All Forum Posts by: Brian Adams

The Killeen area has more multi-family options than most areas in Central Texas - but they don't cash flow at $150/unit, unfortunately. 

To pull that off in our area, it would likely have to be a solid SFH foreclosure deal. Downside is you are only getting one unit at a time, will likely need more out of pocket in repair costs, but cash flow is a little better.

That said, the Killeen area has a lot of newer housing, and most foreclosures are less than 15 years old, so you can get buildings that are still in great shape and just need some cosmetic stuff like new carpet and paint.

I see. However I am very shy when it comes to small towns. I don't know where you are hearing anything about a major drop - there is one proposal yet to be presented to Congress to initiate a BRAC commission, but it would likely be less severe than the previous one that already took effect, and, if it impacted Fort Hood at all, would almost surely not be considered "major", but rather a small, single digit % reduction. Whereas with McGregror, if SpaceX moves out, it could easily be the entire SpaceX company - 100% - and then you're stuck with rental investments in a small Texas town with 0% growth (though I should caveat I don't know that much about McGregor).

I think any major price drops in the Fort Hood area (the soonest BRAC would hit, if it even happened, would be 2021, and would surely be minor as was the last one) would be the result of national trends like spiking mortgage rates, a recession depressing would-be-homebuyer earnings, potential tax reform disruptions or issues with the Fannie Mae/Freddie Mac conservatorship.

If BRAC and single-industry towns is a concern, I can't imagine McGregor would allay that - as it is a tiny town that just has SpaceX. The Killeen area has a better chance of economic diversification in the near future with the designation of Interstate 14 and a larger workforce and lopsided renter-heavy market.

Hello @Devin Turner !  If you're in the area, I'd recommend making the auction on the first Tuesday of every month. There is also a Killeen Meetup that meets first and third Thursdays. https://www.meetup.com/Real-Estate-Investors-of-Killeen-Fort-Hood/

I'm an agent in the Killeen area. I know a couple successful wholesellers. There are a couple Homevestor (We Buy Ugly Houses) franchises that get deals in our area as well that they wholesale.

It can be a difficult market for wholesaling, however, because of the immense amount of new construction inventory, the high LTVs that come with the VA loan and mean that homeowners don't have equity, and a buyer friendly market that means most of the transaction costs fall on the seller.

It's a pretty solid rental market, though, and finding properties to wholesale to buy-and-hold type investors is probably a route you could explore.

@Daniel Erdman

Where are you getting your property leads?

If just looking at local foreclosures or multi-families, I wouldn't expect much better than a 6-8% cap rate - probably closer to the 6% side.

If getting off market leads through direct mail, auction, etc., then you can do much better.

Maybe someone else can jump on and give their experiences. Most of mine is working with buyers with multi-families and foreclosures with that 6-8 range.

Hello @Federico Portalupi -

I'm a Realtor in the Killeen area and have done a few multi-family deals, and own my own fourplex that I picked up in 2012 in 76549.

One important criteria I would use to evaluate a multi-family in our area is whether or not a reputable local property manager will even be willing to manage it. The 76541 (downtown) area is an older area, and there is often a lot of deferred maintenance or even major updates that are needed. There is an immense amount of new inventory you will be competing with (average age of homes in the area is only 15 years old) that will suck your renters away to newer parts of town.  I would run the property past a couple property managers and ask them to give it to you straight whether they would be willing to take the property into their portfolio - even if you are planning on managing it yourself. It will tell you a lot about the property if everyone is saying "thanks but no thanks".

I'm a Realtor in the Killeen area. I mostly agree with what @Joe Scaparra said.  But would like to add some more thoughts about the area.

The post rentals opening up to soldiers - I don't know the entire reasoning behind it other than indeed there WAS a lot of vacancy on post due, I assume, to superior off post options for Soldiers. Opening up that housing presumably adds rental inventory, essentially, but that effect is already priced in.

There are a LOT of rentals, but there are a LOT of renters. 2/3 of the area's inhabitants are renters, the inverse of the national ratio. Also, frankly, a lot of those rentals are not well taken care of, either because of sub par landlords or property managers. If you take decent care of your area rental, vacancy should not be a major concern. I would budget 8% vacancy but I've been under 5% in my time owning both a SFR and fourplex.

It is a military town, and that is the primary economy, followed by healthcare, schools and call centers. But it is a lot larger town than I think some people realize. Killeen is the largest town between Dallas and Austin - larger than Waco, Round Rock, Georgetown, Pflugerville, Cedar Park...  And that is not including the on post population, Harker Heights or Copperas Cove.  There has been some significant infrastructure improvements in Killeen - specifically the expansion and designation of Hwy 190 as I-14. Anecdotally, I have seen a surge in commercial/retail investment in the last 12 months.

As for being overbuilt, that is possible. Killeen has seen a huge surge in population since 2001, growing from 80,000 to nearly 140,000 now. However that population growth hasn't put a lot of pressure on prices which have kept up approximately with the rate of inflation. I do think that is due to the builders in the area, which are very active (the average home sold in the area in the last year was built after 2000). 

So, it is it's own market. I always recommend diversifying, but there are folks having good success with rentals in our area. If you have a little capital but not a lot of time, I might look at fourplexes/duplexes where you can get a 6-7% cap rate. If you have more time and are more involved, you can look at SFR foreclosures and target a very slightly higher cap rate (and higher rent bracket). If you are a full time investor, BRRRR, wholetailing and traditional buy and hold can work in our area, and I know folks who do all three. (Some flipping, but very little).

$700/mo 15+% cash flow sounds REALLY high for a Killeen fourplex unless you got it off market at a hot price. Are you sure that's accounting for all expenses, either actual or anticipated (capex, taxes, insurance, vacancy, management, maintenance)?

Generally, at least at first, guys buying stuff off the MLS are cashflowing $200-$300/mo.

I might also check out John Reider. They manage apartments up to 50 units or so and are one of the three major commercial brokers in the area. I haven't had a personal experience with them other than doing some deals with their agents.