All Forum Posts by: Dave Chapa

We don't use HW on our properties, we keep a Cap Exp account that is fed monthly for the big ticked items.

The only experience we have with a home warranty co was the one we received with our home. Was the best money spent. We replaced 3 a/c units, the pool pump, fixed the range (the rage is a Thermador, so the cost to repair was crazy, over 2k!). After the first year with the HW co, they sent me a Dear John letter!! lol. 
 

@Rizwan Alam I can't help you with the condo however I can offer you some advice. I would focus on rebuilding your credit then, start looking for a property. This would put you in a stronger position and open more opportunities.

Houston is still a good market however "lucrative" is subjective. If you can, spend some time here and learn the areas you want to invest.

There are several good PM in Houston, just asked around. We are on our third year with ours, it's been a good experience. We worked out some kinks in the beginning, on both sides, and now have a very good working relationship. Our PM also bird-dogs potential deals for us too.  

Hope this helps.

@Vijaianand Thirunageswaram Congratulation on this new venture, keep us updated! 

@Jeremy Karnes Sorry for the late response. What we have been finding is that the vacancy rate wasn't an issue because of the lack of rentals in smaller towns, especially in 2k to 6k population towns. All the small towns I have been looking in are 15 to 30 min from other towns, that gives it a larger pool of potential renters. One town I like is Bellville, 4k pop. 18 min from Sealy 6k pop, 26 min from Brenham, 16k pop. 22 min from Hempstad, 7k pop. 

@Jeremy Karnes

2, 3 and 4 units are out there, but very hard to find fix and ready to move in for under 300k, especially 3 to 4 plexs. A friend of mine just signed a contact in on a 4 plex in LaPorte, and it was over 300k with some repairs needed.

I was able to pick up a 3-plex in a small town, no repairs needed, for under 300k, however, it's 40 min from Houston. 

I'm submitting an offer on a 4 plex, also outside of Houston, in a small town for under 300k.

With how the markets been in Houston, I mainly focus on rural towns. That is where I've been able to find some deals. 

Just keep looking and expand your search area into other sub-markets that you wouldn't mind commuting. 

@Sam Epperson

How to fund this portion? 

Save up and start with 1-4 unit SFH. Then move to MF because now, you should have the net worth and track record.

Do most beginning investors use a hard money lender? 

Depends on the MF property and you. My only option was 20/5, 25% down, with no money for rehab. I paid for the rehab out of my pocket. After successfully running the property for one year I was able to refinance and pull out 1/2 of my total investment. Also, non-recourse loans are very hard to obtain on small properties.

Do they do private money? 

As for me, no, I wasn't willing to ask others for money without risking my money first on the first MF deal.

I also invest with other that have a track record and a net worth equal or more than I. Personally, I wouldn't invest with someone who only has 10k to put in a MF deal and, no proven track record or net worth. However if it was a SF deal that would be different, because 10k is more to scale to 25k down payment on a 100k SFH vs 250k down payment on a $1m MF. Because whomever invest in a MF deal with you will need to have the net worth equal to the property and carry most of the risk.

I would highly recommend starting out with SFH, (1 to 4 units). I know several people who started with SFH that now own MF.

Once you get the track record of successively running properties, then the investors will follow.

@Sam Epperson

Congratulation  @Vijaianand Thirunageswaram! You were able to turn lemons into lemonade.

@Ryan Johnson

"Id be rehabbing the entire property getting everything up to code." This is where it can bite you. If the plumbing, electrical, structure, foundation,  etc.. are not up to code, then what will it cost to bring it up to code? I would have a licensed contractor look at it beforehand.

"What risks will I have with the lack of permitted edition when I permit the rehab?" You will have to bring it up to code unless it's grandfathered. However, the 3rd unit doesn't even count unless a permit was pulled for the addition. 

"Will HCAD re-classify as a triplex?" Yes, once they find out when they audit the area. 

"Can they make me tear it down?" The City of Huston can. Have a licensed contractor (with the City of Houston) look at the property. You could also call the Houston City permitting and ask general questions.  

"Will i run into issues on the refi if list as 1750 duplex by HCAD when it’s really a 2100 triplex?" I would ask your loan company. They will request a new survey and appraisal. 

In my opinion you are buying a duplex with a questionable addition. I would verify some of the hard questions before buying, especially if your numbers are dependent on the 3rd unit. 

@Aaron Krawitz SFH Investment properties will require 15 to 25% down, with a 30-year term. You can have up to 10 loans (includes your primary residence), once you past 10 loans it becomes commercial terms.

SFH, 2-Plex, 3-Plex and 4-Plex all qualify for 25% with 30 year terms.