All Forum Posts by: Juan Vargas

Got it, Yes, the Houston market is heated as are most markets. It's tougher to find good opportunities as there is increasing competition from overseas capital and out of state investors. That said, the Houston market is still a great market to enter due to the diversification of major employers, job growth, population growth and business and landlord friendly laws (State of Texas). 

I don't invest in single family, just focus on multifamily. 

Hi @Dulce Beltran, do you mean the specific suburb of Houston where I live or Houston in general? 

I have invested both locally and out of state but have more of a focus investing locally.  

@Brandon Yuan, you haven't told us what your business plan is. Are you planning on holding this long term (7+ years) or will you be wanting to exit in a couple of years? 

If you are planning to hold long term, going with a Freddie loan might be the better option because you can get a locked in rate for 7, 10, or 12 years in addition to the interest only payments, non-recourse debt, and 30 year amortization.  

If you plan on selling only after a couple years, going with a local bank could be a good option. True you will sacrifice cash flow and typically you'll only get a 5 year term (most cases) but the upside will be that you may not have a pre-payment penalty and you'll have the opportunity to pay down on the principal in the first couple years (vs the IO loan).

Ultimately it depends on your business plan. 

@Ryan McGlasson, assuming the property meets the requirements necessary for a loan, the lender will still need to make sure the sponsors (as a group) meet all requirements as well. Lenders look at everything from the property itself, net worth, liquidity, track record, property manager that will take over, previous projects (track record), previous experience with non-recourse loans. 

If you or another sponsor is lacking in an area, bring in other guys that fill the remaining needs/ requirements for the lender. 

This is a team sport. 

@Ryan McGlasson, if you wanted to put a deal together, you would have to bring something to the table. If you have no liquidity, net worth or experience then your best bet is to find a deal that realistically makes sense and take it to a proven sponsor with the track record necessary to take it down. 

You mention getting a non-recourse loan. Typically to be able to qualify for one, your family member definitely would still need to qualify. Does he/ she have experience and a track record with multifamily, specifically with non-recourse type loans? 

If your family member has the liquidity and net worth required and you are able to find an opportunity, you would still need to meet the lender requirements as far as a proven track record. Again, this all comes back to building good relationships with sponsors and if/ when you find a TRUE deal, you can leverage their experience and move forward. 

And to answer your question. Yes, you technically would be a co-sponsor if you signed on the loan with others on the GP side.

@Jameson Sullivan Given that you stated you are open to more flat appreciation but possibly higher cash flow, the Midwest might be a good option for you. Markets such as Cincinnati, Columbus, Kansas City, and Indianapolis are some you could look into. 

Possibly a better way to get more information about San Antonio or any market is by calling property managers there and asking them about the submarkets. Some of the very best and most experienced property managers can even tell you some of the history of certain properties and what pockets you should look at and which you should stay away from within that certain submarket. 

@Account Closed, yes definitely account for your taxes to be higher. You can protest your taxes still but most likely the Harris County Appraisal District will still appraise it for a higher amount because they know these properties keep trading for a higher amount. If you were in a different county, you might be able to get away with it somewhat easier. 

With “after closing” I meant next year as assessments have already been done for 2018. 

Yes, you could be reassessed after closing. I would account for 70-80% of purchase price multiplied by the tax rate for the following year just to be safe.