All Forum Posts by: Alex J.

i agree what you are saying about the 90s till say about last year, but I am finding prices decreasing in some of the trendy pockets.

regarding the duplex, you are absolutely right i would need to find the investor as an exit strategy and I dont really look at it as anything other than a "cashflow"... im a long term buy hold investor I just want to build equity over time and dont get into a deal that isnt cashflowing significantly to a point where it makes sense for me.

Are you strictly doing wholesale or are you actually investing as well?  I am curious on how the rental market is from the investor perspective with the recent oil downturn...

would also love to hear any other houston investors chime in!  feedback from the ground level is the best

what i would pay?   25% under whatever market value is : )

I am in escrow for my first investment property in Houston TX and wanted to get thoughts on the deal...ill provide as much i can to help readers decide good or bad.

Some pre-deal info:  This is not my first investment property, i have about 12 doors across 4 properties but they are all in los angeles ...some great areas some not so great areas but thankfully they are cash flow positive.  I manage those with a local partner and he is the active maintenance part while i manage the "front office" (leases, tenant calls, background checks finding the deals managing budgets etc)

The property is in Houston.... think of it as a "C" or "D"  type of property area basically some subsidized some not in the area.  I have exp in this type of a market this is not my first investment and ive found it to be decent in the investments i have in Los Angeles. 

purchase price, 100,000

25% down say around 4.5% 30yr note

The two units are already rented  total rent combined $1325 / mo

tenants pay for utilities, landscaping, etc

Prop tax is 2.5%

insurance about 2,500 (its a flood zone so its actually two policies totaling that amount)

The inspection came back in decent shape, there is a lifetime transferable foundation work certification, and new 30 year roof put in 2015.... nothing tragic thus far.

I'm coming to around a cap rate of near 10% and a return on equity of about 16%

Numbers wise, its not a bad deal but heres where I am having reservation and here are some general thoughts on the Houston market I would love feedback from readers esp houston investors/residence

1) I dont really see how we will get large price appreciation or any price appreciation really because the areas are kind of low value low income and pricing in houston in generally the last few years grew at a very unsustainable rate.  Generally I dont like investing in an environment like that but if it stays flat to slightly down and cashflows  i can still depreciate so its not terrible.

2) oil pricing might impact investors and could create some situations where investors need to free up cash and basically have to sell properties even if its cash flow positive to raise cash.  As for cash flow homes, they are pretty difficult to come across and the multi unit market here doesn't really exist in a 2-4 unit unless its in "C" or "D" areas....this might or might not present an opportunity i am not sure.

3) Houston is a big oil and gas city and costs in general for housing here compared to the coasts are LOW while incomes the last 2-3 years have been competitive to coasts...this means a lot of discretionary income is around so there might be investors that will keep the real estate market from bottoming once they find cap rates that make sense

4) there is a huge overbuild of commercial properties in the city and ive heard that there is more commercial space coming online this year that is new sqft than the ENTIRE city of St Louis sqft total...and that doesnt even begin to factor in the several huge multi unit mixed use projects all over the city just coming online....soo the mid-upper "a" or "b" properties are probably all overpriced and will see some pressure....which is why i stuck to a "c"/"d" property because they are pretty much not adding more of

5)  This deal seems fine but if i am going to start really building this business in Houston I really need to get a better handle of what can drive this economy if it ISNT going to be oil and gas.  IF there is a pullback is this an opportunity or just the start of a falling knife ya know what i mean?  I mean population wise houston is a HUGE city...but ive never been able to find good value in it other than if a person was to buy hold as a spec...builders did well here but i am not a builder and i think they might be in a bit of pain right now...so I really dont know how to approach this city going fwd.... any investors in houston perhaps can shed some light?

Ok I know this was a long post, and im sorry, but i wanted to give some light to a market that probably a lot of people have heard about out of state and get a real local perspective of the current trends here.

invest in muni bond funds that have high yield...something like  a california bond fund so you get the uplift and liquidity when you need the cash think of like the pimpco funds that do this as a starting place... some funds even pay monthly distribution like a rental.

follow up to this, i went with allied last night, they said if you want to get a discount you can use me as a reference just message me and i can give you the info but pretty  much brokerage license courses and prep exam for CA comes to be around 500 bux

so I have a similar question as this only i am wanting to get my brokers license.....

