All Forum Posts by: Denise Mayo-Walley

Hello BP community!!!!

Several hours ago I viewed a property with my realtor and was very excited about the property potentially being my first- that was until I started crunching numbers. I sure hope my cash flow calculation is incorrect. Please help! And keep in mind this property is in Houston - 2% rule is RARE

Here are the numbers:

Potential Purchase Price: $99,000

Cash to close (downpayment plus closing costs): $19,800 + $5,900 = $25,700

Mortgage: $401/month = $4,812/year

Income:

$1200/month = $14,400/year

vacancy rate (10%)= $120/month = $1,440/year

net income = $12,960

Expenses:

Property taxes = $1853/year

Insurance (complete guess): $1380/year

Property management (though I plan to self manage): $1,400/year

Maintenance & repairs: $1,400/year

HOA dues: $411

Total expenses: $6,524

NOI = $12,960 - $6,524 = $6,436

Cash flow = $6,436 - $4812 = $1624 (???)

Cap rate = $6436 / $99,000= 6.5%

***So this translates to only pocketing $1624/ year - more if I self manage and repairs are less than I budget for?

I am trying to figure out if I should make an offer. There are 4 other offers as of today and the home has been back on the market for 2 days. I want to make a smart decision based on the numbers and not on the number of offers.

Thank you for your help!!

Welcome! I'm at the same point as you in my quest to become a real estate investor. I believe we are in the right place. Good luck!

Hello everyone,

I am trying to purchase my first property in the Houston area. I have my financial go lined up and have narrowed down my areas where I would like to purchase a property.

A coworker of mine has several rental properties and recommended her Realtor. I spoke with him and set up for a search on Har.com. We went to look at properties. He works under a company that has both Realtor services and property management services. When showing me the properties he seemed very knowledgeable about things investors should consider and had suggestions about which properties would be a good purchase.

HOWEVER, he has terrible communication skills and I often will not get a response to a text message or email about a property until the next day after contacting him again. I expressed my issues before but today I emailed him and let him know that this wouldn't work after a property I asked to see since Thursday was changed from active to pending.

All that being said,how did you all go about finding a Realtor that is experienced with investors AND understands acting quickly. Honestly, most Realtors will do it willingly but experience is helpful.

Thank you all so very much for your responses. They are truly appreciated.

@Dennis Rodriguez - Thank you for your insight. The realtor who I have been communicating with has warned that homes in this price range fly off the market and I've witness it myself. Even the homes that aren't the best investment deals have definitely been on the MLS for 2 days before the status changes. I don't quite understand it but I do agree that some investors may not evaluate the properties in the manner suggested here on BP.

@Sam Craven - Thanks for the advice. I may need to start looking outside of my current target area because home prices here are pretty steep for what you get because of the appeal of the area. But that is encouraging that you are still able to find deals on the MLS. I would also like to be added to your buyer's list. I will register on the website and PM you as well if that is okay.

@Sharon Tzib - awesome reply!!!! Thank you so much for that information. I will be sure to get those items verified by the Realtor (actual rental comps instead of guessing or using Zillow), HOA, etc. The 50% scares my husband :-) but I believe it's better to be safe than sorry later. I will try to get on some wholesalers' lists.

@Deidra Hubenak - great advice and thank you for sharing your story about getting out there and having things work out. LOVE the advice to stop looking for a great property and buy a good property.

Welcome! I'm new here and in the Houston area as well. My husband and I have the same goals and you all - we haven't purchased our first property yet but we're ready to get started. Good luck and perhaps I'll meet you at a future REIA meeting. We're blessed to have BP as a resource. :-)

Hello BP community!

I've spent lots of time in the last couple of months learning as much as possible from various sources and now I am getting ready to take action! I have started assembling my team and will be working with a Realtor that has experience working with investors and has actually found properties for a co-worker of mine. I've clearly defined my target areas, price range, square footage, bedrooms and baths, age of the home, etc and now I am trying to become more comfortable with analyzing homes I am interested in.

Since I have plans to buy & hold I have become very familiar with the 1%, 2% and 50% rules and for life of me I cannot make the 50% rule work for the market here in my Houston suburb of Sugar Land/Missouri City TX!!!

I am looking at properties in the $80-110k range which are renting for $1,200/month on average. While the 1% rule is satisfied at this amount for rent, every property I look at pretty much fails the 50% rule with cash flow amounts less than $100.

My questions are these:

- Does anyone have any experience in the Houston suburbs with properties in a similar price range and able to have good cash flowing properties? If so, what was your strategy?

- How true have you found the 50% rule to be? (I know this will vary based on the age of the home due to expecting to make more repairs when compared to a newer home)

- Any tips on whether it financially makes more sense to purchase cheaper properties ($60k) requiring more work than I originally intended to do to increase the monthly cash-flow though investing more up front?

Thank you all for your help -- I'm driving myself crazy!

Thank you so much @Bryce Christensen for letting me know about the meetup! I really appreciate and plan in attending.

Thanks again

Welcome to BP! I'm also a newbie to REI and I live in the Houston suburbs. I want to wish you the best of luck with REI and maybe we'll meet at future meetup! We're definitely in the right place for learning from those with experience.

Hello everyone -

My husband and I are committed to starting our endeavor in REI and would like to know how to find a broker so we can get things started and begin looking at properties. It would great if we could find a broker who would not only show us properties but would willing to help us find what they would consider to be good deals in our target areas.

Any suggestions for finding a broker other than looking on HAR.com (local MLS) and looking at ratings? We are perfectly fine with purchasing our first property off the MLS and are open to consider wholesalers for later investments. Of course it would be better if we found someone who is knowledgeable about the areas we would like to invest in.

Thank you all so much

@Bryce Christensen - Thank you. We will definitely continue to read as much as we can here on Bigger Pockets and books as well but if you happen to hear anything about local meet ups I'd love to know about them. Have you attended any local meetings that you found helpful? Have your done your first deal?

Thanks