All Forum Posts by: Mark Brown

@Stephen Janes. I might consider something ground level behind the sea wall. That’s most houses in that area. But anything out beyond the sea walls I wouldn’t want at ground level. Also if it’s in a city in that area, if the place gets flooded, the city will require your rehab to comply with current fema regulations that say the ground floor of the house must be above the base flood elevation. For a ground level house, this means you’ll be required to raise the entire house and put it on stilts anyway, which will put you upside down on your investment. So to put it another way, a ground level house outside of the sea wall is just one hurricane away from losing your entire investment.

Hi Blaine,

You basically have two options you might look into. If you don't split the lot, then you're essentially making a horizontal condominium complex. Condo association owns the shared driveway and everything beyond the front wall of the house. People can buy and sell their individual. Second option, but an "apartment complex" where each unit is a standalone building (ie, a house). Another option I've seen, you do divide the lot, but then you create an HOA, and the HOA owns the shared driveway. I'm curious, why would you not want to split the lot? In other words, what problem are you trying to solve by not splitting up the lots?

Hey Jim.  I noticed you haven't gotten any replies yet. If this is still an issue that needs to be resolved, give us a call or email and we would be happy to help you out.  I've been in both the property management and contractor / remodeler side for more than 16 years.  We can get this done for you.

Oscar, I'm a little biased, but I couldn't recommend anyone else but ourselves.  But I'd be happy to chat with you about cost effective rehabbing for your property. 

@Miguel Toj Can you provide enough parking spaces for the apartments? Houston requires 1.333 parking spots for each one bedroom apartment, 1.666 for a two bedroom.

@Jeffrey D. Your margins are too tight for a good rental. Tenant turnover and vacancy costs between tenets alone will make this a negative cash flow investment. EADO is great but I think that most of the fast appreciation has already occurred in that area, and your repair costs will only go up as the property ages and tenants abuse it. So sell the property. Get your equity out. If you want rental properties, then reinvest the money in buying one or two cheaper properties in other areas of town likely to appreciate faster.

@Jacob Beg. No doubt you dodged a bullet. In addition to what everyone else has said, I’m always wary about people that want to move in right away. Responsible tenants who have their act together dont wait to the last minute to find a place to live. They know when their lease ends and begin looking before their move out date.

On the importance of the credit score, this is why I like to pull the actual credit report to see why their scores are low. Some debts like unpaid medical bills or student loans may impact their scores, but it’s not as bad as not paying their car note or having past debt from apartments.

@Marcus Auerbach. I’ve been investing in real estate for 16 or 17 years now and there’s a lot of truth in this post. The numbers can look fantastic on paper but the numbers don’t reflect the human factor. From tenant quality, contractor quality, pm quality, etc. The fact is the best tenants, contractors, and property managers all don’t want to live and work in a slum area. And since they got the capability to live and work elsewhere, that’s exactly what they do.

The only exception to this rule is if you can find a neighborhood that is truly gentrifying. Then the rising tide of prosperity can bring in the better people.

I just think that your whole premise about whether Houston will have a "rebound" in price appreciation is false. It never regressed.  It has low price appreciation because there have been pro-builder friendly policies in the suburbs and vast swaths of flat, easy to build on land.  Up until Covid and the lumber shortage, builders have been able to add new homes to help meet the demand.  Places like Austin have lots of "home appreciation" because of governmental restrictions on new construction.

Ok - the idea of buying a brand new home because everything is under warranty is a good idea, but I would recommend looking at starter homes. The number of people looking to rent a home at $3,000 per month is pretty small - people with that kind of income are more likely to be buying a house, not renting. What this means is that your house will likely sit empty for months while you look for a renter.  90+ days of vacancy - which brings us to the problem with your cash flow analysis.  You're assuming in your numbers this place will stay occupied for 12 months straight.  Of course, that's not realistic.  You should factor in long vacancies and then ask if you're willing to fork over all that cash to pay the note while it just sits there empty.  I wouldn't. I'd consider getting a starter home in a community with a good school district.  Shoot for $250 or less.