All Forum Posts by: James Farrior

Hello,

I'm looking at putting together my first project - a multifamily in Houston. I ran the numbers and came up with a 17% IRR and a 7% cap rate over a 20 year horizon. I'm trying to understand whether this project is superior to putting my capital in the stock market (which I'm assuming will return 7%). I understand the math behind the IRR number (setting NPV equal to 0) but I'm having trouble capturing the intution of how to compare that to stock market returns. Also I know that investors generally want a cap rate of 8-12%, but I think that may be arbitrary. Could someone please help me figure out how to interpret these nubmers (as oposed to putting my money in the stock market)? Thanks.

Thanks all for the input, especially the 85% of sale price estimate. Why should it matter that TX is a nondisclosure state? Can't the city government look at asking prices of properties and see that they're selling (presumably at something close to the asking price) anyway? And I was able to get sales prices pretty easily by just asking my agent - I'd guess that it would be easy for the city government too. Is this incorrect?

I'm interest in purchasing some single family homes in Houston. Many of the homes that I am considering have property tax assessments far below the value that I would pay for them. AFor example this property is assessed at $30K, but the $130K seems like a reasonable purchase price. Woudl this low assessment stick around for a while after I purchased the property,or would the municipal government immediately re-assess the property?

Hi all,

I live in Houston. My wife and I just bought our first house (small midtown townhouse) for ourselves (closing in late January), and I'm planning on buying some rental properties later this year. We have a good chunk of change saved (~250K after down payment on our first house) and we make a bit over $200K combined from our day jobs.

I'm thinking that a multi-plex in third ward may be the way to go for our first rental, maybe with 10% down. I've seen a couple of tri-plexes at $200-$250K where the three units combined would rent out for $2500 - $3000, especially in the U of H area. I've run the numbers a bit on building a multiplex new, and it doesn't seem to work out very well. Other than that, not sure how to start. Advice? Thanks.