All Forum Posts by: James H.

Several friends I graduated with in college moved to Sugarland due to its proximity to Fluor and other engineering/oil service consultancies. I have no idea what prices are, but it should be a nice area. Don't know if there are neighborhoods close by that would meet your criteria. Bryan is absolutely correct about zoning in Houston in that there is no rhyme or reason for residential and commercial zoning. You often see very strange arrangements of property. If you don't know the city, I would make sure to have an agent you can trust that knows what you are looking for and where to find it. Houston is pretty crazy in respect to a lot of things, lol!

As an aside, Mitch, you describe a neighborhood that models pretty closely the neighborhood where my property is situated, yet you were encouraging other post readers to consider something different (based on the trouble with screening tenants) with more potential for appreciation. I don't understand. What do you consider a war zone vs lower middle class blue collar?

We just collected first month's rent this evening! We screened and declined several applicants (even returned a deposit to hold for one declined applicant - took a lot of self control)and finally settled on some tenants that gave us the warm fuzzies and passed the background/credit/rent history/work verification with flying colors!

Here is the breakdown of the deal. Tell me what you think!

Low income working class neighborhood. Not a war zone! Safe at night.

Purchase price + Closing costs = 13,000 cash

Cost to renovate + Appliances= 6000 financed at 12% interest with visa

New central HVAC = 4000 financed at 14% interest with signature LOC at 5 years

Annual insurance = $500

Annual taxes = $600

My time to rehab = every weekend for 2.5 months

Rent = $550/month

Deposit = $300

Leased within one day of completed rehab.First months rent and deposit in hand prior to letting keys.

ARV hard to pin down but conservatively = 35K-40K in current market.

"3. holding onto money as long as you can. The person that has the money, has all the control. Don't pay the final installment until all inspections have passed too."

This is the most important thing you can do. If your contractor needs fronts for materials, buy them yourself. I recently had a contractor try to charge me $300 of a $425 job to put insulation in an attic (for matereals). I told him I preferred to pay the 50 for hanging the ductwork(which was what was complete) and pay the rest upon completion. If he needed I could buy the materials. Haven't heard from the guy since. And I did not expecet him to be a deadbeat. But I'm glad I went with protocal and not with "gut". You never know who is gonna flake. Contractors are probably worse than tenants.

SFR will be the easiest to flip. Just think about your market pool. What kind of people buy SFRs? Everyone. What kind people buy multi-units? Only investors with the occasional owner occupant duplex buyer.

So, now that you know what market you want to cater to (everyone), now your decision is controlled by how much money you have to work with. You make a deal work in any neighborhood if the numbers are right. So it is best to invest in the market in which you are most familiar. If you know the 100K to 200K market like that back of your hand but only have minimal experience in less than 50K or more than 500K, then you stick with what you know.

I recommend becoming completetly familiar with the type of property YOU feel most comfortable with and start getting to know some wholesalers to see what they offer and how it compares to retail and REOs(sometimes there's not a lot of difference.

Then I would deploy wholesaler strategies to find deep discounted properties without paying the middleman fee. If you get a property at a deep enough discount, any exit strategy will be a winner. Then your exit strategy will then be determined by your goals rather than current market conditions.

Take this with a grain of salt as I have only recently acquired and rehabbed and operating my first buy and hold property. But after buying said property from a wholesaler, I can tell you that the above advice is exacly what I will be doing when I have enough cash reserve to do another deal.

I am a fan of buy and hold. But I have a day job...

I agree with the philosophy that George subscribes to. However, my bigger belief in casting as wide a net as possible trumps the reasons to not take action. The worst that will happen is what George predicts and the best that will happen is that you find a tenant who is ready to move in on day one - even if he wasn't ready to move in during the rehab, in which case the house wasn't ready anyways. In all, you screen more people which is more work. But hey, if this was easy everyone would do it.

Call the title company and explain that you are planning to start wholesaling and you just want to know what procedures you would follow with them once you are ready to push a deal through. If they don't understand, or don't have time to (basically train you for free) just call another one until you find one who can help. I would study up and try to be as familiar as possible with the process before bothering professionals to help with the details. Their time is very valuable to them and they won't want to waste their time fostering a relationship with you if you sound incompetent about what you are trying to do.

That's interesting that the sign in the yard doesn't work for you as it is contrary to almost every post I've seen here. I don't know what kind of property you have, but I expect to screen through a lot of losers. CL doesn't generate jack for my property but I get about 15 calls a week from my sign. This property is in a low income area, but I wouldn't consider it a war zone because I feel safe there even at night. More than half of my applicants probably don't have internet. Also more than half (not necessarily the same half) don't speak English. Luckily we do because it is a hugely under served market.

This is what's useful about the deposit(in my opinion):
Most people's leases end at the end of the month, but people view the property throughout the month. If I find a candidate that likes the property and that I want to approve on, say, the 12th of the month, but they can't move until the end of the month because they just paid rent for the last month of their lease, I would like to hold the house for these responsible people. However, I don't want to hold it for free. So that is the useful part of the deposit. If they change their mind, I keep the deposit.

That being said, I can understand about not wanting to contact denials except with a letter. After thinking about this, I may change my policy to only accept the deposit to reserve only if the applicant is approved. But still, seeing that they have money does help with my decision, especially with the demographic I am working with. I am not too concerned that I will get duped by a drug dealer or whatever like you brought up. Once upon a time, I lived in the same trenches my potential tenants (even the losers) live in. I know a drug dealer when I see one and I am a pretty good judge of character of the people I am dealing with. Now if I had a nicer property, I might have a more difficult time discerning who was right for my property. But I'll worry about that when I get there.

This is not a question. I just had something I wanted to share. I just had a tire kicker call about my rental. She asked when they could look at the place and I told her we would be there tomorrow. She acted like this was out of the question and wanted to know if we could schedule this activity on a "business" day. Say Monday around 2 or 3 in the afternoon. Well I don't think MY employer is cool with that. Based on later comments by her, apparently they don't want to do any business on the sabbath.

Gee, I wonder if I could call sabbath on Sunday if they water heater or some other critical item broke? NOT!

This is my house. I set the terms for rent, deposit, application fee AND when I will show it to you. If you can't even meet me on the terms I have set to show the house, there is a high likely hood you will not be able to meet me on my other terms ($$$).

I'm not saying there is never a time to bend when scheduling times to show a unit, but if I am already being asked to inconvenience myself so that the tenant doesn't get inconvenienced, then I am OUT.

I told her to call my wife to schedule for Sunday after she acquiesced. Needless to say she never called. GOOD.

I downloaded the form form Bigger Pockets and it is at the end of the rental application that Joshua Dorkin posted for everyone to upload. Since I am new I am going with tried and true methods, not what "feels" right.

There might be some forms available on BP for free. I would go to a lawyer and have them help me draw up a simple contract. It couldn't cost more than about $500. They can be VERY simple. I learned how the wholesale process worked when I bought my rental form a wholesaler. It is pretty simple. I wouldn't waste my time advertising until I had a signed contract. Words mean nothing in real estate just as they mean nothing in any thing else.