All Forum Posts by: Luciano A.

@Natalie Onacki

Sometimes buying close to home can be a great teaching moment. However, if you do decided to buy in Texas I'd say be careful. In Houston one thing many out of state investors dont realize is that if you buy a property that say has tax assessment of $100k but you buy for $200k the taxes will be reassessed to the new purchase price for following year. This will reduce your cashflow. When crunching your numbers always calculate the new tax amount so that you are not surprised as many agents will not tell you that. I have been getting many out of state investors reaching out to me since I build a lot of duplexes and they want new construction thus reducing their CapX and maintenance issues. Whatever you do make sure you spend the $300-$500 to fly out to that city and spend a few days. 

What looks good on paper doesnt always pan out in real life. 

Best of Luck 

@Owen Dashner

So this deal was how much money was out of my pocket from the start to purchase. Cheapest was $100. Bank approached me with a few properties they wanted off their books. The loan included the rehab cost and I only had to bring $100 to the closing table. The property was for $40k and $15k in rehab but I had only $100 in the deal. This was back in 2010. Recently sold for $200k.  

@Jeromy Jordan

I too am in Houston. I moved here to buy real estate back in 2008 but started buying here in 2006. As someone originally from CA I feel like we are in similar market with everyone jumping into Real Estate and everyone optimistic about the market. 

Patience, knowing what you want and knowing what you expect will help reduce the shiny syndrome. If you have criteria that you only want 3/2 in suburban area like Katy but you get a wholesaler telling you he got a deal of a lifetime in Humble you can just pass because that doesn't fit your criteria. Staying focused will allow you to look at deals and make decisions faster. 

I think the idea that you pay more and hope next year or 5 years prices will be higher and rents will be higher is foolish. So many of my friends in CA had that mindset. They will overpay because the property had multiple offers but its okay because it will be worth more next year was their mindset. Some did really well while others got on the gravy train at end of the market cycle. That game is great when it's in your favor but someone will be left holding the ball. 

Everyone is chasing properties that need little to no elbow grease and expect to make $500 per month in positive cashflow. This old game of finding deals and turning into rentals is harder to come by. But as you pointed out, insurance, property taxes getting reassessed faster than in the past and finding good trades is becoming harder. These things can eat up your cashflow if you are not running all your numbers and using emotion to buy. 

What you are doing is great. Staying focused and know what you want will help you stay in this game a lot longer than the buyer who is banking on appreciation and rent increase while making $100 per month positive cashflow. 

I will pay the amount that I feel the property is worth. If it becomes a multiple offer situation I would use other strategies, like all cash, quick close etc to get the deal not going over my limit on what I would pay for the deal just to get the deal.

I have found all my deals on HAR.com and have not needed wholesaler to get me a deal. But I spend 2-5 hrs a day looking in between meetings, bathroom breaks etc. 

If you need an agent that will not complain PM me and I can get you in touch with my son who is a realtor and makes offers on my behalf all the time with no issues.  

Best of luck 

@Matthew Conner

I agree with @Dan Maciejewski. If you call the city they usually have an occupancy or habitability dept in their Permitting department, who can help answer your question. In CA they have this general but not set in stone of two adults plus one additional tenant per bedroom. Here in Texas, it is 3x the number of bedrooms. We have numerous apartment buildings in which we have allowed smaller kids. Some people will forgo the luxuries for the security of having a roof under them. If the prospect meets all other requirements I would rent it out to them.

Best of Luck 

@Peyton Leal

When taking down a 21 unit just make sure you have a padded budget because pricing from two weeks ago can be alot higher today. Also not sure what year this building was built make sure to account for new code requirements. That can get costly. 

I'm interested on any wholesale deals you might have if its 5 units or bigger.

@Javier Macedo

I would use HAR.com to find an area you like that is within your budget and learn what is selling and what things are renting for. You can do mailers and all that but I have not done that and always find deals on the MLS. Once you know the neighborhoods you want to own in you will be an expert and anything that comes online that is a good deal you will know it is and can jump on it.

Go to meetups and network with other investors especially honest, hardworking investor-type agents that are looking out for your best interest not their pockets. 

Best of Luck 

@Joshua Storm

You have gotten some great advice here but also be careful when you use only numbers to figure out if it's worth buying. What some don't realize is that Acre Homes is booming. As a builder and with builder friends in that area buying up any lot we can and paying a premium. I remember when I moved here back in 2008 was told to stay away from Third Ward and Fifth Ward. I didnt and bought. I just wish I would have bought more back then but again the fear projected from others had me questioning my choices. I am not opposed to the area but you might want to find out what the homeowner versus investor ratio is in this complex. Some lenders will not lend if it is investor-owned unless you are putting 20-25% down.

Another thing I would point out in my experience is when an area is gentrifying and you buy right you can make a lot of money. As the new product is built and listed for rent at a higher than what the run-down stuff is going for, it will attract people who can afford the asking rent price because they are coming from nearby areas that have been established. The new product will attract the best residents in that area. The older product like yours will start seeing less and less interest from newbies moving into that area or will not pay top dollar unless you rehab so it can compete. But what happens if you make your place look nice but the investor who owns 20 units in the complex and bought them back in 2010 for $50k each and he is happy with the low rents thus doesn't take care of his property or screen his tenants. Buying in these types of complexes is risky in regards to buying and holding for the long term.

Drive down Tidwell near Antione and see how those complexes have units for sale but can't get them sold. Or if they do sell it is usually to the rookie investor that put his numbers on a spreadsheet and thought it was a great ROI. Another example is on De Soto St where they had a community of 4plexes site empty for years back in the day because they were investor-owned and mostly out of state thus drug dealers scared people from renting and they ran the community. Their HOA didn't stop this. And the police would only go in there if they were called in for an emergency.

If you want to buy an investment property in which you can live rent-free or save on rent, then I would suggest you buy a new or newer duplex. I have 5 sold and we have yet to build them. They are embedded within a normal neighborhood thus a mix of SFR and duplexes versus all one kind.

Best of Luck 

@Ricardo A Guerra

I agree with @Krista Goodrich that you should reach out to a local bank like Allegiance or First Liberty National, whom I've heard provide great terms for long-term holds. If local commercial banks don't want to do this you can also reach out to a local credit union that works with investors. One that I have heard doing investor deals is First Service Credit Union. 

Best of Luck

@Orke Borke

Investing will depend on what your goals and strategy are. Will you want to self-manage or source to a third party? Are you looking for SFR or something bigger like a duplex up to a smaller multi-family? Do you have a price point you want to stay in? How long are you planning on holding?

I have been doing the buy and hold here in Houston since 2006. I have bought in both great areas to not so great areas. This market has helped my portfolio given the appreciation and high demand. What once was a bad area is now a hot area so if you can clarify your strategy and what you hope to do with the long-term holds then can give you my opinion given I am not an agent nor am I soliciting for any business. Thus honest opinion from what I have learned through the years in this market. I was originally an out-of-state investor from CA that moved here in 2008.

Best of Luck

@Desirae Price

I see you mentioned you are a wholesaler in South Park and Sunnyside. I'm a builder in that area and if you come across any lots outside of the flood zone please PM me with the info and I can give you an answer within an hour. About to put up two duplexes in that area. 

Thanks