs, short supply of existing homes, and long lead time to get new lots on the ground creates the crazy price increases that regions has seen.