I think I have all the pre-qualifications that might be able to get me to bypass the agent and go straight to broker. 

is there any online courses you guys can recommend?  I need online because I live in TX but all my RE is in los angeles... I essentially want to get into property management servicing and other interesting opportunities.

Any advice would be greatly appreciated

real estates golden rule....

location^3

as an investor in Los Angeles and a resident of Houston/Sugarland I can share some experiences I have gone thru relating to the rental markets in both cities.

in houston, its been a builders dream for the last 5 years no doubt, when i first moved to the city i rented a 1200 sqft 2bed2bath in a fairly decent complex for 1200 a month, now it goes for 1800 a month. housing in the suburbs went from 250 350 to 350 450 for a pretty standard suburb 3200+sqft house

in los angeles something comparable to my houston rental would have been say 1700 a month in "the valley" and its probably now 2100-2200 a  month.  about 2300 2600 westside areas.

In regards to Houstons "never ending land"  thats actually a very big misconception of the city.  although it seems like there is neverending land, the main parts of the city are quite built out which is why its seen such high appreciation in the "Boom" time for oil and has(the oil and gas biz)

I Actually think houston as a rental market is not really a great deal unless you are doing mega buildings and the reason is that the property tax rate here is so dang high.  If you buy in sugarland katy area is similar, but you will likely have a longer wait time in getting the house or what not rented.

Ive looked at so many deals and I dont really think they work for me personally in the city of houston.  

One thing i learned from a realtor who specializes in sugarland is that the city of houston never really had this building out of multi units like duplex-4plex as Los Angeles.  It was a city of many affordable Single Family homes and everybody else lived in an apartment essentially.   They are pretty hard to come across actually.

So that leaves basically apartment complexes or homes to buy/renno/rent  and the yields in this current market environment arent too great.

the one thing i can say that houston offers that los angeles doesnt  is extremely good public schools in the suburbs and a lot of international people working there for oil and gas jobs that fuel that demand.  the incredible thing i found is that in an area called sugarland... you can buy a house zoned to nationally ranked schools for say 200k-300k and basically be paying 1400 a month mort/propertytax/etc and live in a HOUSE in a great place.  This doesnt exist in LA anywhere.   This type of opportunity coupled with reasonable paying jobs makes me think that areas like sugarland can potentially see further appreciation or at the very least should have some rental demand because its a fairly built out suburb.

there is a lot more discretionary income in this city for the average person than los angeles...the ceiling for rents can go higher in a city like that, whereas in Los Angeles its going to be difficult to push rents higher and higher if there isnt real wage growth or more transplants with "bigger pockets" pun intended.

this is my color on the markets just throwing some food for thought out there.

Wow very impressive !!  I am in Houston  though i invest primarily in los angeles, I really feel like the houston market is harder for "retail" or "small time" guys but 14m is def not a mom and pop operation

thats really awesome i would love to  see the progress on this project it sounds like a great learning experience even on the sidelines 

OK SO

I have recently run into a similar issue... my issue being that I have 5 loans and of those 5 I am trying to do a refi cash out on a duplex...well when i bot it it was a single family non owner, that i coverted to a duplex

So far ive learn this:

There are banks that will do a non owner HELOC type of loan, and i think rates are comparable to a non owner financing... HOWEVER it needs to be on a SINGLE family residency.

I think if you called like a bank of the west or even wells fargo they will be able to do an equity line for you

but if you dont have more than 3-4 loans, I would say do the refi cash out and get a new 15 yr loan with your new balance then use that cash toward an investment..the reason i say this verse a heloc is because if you plan on holding the current house for a long time you might as well fix the payments on it instead of let a heloc linger and if u go heloc and later decide you want to fix it , thats 3 loans you need to genereate... 1 for heloc, 1 for new investment, then 1 to refi rate term on your first original investment.  might as well cut that third step out and go refi cash out from the beginning , then invest that money into new project and fix your costs.

for my own particular situation I am still looking for a non owner occupied lender that will do equity lines of credit for multi units and im striking out so far.