All Forum Posts by: John Vo

@Valli Smith Would you care to share who those wholesalers are that has those kind of deals? I would like to get on their email list.

@Chuck Webb Interesting idea. I'll have to look into that. Thanks!

@Shital Thakkar Yeah, looks like the MLS is the way to go if I keep seeing these kind of deals from my wholesaler sources. Either that or start doing mail advertising myself to find these deals....

@Christine Kankowski I don't know of any property in Houston that has a 1% tax...if only those kind of properties exist! Taxes are comparable to each other for the properties that I look at, but I agree that it is a factor to consider. I guess this is the state of the Houston market..too much competition and not enough supply. 

Benjamin Barredo Home inspectors are usually license by the state. You can check with state board to see if they have any complaint logged against them. Also check with BBB to see if their business has any complaint. Yelp is a hit and miss sometime. You can also check with a national home inspection organization to see if any of their members served your area. Same can be said for contractors that required license. I also use homeadvisor.com to look for local contractors. It's a hit and miss, but it's a starting place.

James Carroll If it's a wholesale deal I'm looking for a minimum of 15% equity in the property once all repairs are done. I thought that was an achievable goal but it doesn't look like it is for the Houston market and areas I'm targeting. I don't really know a lot of rehabbers in this market that's in over their head and willing to give up their property at a discount.

I've been analyzing deals from both wholesalers and the MLS in this Houston market,and I'm stumped. So I have to ask the BP community to chime in with their opinions. I've looked at a property on the MLS yesterday that I'm considering to buy and rent out, as well as a property from a wholesaler. Here's a general description of both property. I'll list it as property A and property B.

Property A: MLS listing. Build in 2004, 3 bed/ 2 bath, 2 car garage, approximately 1200 sqft. Needs new carpet, some paint and possibly a new AC. I estimate repair to be about $7000. Property is locate in a B/C neighborhood and good school district. List price of $125,000. Potential rental price of $1300/ month.

Property B: Wholesale deal. Build in late 1970s, 3 bed/2 bath, 2 car garage, approximately 1600 sqft, need new carpet, possibly new roof, has some foundation issue, and require general update through the property as stated on the flyer. My repair estimate by looking through pictures and the description is about $20,000. Property is locate in a C neighborhood and a good school district. List price of $90,000. My comps place the property value of around $120,000 after repair. Wholesaler has the ARV of the property at $130K. Potential rental price of $1300/ month.

If I buy property A using conventional loan with 20% down payment, 5% of purchase price as closing cost estimate and $7K in repair, I'm looking at out of pocket cash of approximately $30K. Estimate time to close and repair is 2 months, conservatively.  

If I buy property B using a HML, it looks like I have to put out approximately $24K if the HML will finance 75% of ARV. The $24K includes closing cost, holding cost of 3 months at 8% interest rate, origination fee, appraisals, etc... Cost to refinance the short term bridge loan into a long term mortgage was not calculated. Estimate of 2-3 month to complete repair after closing, conservatively.

Here's where I'm stumped and scratching my head...why would anyone go through the trouble of purchasing a deal like this from the wholesaler and go through the long repairs, headaches of refinancing, etc... in this market when you could easily put out a little bit more and buy it straight off the MLS. I see deals like these for quite some times now in the Houston market from a lot of wholesalers.

Am I calculating something wrong?

Is this just the way the current market is? 

What would you do?

Wayne Brooks Troy Norwood Wayne made a great point. Once you paid the seller for the property, all future and past problems will be yours to handle clear title or not. This comes down to how much risk you are willing to take when it comes to title issues.

Troy Norwood Not sure how much you have the property under contract for and what your risk tolerance is, but personally I would not take the risk of buying the property without having a full title search to verify for a clear title and have title insurance in place, even though the seller stated that he's the only owner and you have verified it. A professional needs to check your work and insured it. Unless you are a professional who regularly deal with title searches and everything related to closing paperwork and filing it with the county, I would let the professional handle it. You can easily go to a real estate attorney that will take care of the paperwork and title search for less than the cost of a traditional title company. This is advice from a non professional, who meticulous comb through county records for liens and title ownership as well as MLS data before making an offer. I just think a title company have better access to information then a non professional do. They better since they insures a clear title.

Kinyada Frazier Usually if it sounds too good to be true then it is. As a personal rule of thumb, I will only work with local lenders that I've seen around for more than 1 year and have had a face to face conversation with. These lenders will usually have a place of business that you can go to, have a website of some kind, have a professional email account that's not gmail, have a license or professional credentials of some kind, or have done verifiable loans to someone else I know. All that is to ensure that you're dealing with a reputable lender and not someone who's scamming you. If this is a loan from family or friends then obviously that would be different because you know them and know how to reach them. But it sounds like the lenders that have been soliciting you are people you don't know, so I would tread very carefully and not give out any personal information until you know who you're dealing with. By the way, reputable lenders won't badger you constantly for your info. They'll state what they have to offer, and will solicit for your business but in no way will they constantly badger you for your information. That's a red flag to me. Trust your gut.

@Mark M. I went to the Harris County Auction last month. Considering that it was my first time there, it all seemed like a mad house to me. You have sheriff auction from all five precints, trustees auction, and people from auctions.com there. If this is  your first time, I would recommend hooking up with the meetup.com group there. Link is here

https://www.meetup.com/Houston-Beginner-Real-Estat...

Linda will give you a tour of the place and what's it about without the bs. Of course she'll give you the education pitch at the end of the tour, but the tour itself is worth the pitch at the end. 

Careful not to get caught up in the hype...I personally witness some crazy bids that I didn't understand where they were coming from. I don't know if they got caught up in the bidding process or they have a fix strategy that I couldn't figure out. 

@Kevin Eldridge The first rule of real estate is that everything is negotiable that means yes even a buyer agreement contract is negotiable. With that said, a good agent is worth their weight in gold and will steer you into the right investment property and bring you the right deals. Is your working relationship good with that agent? Is that agent knowledgeable about investment strategies as well as what your criteria are for your investment properties?