All Forum Posts by: Pete Harper

David,  I would be interested in seeing your name numbers on new construction. 
New construction comps are about $175/sqrft. That works out to about $263,000 per unit. At $1250 Rent you are not going to Cashflow. Take that same $263,000 to Killeen market will buy you a 4-plex at more than double the monthly rent. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $135,000
Cash invested: $135,000

4-Plex in Rural Fairfield, TX. Units are all 4BR/1BA

What made you interested in investing in this type of deal?

We have been looking for investments closer to home. All our other properties are 2hrs+ drive. This makes them inconvenient for self management.

How did you find this deal and how did you negotiate it?

I have Zillow searches running in multiple target markets. This property showed up on one of my searches. We waisted no time in lining up a local agent for a showing. The property is in pretty rough shape. Original owner passed away and a family member has been managing it for his children. Negotiations took a very long time. The family are out of time and communication was painful. The two heirs were not on speaking terms so their mother needed intervene.

How did you finance this deal?

All cash deal. Our plan is to BRRRR this property.

How did you add value to the deal?

Property is in rough shape with a lot of deferred maintenance. First up is a new roof and rain gutters. In the two vacant units we will take the kitchen and living down to bare studs replacing all the old dated panelling. new kitchen cabinets, over range microwave, dishwasher, ceramic tile, fresh paint and lighting.

What was the outcome?

Work in progress.

Lessons learned? Challenges?

Patience. The negotiation took over three months. We stuck to our price and were able to get a $20,000 reduction.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Angela Kennedy

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Bryan.

Purchase price: $255,000
Cash invested: $255,000

4-Plex in Bryan/College Station Texas. Units are 2BR/1BA

Original asking price was $285,000. During inspection we found issues with the foundation and were able to renegotiate the price at $255,000. After closing we were able to repair the foundation for $12,600; $17,400 net savings. We have put another $2000 into paint and upgrades. Painted existing kitchen cabinets, over range microwave and granit counter tops in one unit.

What made you interested in investing in this type of deal?

Terrific location! Walking distance to shopping, restaurants and Highway.

How did you find this deal and how did you negotiate it?

Zillow search engine. Agent Johnny Horton.

How did you finance this deal?

All cash from 1031 exchange.

How did you add value to the deal?

During inspection we found issues with foundation. We used this to negotiate $30,000 price reduction. After closing we completed foundation repairs for $12,600. We put another $2000 in paint and upgrades on the two vacant units. Painted existing kitchen cabinets, over oven microwaves, new light fixtures and new granit counter tops in one unit.

What was the outcome?

Our strategy is long term buy and hold for cash flow. We plan on pulling equity out in 2020 to BRRRR future strategy.

Lessons learned? Challenges?

We learned to use inspection report to negotiate significant price reduction.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Johnny Horton is the best. We have done two deals with him this year. Hope to do more in 2020.

Welcome to Real Estate Investing!  
I think the answer to your question has a lot to do with your long term goals and available time. Passive investment is just that, passive. If you have a full time career and family your time might be better spent focusing there. If you have the time and energy then active management might be best for you. If you go the active management route I would suggest starting with a PM for the first year or so. For a 8-10% fee the PM will manage your property. You can shadow them for a year to learn the ropes; screen tenants, lease agreements, collecting rent, and maintenance. After a year if you feel you can handle things remotely then by all means manage yourself. 
Specific to Killeen, pay close attention to neighborhoods. Even a block or two can make a huge difference. Use Trulia crime maps as a rough screen. Try to drive through the area at different times both day and night. Pay attention to abandoned properties and business closings. We saw a Carl’s Jr. going out of business in N Killeen. If a fast food joint is pulling out of an area I see that as a huge red flag. Also read the local paper. There was a recent article on North Killeen becoming a food desert. There is good reason why North Killeen properties are cheap. Harker Heights and South Killeen are better. 

Good luck, Pete

Central Texas Real Estate Group meets at the VFW in Killeen. You can look up the details on Meet Up. 

Congratulations on getting started early.
I own Rental property Killeen. IMO Killeen is an unusual market with Ft Hood being the economic driver. That being said none of our current tenants are military. I have not owned property long enough to have gone through a major change in deployment at Ft Hood. Perhaps others have. 
You definitely need to pay attention to neighborhoods in Killeen. Even a few streets over can make a big difference. When doing property searches I try to look at Trulia crime maps. Later verify on the ground. As a general rule North Killeen is pretty rough. I read an article earlier this year about the north side becoming a “food desert”; stores are closing down and moving out of the area. We drove by a Carl’s Jr. that had gone out of business. Things are pretty bad if you can’t keep a burger joint in business. The better areas are to the South and East. Harker Heights is better. Our property is right next to Harker Heights. Compared to other parts of Texas rents are low in Killeen. There is a lot of inventory. Older properties in rough areas might look attractive but they are hard to keep rented. 

Sounds advice!  I see a lot of New muscle cars rolling down the streets of Killeen. Every time I see one I think that payment could be going to a duplex or fourplex that would be buying you a Tesla in ten years. 

Have you tried to pull the permit yourself?  I’ve pulled an electrical permit then later hired an electrician. This was a big project and I acted as the “general”. I hired one guy to set the pole then an electrician to wire the box. Long story... first electrician went AWAL on me so I had to step in and finish the job. His sub was more than happy to work with me because he knew he would get paid. 

Blake, I will continue to have my eye on the Waco market. Maybe with Baylor enrollment continuing to grow the inventory will correct. 

Jennie,  We drove around Baylor and looked at all the For Lease signs last week. Just about every apartment complex has a sign out. Not good.  I looked at a 10 unit complex with only 60% occupancy. 
I spoke with a PM last August, he said the student market is very competitive. There have been a number of new properties built in the last few years. These properties are doing OK if close to campus. There is very little crossover with non student renters so it is hard to fill older units even at a reduced rent.
So far I haven’t found anything that cash flows.