All Forum Posts by: Brianna H.

 I am not very familiar with inside the loop, so that would be a good question for a realtor. How long have you been looking at townhomes in this area? Are there a lot of rentals listed? Have you done a market analysis? A realtor will be able to get you the sales comps/rental comps for the area to assist in your research. One thing that really turns me away from townhomes/condos is the mandatory maintenance fees attached to it. You will easily spend $250/mo in maintenance fees. Have you thought about this?

I just did a quick search for the galleria area and analyzed one place. (2121 Fountain View Dr)

LP: $85k (5% DP, 4.5% interest - $400/mo)

Taxes: 2.5% on $45k ($1125 - $100/mo)

Insurance: assume $100/mo (I have no idea what townhome insurance rates are, but you can get quotes before you buy)

Mandatory maintenance: $300

Vacancy: $100/mo (based on monthly rent of $1200)

Repairs/capex: $100/mo (Built in 1968, I would expect to make some repairs)

Management: $120/mo (10% of $1200)

Total monthly expenses: $1220

In the same area, I saw a place listed for rent for $1200 (824 sqft), which is $1.45/sqft. The house I analyzed is 660 sqft, which would mean you could rent it for $960 which all things being similar (I didn’t check this too detailed).

This is just a super quick calculation that doesn’t really have a lot of basis behind it, but this is exactly the reason why I avoid inside the loop and why I avoid townhomes/condos. The mandatory maintenance fee is a killer! I’m not sure what all the maintenance fee consists of so you might be able to get away with not setting money aside for repairs, but it still looks like a horrible deal.

I can send you my realtor information if you are interested. He is an investor himself and he deals with a lot of investors.

Both my home loans are FHA. They offered the best terms in both situations. Refinancing has many different purposes. Most people refinance to take advantage of a lower interest rate and reduce their payment. You can refinance and get cash out from your home if you have enough equity. My primary mortgage was originally at 5.125%, 30 year. I refinanced into a 15 year at 2.9%. I'm only paying $100 extra per month and I reduced my loan in half (I refinanced after 6 months). I bought a foreclosure and they would only let me get this particular loan with the house and I knew right away I didn't want those terms.

Just keep in mind that it is a lot harder to refinance a home if it is not owner occupied. You will need more equity in the home and the interest rate will probably increase, that is if they agree to refinance in the first place. I hope that helps a little! 

I personally would find it annoying to pay $1999 for rent. I even add extra principal to my mortgage just to get it up to the next $25 increment. I would recommend keeping it at $2000 because you will eliminate people if they do indeed have a filter that goes up to $2000. 

And honestly, $1999 seems like a pretty firm number. If you get a good applicant, but the price is a little high, they might be more willing to ask for a lower rent if it's $2000 rather than $1999. I would rather get a good tenant in for $25 or $50 less instead of someone that doesn't pay after month 1 for the higher bill. :-)

From my experience, tris and quads are very hard to come by in Houston because there are very few of them. I think the majority of people living in Houston want space, so it's not like other cities where it is common to share a wall with your neighbor. Also, the tris and quads that I have seen...you probably would NOT want to live in. They are usually in rougher areas. 

Another option may be to look at duplexes. I've seen a lot of neighborhoods outside the beltway that are purely duplexes. I can't guarantee that you will spend less than $130k though since the market seems to be inflated right now. 

I agree with Doug. Buy a SFH that is marketable as a rental, then repeat after a year. My realtor is also an investor himself and deals with mostly investors. Here is his information:

Le Nguyen

 Someone correct me if I'm wrong, but to get the lower down payment (owner financing), you are required to live in the house for OVER a year. Moving out before your year is up would be loan fraud. 

It's a good plan, but I think you should get involved with an investor realtor. One bedroom, in my opinion, isn't really desirable as a rental house. If you're not willing to live in the unit for a full unit, why would your tenant be willing to?

As far as loans go, talk to a mortgage broker or a few lenders. The type of financing you want really depends on how much you want to put down, what your goals are (refinance after 2 years?), etc. Fees are different for each of the loans. In my situation, FHA has always been the best option.

 I agree with your approach. It looks like they just fell on hardtimes. I would call both employers to do some digging. Since he has only been there 2 weeks, maybe you can dig a little deeper even...has he been a GREAT worker in those 2 weeks? etc. If they have been living at home, they probably have money saved up so 2 months security deposit shouldn't be a big issue. 6 months agreement is a good idea so you can get back on track for a spring agreement! Goodluck!

Dago Garcia

832-334-6037

[email protected]

Degassi Construction

 I personally don’t even look at percentages…I usually use my gut instinct as my initial opinion of a rental. A full on analysis might take longer, but after a while you get a feel for what a house should rent for in a particular area.

My process for my rental home was this:

-Fit within my search criteria for 3/2/2, 1500+ sqft, <$100k.

-Check what other houses are listed for rent in area (guess that this house could rent for $1200 with updates) ($0.68/sqft)

-Have realtor pull sales/rental comps ($/sqft is lower than majority of homes in area - $56/ compared to average $70/) (range: $44/ - $84/)

-Rental Analysis with actual taxes, estimated insurance, etc – rent based on average in area -$1250 ($0.75/sqft – need at least $0.70/sqft for deal based on analysis) (range: $0.68/ - $0.85/)

-Look at rented houses on high end / low end to see what price pays for (granite, fridge included, new paint, etc)

My house was listed at $100k. After inspection, our realtor told the seller that it would require $40k to fix (total over estimation). We settled with seller for $86k. Contractor estimated renovation at $15k. ($57/sqft with renovation) Within one week of listing, we had renter in home for $1500! ($0.85/sqft) My expected cash flow is $250/mo, and I believe that is a conservative number. We went all out with the renovation (granite, new paint, opened wall, new carpet, updated bathrooms, new stainless steel appliances).

My point is…if I were to look at percentages, I would have discounted this house. $100k + $20k repairs with average rental of $1200 is 1%. No thanks! But I saw a distressed home and come to find out, the owner is on the brink of foreclosure pretty much starving for cash. Take your time. I once read that you need to look at 100 properties, put offer on 10, and hopefully 3 will accept.

Another favorite piece of advice I live by….if you’re not embarrassed by you offer, it’s too high! :-P After the inspection, we changed our offer from $100k to $60k. I was so embarrassed! The seller said he couldn’t accept, but our realtor asked how much they were willing to accept. This showed us what the seller was actually hoping to get out of the deal.

Hope that helps!

 My rental, including repair costs wrapped up into the loan, is 1.5%. This was a house that was deemed 'unlivable' because of the condition that it was in before the rehab. I agree with everyone else...I don't think 2% is reasonable in the Houston market right now. 

Sometimes, you can word it in the rental agreement to say rent is $950 if submitted by the 28th of the month, $975 by 1st, etc. Is that what you are talking about? I think speaking with an attorney is your best bet so you don't break any rules in your area.

Easy. Buy the houses before you get married and draft up pre-nup. Sounds like you should just stay single though. :-)