All Forum Posts by: Tim LaBorde

Welcome Rashoya!  What part of Houston are you in?

@Hersh M.We see plenty of inventory go quickly in Texas City/surrounding areas.  People are still putting money to work in long term rental plays.  Honestly, yes we have industrial facilities around there that could be impacted but Houstonians (and out of towners) have no problem snapping up deals for the right price and managing those projects there.  We just had a deal that became available from Texas city this morning.  I haven't even sent out a marketing email on it yet as I've been tied up all day.  Think about how many people don't have any qualms about dropping $100k on shares of Apple in the "Grand Casino".  Now compare that to taking on the risk of a project where you can manage the rehab and 100 aspects of a piece of real estate where you have almost total control of the outcome based on your knowledge and experience.  Real estate does not scare me.  The Federal Reserve and mutual fund managers collecting their percentages whether you win or lose scares me.

Harold Randle has inspections starting at $275 - 713-855-3133.  That's one of the cheaper options I've seen.  If you have someone cheaper let me know and I'll refer them.

I learned about the 1% rule when I got started several years ago.  I prefer 1.5% and higher obviously.  The issue with the rule is that it should be treated as a starting point not the end-all-be-all decision maker.  You can find 2%+'s in Houston in "less good" areas.  Yes the returns on investment are better but then you have to manage the properties a lot more which is time-consuming and your tenants are low-rent and in general (but not always!) create a lot more headaches for you.  Now I only look for properties that rent for over $1,100/month.  With lower rents you're going to be dealing with a lot more repairs every time the tenant turns over and just more problems in general.  I speak from first-hand experience with evictions.  I don't want to deal with low-rent tenants that are more likely to be involved with illegal activities.  They don't care about the law and they don't care about your property.  Owner-financing including a large down-payment is your best bet to handle the low-rent properties.  Make the tenant/owner have skin in the game.  A $1k deposit isn't going to cut it.  The bottom line for rentals is to find the worst property in a nice neighborhood, rehab it, and rent it out.  Pick out how much cash flow you need to clear per month in rent, say $400/month.  If the property after repairs can let you clear your monthly cash flow hurdle, it's a deal for me depending on how much of my own money I have to bring to the table to finance it.  

@Hersh M. The life of any central bank and any currency has a 100% failure rate so far.  No currency or central bank has ever survived in history.  Yes, Yellen may very well be out of control and central banks are making things up as they go along.  Hard assets like commodities and real estate serve as an insurance policy.  There are no right answers.  If you talk to a gold salesmen, you need gold.  If you talk to a real estate agent, you need real estate.  If you talk to a bond broker, you need TIPS.  None of these answers are right or wrong.  We're all making bets that one asset will outperform another and that we can beat cash as an investment.  I think cash beats everything else around 15%-20% of the time.  I don't remember the exact percentage.  I try to manage my real estate holdings and everything else from a portfolio standpoint.

Apparently, enough people are concerned about the price of oil that it has affected Houston’s ranking according to the Urban Land Institute. Realistically, as an investor, you always have to be cautious about what property markets are doing. However, the oil market is only one slice of Houston’s economy. Don’t forget that we still have one of the best medical centers in the world and companies are moving to Houston and Texas in general from all over the country, making our local unemployment rate one of the best in the nation. I started becoming concerned about oil last November. From what I’ve seen in the last year, our clients haven’t slowed down at all. They’re still making money with their flips and rentals. We’re still doing well with our rentals; our tenants are still working and making their monthly payments. 

The end of the world is not coming despite what a lot of talking heads in the media would have you believe. The Federal Reserve wants inflation. They want property prices as well as all other prices to go up. If we start seeing deflation, the Fed will step in to provide QE4 or whatever they’re going to call it next time. Over the long run, assets outpace the dollar. If you’re buying real estate at a discount as an investment, the price changes will not affect you the way it would a typical consumer that buys a house for his family at the top of the market and then watch as that value goes down and now they’re upside down with their mortgage. I’ve touched on this before in a previous post but your end goal is to get in and out of a flip project in 4-5 months. If you’re not comfortable with that time frame then you should steer clear of that risk. Also, consider that if you’re properly using asset allocation, you’re not going to drop your whole nest egg into one project. Real estate has a place in your portfolio but that shouldn’t be the only asset in your basket.

http://www.bizjournals.com/houston/news/2015/10/07...

@Brandon Hall I agree with your point that agents save time and let you focus.  The issue is that while you don't think there's any analogy between a McDonald's kiosk and an agent, many consumers view agents as commodities with one being as good as any other or that our work is so easy they can just do it themselves.  Consumers that think that way are being catered to by "daytrading" website brokerages offering flat-fee listings.  If you buy distressed property, you know there are plenty of people that think their house is worth $150k while the comps reflect $100k.  When the agent points this out to them, the seller tells the agent that they don't know what they're talking about and that they'll just wait until $150k comes through the door and they refuse to accept the value an agent can bring to the table besides data.  Maybe we should just re-title this thread to "Ignorant Sellers and Their Cheap Cognitive Dissonance" :)

@Brandon Hall I saw the article online about reduced commissions for brokerages and wanted to put it out there for discussion.  I found it interesting that people are protesting being paid less than $15/hour to work at McDonald's and McDonald's installs machines to take orders instead of giving raises.  Labor costs have gone down since NAFTA; why is it unimaginable that costs should go down in this industry as well?  I'm sure when cars became prevalent there were horse buggy manufacturers scheming on how to get congress  to enact protection schemes.  Many people have commented on here - if you have a superior skill as a top 1% or 10% agent you have nothing to worry about because you're providing value beyond data and so none of this would apply to them.  The fact of the matter is that those top guys would have probably been successful in whatever industry they ended up in.  Work ethic, reputation, and integrity carry the day.  Yes I'm a licensed agent but I only work on distressed properties.  We put properties under contract and close on them and sell them for a higher price as professional wholesalers.

We look at many properties in Houston and termites are never brought up by our clients unless there is obvious foul play caught by our inspections.  Isn't there enough to worry about already? :)  I wouldn't worry about it unless you can see any kind of damage that looks to be insect related.