All Forum Posts by: Brian Adams

I would say the value-add opportunities in our area exist, but are few, probably mostly concentrated around the rare fourplex in Harker Heights or small to mid-range apartment buildings throughout the area.

Most other fourplexes and duplexes, in order to meet the criteria I look for, are going to be generally newer (2000s) and in good enough condition that there are only some cosmetic upgrades needed, and therefore they are selling at retail.

There are older fourplexes in disrepair that on paper look like value-add opportunities, but they can be in low rent areas next to other fourplexes in comparable disrepair, so hard to impossible to upgrade into higher rents. Also areas for which I would recommend an in house property manager or something because local property managers are often reluctant or wary.

But there is the occasional C- apartment building that could be a B-, yes. I've been looking for one for a year and missed out on a couple, but they do come around from time to time.

Welcome!

If you're looking in the local area, there are two meetups:

One newer one in Temple that meets in the evenings and usually has a guest speaker of some sort:

https://www.meetup.com/Masterminds-of-Cen-Tex-Real...

And the Killeen one that is currently homeless since El Chico closed down, but I imagine will find a new location soon. The Killeen one is very informal. Folks just show up for lunch.

https://www.meetup.com/Real-Estate-Investors-of-Ki...

Hello @Chris Perrin ! 

I'm an agent in the Fort Hood area and work with investors - flippers, multi-families, and buy-and-holders. Own a fourplex and SFH rental myself. Would love to connect and share info on the area and what to expect. I've written some articles on my website oriented toward investors about what to look for and expect from our market, as well as an article here on BP about multi-families in particular, if you haven't seen it.

https://www.biggerpockets.com/blogs/10185/66309-ki...

Hope it's helpful! Please reach out if you'd like to talk more via PM or phone.

I can't take issue with any of the advice above. But I would mention that the median price in the Fort Hood area rose 11% in 2017, which is pretty incredible. I don't expect that to last into 2018, but the area is on an upward trajectory. I did the math right now, and there are 2.68 months inventory in Killeen. (2217 sales in 2017 / 12 = 184.75/mo. 493 active listings / 184 = 2.68).  This isn't your 2010 Killeen market anymore.

There are still numerous foreclosures - 14% of sales in 2017 - so there are distressed opportunities (many don't have a lot of work required as the area is so new and many foreclosures are only 5-15 years old). The multi-family market took off with 14% increase in median prices in 2017 among fourplexes. 

Interest rates rising, Austin slowing, and other things might change the story in a year. But for now, the market is actually active and fairly hot for what we are used to and getting a lot of attention.

I haven't seen it yet, but with the rising prices, I can't imagine the BAH won't be going up soon (it's gone down in recent years), plus will put pressure on rents to rise as well, making SFH and MFH rentals more attractive. We're still one of the most affordable major markets in Texas, so I think it's still a good buying opportunity.

I'm a Fort Hood area agent. I'm guessing it's 76541 - the older area of Killeen? I would tread very carefully. If you have a team you trust and property manager ready and eager to take on the building, then you can maybe pull it off. But if that really is your first deal ever.... that could be a tough one.

Thanks @Nirmal Khanderia !  I look forward to seeing you at the auction next week!

@Christopher Cadenhead - let me know what you have questions about the area.

Hello Kevin! Welcome to forum posting. And BP!

I wish I had done fourplexes with owner-occupied loans like the VA loan earlier. I bought one in Killeen with the FHA (I had already used my VA twice) in 2012 and it's been one of the only positive deals I've done.

$100/door would be great, but I would be sure to be careful about where and the condition of a quadplex in Killeen. I wrote an article about what I recommend looking for in a Killeen/Cove/Heights fourplex here:

https://www.biggerpockets.com/blogs/10185/66309-ki...

Hope that's helpful and that your deal works out well!

Hey @Account Closed ! 

I hope my message didn't sound like any nerves had been hit. I certainly try to be dispassionate. Just informational! And I honestly don't know how the Census does their vacancy numbers. Just tossing around both ideas and information.

Concerns about being a military town are not unfounded. I own two properties in Lawton near Fort Sill. Having them assessed for possible sale now, and the market there is flat-lined at best - even fallen off a little since I bought 7-8 years ago. 

Regarding multis under the numbers I recommend targeting, they are definitely not Bs, so I would tread carefully. Some I would easily classify as Ds, in fact. I know at least two guys who bought a few years ago hoping to manage these D-C class fourplexes themselves and are both now trying to sell because they're sick of all the work and tenant drama. The numbers definitely aren't as good on paper at the $200-$215k prices decent fourplexes are going at now, but I would rather not own one at all rather than settle for some of the lower classes of properties, and recommend the same to would-be buyers. I would only recommend considering the others one if you have local, experienced, and in-house property management for your portfolio.

@Account Closed

The Fort Hood troop reduction actually happened well after 2012 in 2015, and didn't actually take full effect until 2017.

http://www.statesman.com/news/local-military/fort-...

http://kdhnews.com/news/local/study-no-major-impac...

2017 ironically has had some of the best real estate numbers since the Recession, with every city in the area's median price growing by at least 5% YoY.

I've been curious about the Census vacancy rate. I don't see a methodology of how it is calculated. Is it just vacant homes, or vacant homes actively advertising for lease? It is possible it is counting inventory that owners are not even trying to rent. That would somewhat explain the numbers in 2012 when many multi-families and single families were foreclosed on and therefore vacant, plus only approximately 35% of listed homes were selling, meaning there was vacant inventory just sitting with a For Sale sign in the yard. But I don't know the answer on that one.

The troop reduction concerns and trends you reference should be put in context that the area has continued to grow throughout those years in population and, especially, builder activity, which has continued nearly unabated, adding more and more inventory for both buyers and ultimately renters.

Plus, I don't understand, if vacancy really were that bad then in 2012, surely rents would have dipped as landlords competed for renters?

Anyway, anyone looking at Fort Hood - yes, turnover is going to be higher. I'd recommend a vacancy assumption of 8%. Rents haven't appreciated in forever (although home values themselves are mostly keeping up with inflation), and the area had a good 2017. I think it's worth considering for buy-and-hold types and know a couple investors who agree and have a lot of exposure to the area in SFH rentals.

@David Sray - there is a lot versus the rest of the central Texas market, absolutely, but I believe that is a factor of there literally just being more 2-4 unit multi-families in our area, and our area is naturally higher in turnover than some markets. That said, inventory is actually down. A year ago there were reliably 40 active fourplexes at any given time. Now that is 20. 

The area as a whole does not appreciate significantly, although 2017 was a good year with every city in the area having a median price go up of at least 5% versus 2016. Fourplexes, however, are unique in that they were unusually badly hurt by the 2008 recession (80% of fourplex sales in 2011 were foreclosures), and has rebounded since. So fourplexes have appreciated quite a bit versus the dregs of 2010-2011.  That said, don't let that take away from your general point, which is accurate: don't invest in the Fort Hood area for appreciation.