All Forum Posts by: Joe Benyi

@Joe Benyi I think you're on the path to discovering the same thing most experienced investors in the Houston market have: buying inside the loop (610), especially in the Greater Heights/Rice Military/Montrose area, is almost exclusively an appreciation play.

While I don't think it would be the best way of deploying your first $60K of RE investment capital, you could feasibly see a double digit total ROI (and possibly ROE) over a five-year period even with negative cash flow should the area appreciate at 3-4% annually.

To @Chris Hopper's point though, this is usually a much better play for those that have 7 to 8-figure rental portfolios with a number of properties that can offset the negative cash flow of the example you've given. Happy to discuss further!

@Joe Benyi

Thanks Scott. Am I better off purchasing SFM in a suburb to rent out? Or is Houston just not a great place for landlords to earn a decent ROI? There are a ton of homes to rent, so the numbers have to make sense to some of these landlords, right?

0 Votes

Houston, Texas

After reading through BP's "How to Invest in Real Estate" I decided to run the numbers on purchasing a rental. In fact, it's the townhome I rent right now in the Rice Military area. However the numbers just don't add up for me. What's off with my analysis? I figured a townhome in the Rice Military area would be a decent investment property.

2 bed, 2 bath townhome. Zestimate of 313K. Let's say we end up with a Purchase Price of 290K with no significant repairs.

Some assumptions: 20% down, 2.8% Interest Rate, 2.4% tax rate

Monthly Analysis:

Other tenant and I currently rent for $2150

Mortgage + Taxes: (20% down, 2.8% interest rate, 2.4% tax rate): $1672

Home Insurance: $140

HOA: $115

This takes total expenses to $1927 leaving $223 profit. Of course, this still doesn't include setting aside monthly funds for maintenance, general repairs, and possible vacancies which would eliminate your profit quickly and you'd be in the negative.

Am I looking at the wrong type of home? Should I look in a different price range (higher, lower), more bedrooms?

Any advice is welcome, and thanks in advance for helping this rookie out.

1 Vote

Houston, Texas

All Forum Posts by: Joe Benyi

Joe Benyi has started 1 posts and replied 2 times.

Post: Numbers Don't Add Up on Rental Property

Post: Numbers Don't Add Up on Rental Property