All Forum Posts by: Sharon Tzib

There's limited multi-family inventory in Houston in areas where most people would want to actually live themselves, and even if you do find one, it will probably be older and require some repairs/updates, which may not be a problem for you, but you'll have to find a lender who can give you a rehab loan, or look for the elusive property that passes a lender's appraisal process and doesn't have any major structural or system deficiencies. In my experience, you may be able to cover about 50% of your expenses, but that varies from deal to deal.

I find that most buyers who start down this path here quickly abandon it and purchase a starter single family home that they can turn into a rental down the road. I've helped many investors do just that. 

Be careful in Houston of non-solicitation neighborhoods. It's usually well posted at the entrance of a subdivision, and the residents do not take kindly to folks ignoring the rule. I find door knocking is so off-putting to people these days that it would be self-defeating for me to even try it. Even door hangers make residents upset now because they feel like you are leaving a big sign on their property that they aren't home if in fact they aren't there to take them in fast enough. I mostly stick to the U.S. mail, and not trying to dissuade you, just wanted to give you some tips to be aware of.

@Jonathan Jaime Velarde there's pros and cons to investing in your own backyard vs. out-of-state. I personally have done both, and to invest out-of-state, you need a really good team in place to handle all those things you can't. Once you have a team set up, it runs on auto-pilot for the most part (although you will still have to "manage the manager").

More important than the where to me, however, is what your returns will be. I would not invest in CA just so I could be close to my properties if it was strictly an appreciation play. I was in this exact scenario in 2006 when I lived in N Cal and decide to purchase rentals in Indy.

No right or wrong decision, but the economy of where you buy, the returns you can get, and your confidence in assembling a team and sleeping at night with said team in place are all very important factors to consider.  

I'm not a fan of paying off your primary residence mortgage unless you feel like you are going to live there for decades, or you have some financial hardship where you want to reduce your overhead. If I had $300K, I'd buy 8 $150K rentals w/ 20% down, then I'd start snowballing all ten of your rental properties mortgages (one at a time of course), until they're all paid off. Then you can decide if you want to snowball your personal residence. After you snowball the first couple of properties, you'd be surprised how quickly you can get your portfolio paid off. Quality problem to have, my friend! 

Hi @Dong Yan that is sad. There's lots of different ways to put money in my buyers pocket, so I look at all terms in the contract that we can utilize to help meet my clients' goals. And I find negotiating on terms can be just as successful sometimes as price. There's more than one way to skin a cat :)

I only recommend my buyer/investor clients get one if the seller is paying, which in Houston, is pretty customary. Some of my investors don't want anything to do with them, however, due to negative past experiences. And sometimes we can use the home warranty cost as a negotiation tool to get a lower price, seller concession, etc. if we don't ask for one. 

If you do get one, check out the consumer affair reviews before you choose a company, and then read any companies exceptions very carefully. One company, for instance, has a loophole where no claims can be filed for 30 days after payment for the policy is received-you're SOL if something happens right after you take possession. Here's the link:

https://www.consumeraffairs.com/homeowners/aaa_warranties.html

Lastly, in Houston, we cannot take a referral fee from a home warranty or any service company without having a signed disclosure from all parties. I just avoid that scenario at all times.

Multi-families are mostly an aged product in Houston, since they hardly build them any more. This becomes problematic for FHA loans, and even conventional to some extent, because they have certain condition standards that must be met, and in the under $250K price range, it can be tough to find properties that don't have structural issues, aged systems, and/or safety hazards. Of course, you can get a rehab loan, but the lender criteria becomes even stiffer then. And lenders will also look at you investment experience, so if this is your first rei, I would definitely stick with a 2-4 unit as that will be far easier to qualify for.

I'm not a lender, of course, but these are some of the issues my first-time investor clients have run into trying to house hack and/or buy multis in Houston. It definitely takes a ton of persistence!

@Ben Unger the data reported on HAR is from listings on HAR. It's not for all homes sold or rented in the Houston area, just those listed, sold and/or rented on HAR itself.

You are quite welcome @Theodore Rivera!