All Forum Posts by: Adam D Rinehart

Stucco itself isn’t the problem, but it isn’t all that great of a choice given the soils and climate for Houston. Almost all new build construction is a slab on grade foundation built on highly expansive clay soils. You mix the shrink/swell cycles of the underlying soil and get some differential settlement across the slab and foundation cracks happen.

Stucco, like brick, is a very brittle material that is unforgiving to foundation movement and cracks easily. Open cracks plus a humid climate that gets heavy bouts of rain creates all kinds of problems from moisture intrusion.

@Brittany Langley being in a flood plain isn’t in an of itself a deal breaker. Ask if they have an elevation certificate to certify if the finished floor elevation of the bottom units is 1’ or more above the base flood elevation. If it is, then you won’t be required to carry flood insurance.

@Michael B. And there’s a good reason for that. Here’s the short version. If a house recently flooded inside the city limits of Houston and the rehab/repairs cost more than 50% of the pre-flood appraised value (per HCAD), that is classified as a substantial improvement. Once you cross that threshold the City requires the entire structure to be in full compliance with all ordinances. The 2018 revision to the Chapter 19 Ordinance (Floodplain) requires all structures in the regulator floodplain to have a FFE 2’ above the base flood elevation. The release of the NOAA ATLAS 14 rainfall data released in August of this year has made the 500 year flood plain the base flood elevation.

This means that if the $60k flood damaged house you picked up for $20k needs $30,001 in repairs, plan on spending another $30k to raise it if pier and beam or $50k+ for a slab on grade depending on size.

Know your local requirements and do you DUE DILIGENCE!!

@Lanna Nunez please talk to me or someone like me, a civil engineer that specializes in land development, specifically with properties inside the COH corporate limits, before doing this deal! Seriously, give me 15 minutes due diligence time to help you look at this, no charge, in hopes that you don’t step on a financial land mine. Houston made significant changes to their Chapter 19 flood plain ordinance last year that has profound impacts on development AND redevelopment. This area is ripe with wholesalers trying to pass off junk property that will soon be undevelopable once the updated interim flood maps get released.

@Robin Frazier check out Starwood Farms up here in Cypress. I think they did exactly what you’re describing.

https://ignitefunding.com/fig-starwood-farms-llc-4595-texas/

@Sam Ajouz I design those master planned communities as the Engineer for the developers. As an investor I wouldn’t buy a new to use as a rental in a new development for a couple of reasons. First, you’re more than likely paying retail or higher to get in first. Second, there will be constant supply for several years during build out. So in 3 years, you’re old news. Third, most builders will have in-house financing and will get very liberal in lending requirements if the market slows, pressure to move to the next project, meet quarterly/monthly sales goals, etc...which will give your potential tenants an avenue to own new it instead.

@Mauricio Quiroga I'm just starting out in my REI career, but here's my 2 cents as a local.

I just bought 2 properties in 5th Ward. One is a SFH for $87k that needs about $25k is repairs/updates before renting out and the other is a long term tenant occupied duplex for $100k currently renting for $1000/month. Fair warning, 5th Ward is by NO MEANS Sugar Land (I actually grew up not far from there in Richmond) but the proximity to downtown appeals to a different age demographic. Being from the Houston area, when I tell people I'm investing in "The Nickel" they usually give me the "you're out of your effing mind" look before asking why. I just smile and ask them if they wished they had bought something in The Heights 20 years ago and then the light bulb goes off.

St. Arnold’s brewery coming in as well as the EaDO management district abutting to the south has really driven a revitalization effort and jump started the gentrification process. Get in before you can’t.

@Will Gaston I’m glad to hear you “over improve” your student rentals as well. I’m currently renovating my first property (purchased as a foreclosure) specifically for a student rental but chose finishes that many people watching from afar have said are “too nice” for a student rental. I agree that you need to set yourself apart from the competition and also have a product that can help win over a skeptical parent if they think the price is too much before seeing the house.

Also, how do you deal with utilities? I don’t really want to have them outside of my name for obvious nonpayment reasons, but also don’t want to have to chase another payment every month. Up until I read this thread I was planning on doing individual leases and toying with the idea of including them in the rent price, now I’m rethinking my plan.

FWIW the house is a 5/3 and walking distance to campus and football stadium. It’s a rural area with a huge shortage of housing, regular and student, with a surge in enrollment numbers over the last 5 years.

@Christopher Bran that’s quite an impressive portfolio thus far. I play in the Houston sandbox as well, primarily as a land development engineer for nationwide builder master planned communities. I just recently started investing in the last couple months and have targeted 5th Ward and Prairie View with 3 purchases in my first 2.5 months.

Thanks Brian! Just bought the Texas version so I can create a by the room lease agreement for a student rental property.