All Forum Posts by: Eric Tait

Hey Cuong,

Welcome to BP, Houston still has great property deals, you just have to run your numbers and stick to them. I am moving over to buying from wholesalers, you just have to run your own comps and trust your numbers.

Before you write off Lifestyles Unlimited you should go to a free introductory workshop yourself, don't judge by others experiences, see for yourself. And no I do not work for them.

Hey Matt,

Welcome to BP, Houston has a very active investor group both on and off BP.

As you know this is a great market to be in, if you have any questions or need help don't hesitate to ask.

One metric that I was taught and use for rentals is:

Cater to the widest audience of potential tenants in any area where you decide to invest. (not the low end or the high end, you want the bulging middle)

Take the median income of the area where you are interested in investing and double it (assuming a 2 income working class household).

Use this to determine what your potential tenants monthly income is.

Take 1/4-1/3 of that monthly income to determine what the median rent that particular area can afford.

This gives you the widest possible group of people who can afford to rent your property in your particular target area.

Use this rental number to determine what types of houses/condos/townhouses etc... can be bought in your targeted area that will give you the return that you require (taking into account taxes, insurance, vacancy, maintenance etc... ).

So you are basically finding your rental rates first, then back engineering your purchase price based upon the rehab that you may have to do, and the expenses of your target area.

As an example in the Houston market.

Median income is 35K, so a two income household is 70K a year or around 52.5K after taxes.

That is $4,300 a month after tax cash flow. 1/4-1/3 of that is between $1000-1400 a month in potential rental payment.

In Houston you can buy houses that are between 80K and 140K in after repaired value where this rental amount creates a yield that I am comfortable with.

I personally like to buy them and have them rehabbed where I can have at least a 100% return on capital gains (i.e. if my all in costs are 10K, then I need to capture at least 20K in equity) or 20-30% equity based on ARV of the property.

So on a 100K house, I am all in at 70K with less than 15K out of pocket. (If using financing)

On an all cash purchase, all in at 70K with a $1000 a month rent generates about a 12.4% unlevered cash on cash return in the Houston market while also accounting for expenses. If I decide to use financing, the returns just get better from there.

The equity capture of course is market specific, but the rental income numbers can be used in most markets, the tough part can be finding properties that you can buy that will cash flow catering to this middle market group.

I tried to make this as clear as possible, but if you have specific questions or clarifying points, please do not hesitate to ask.

Try

Dean Chan

He is here on the site.

I think this would be valuable in Houston, nailing down the inclusion criteria is key.

Hey @Kim Clifton,

I am investing in Belize on Ambergris Caye, we just closed our first small syndication, if you would like information on the economic drivers, political system, and tourism numbers please private message me and I can give you all of that information. We have the #1 Broker in the country on our team, so we have access to alot of non-public data about Ambergris specifically, and Belize in general.

Yes, it is worth it.

They have great guest speakers and multiple meeting groups on a wide range of topics.

Hey Sean,

Houston is a very active market with great deals.

Get out and get involved, and also refine your investment philosophy as to what you want Real Estate to do for you. (job vs. investing) There is no right or wrong, but you want to make sure you are on the right track to take you to your ultimate destination.

They did a section of roof for me on my apartment complex.

Cyrus Umberger
[email protected]
cell: (713) 204-1391

Foam Kote Inc.1102 Minnesota St.
South Houston, TX 77587
(713)943-0672

www.Foamkoteinc.com