Market Conditions in Houston>Question Details

J, Home Buyer in Oakland, CA

Looking to invest in rental prop either single famly or multi units - need pos cash/break even at the minimum

Asked by J, Oakland, CA Tue May 20, 2008

if flip not feasable - also need to factor in prop managment - what and where in Houston would you invest 350K? Would you purchase 2 separate parcels? Thanks!

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Investing in the Houston Market is not hard. Making sure that you purchase the right properties in the right areas/neighborhoods is the key to successful real estate investing. Sometimes purchasing the ugliest house on the block and turning it into the swan is the key. If you purchase the home at the right price (low) and make all of the right updates, I have found that renting these properties out aren't difficult at all. In Houston, you could easily squeeze out 3 (possibly 4) properties with the 350K and have a positive cash flow each month out of each of the properties. Normally we strive for approx. 15% cash flow each month. I also encourage my investors to take out 1 year Home Warranties (which you may be able to secure at the purchase of the home paid for by the seller) and this will help lower any larger repair costs that may occur, with the tenant paying any deductible that the Warranty Company will have. My investors prefer to deal with single family homes as we tend to get a lot of "transferees" or people looking to purchase a home but they aren't quite ready yet. Due to the recent changes in the loan qualifications, more and more potential buyers are having to rent a home until their credit scores are much higher. So it's the perfect market to purchase rental properties. Remember the right neighborhoods with a low ratio of renters, good school district, close to shopping, etc. and buy low, don't be afraid to do some fix up repairs, make the right choices (carpet colors, paint colors, upgrades) and you should be on your way to a successful real estate investment career.
0 votes Thank Flag Link Wed May 21, 2008
Rental property returns are higher in the 100-150K price range for rentals. However that price bracket has been hit the hardest by foreclosures too. I would not go below the 100K range because (I think) the rent pricing will be attracting tenants of low financial strength.

Typically you can expect to net around 8% or better (after taxes, hoa and insurance) on a rental before leveraging your money. This number with a 20% down payment can easily reach the mid teens. (And the tax savings from the depreciation will be an added bonus).

We have some rented properties available (turnkey, no repairs, tenants already in place) for your comparing and even potentially your consideration.

Good luck with your investment goals.
Web Reference: http://tx.pcfproperties.net
0 votes Thank Flag Link Sat Nov 8, 2008
There are a lot of single and multi units available in the Houston area. You can get 4 units up to 10 units 100% occupied from $180, 000 to $345,000. These units are located in well established neighborhoods throughout Houston. It is really up to you on how many units you are willing to handle. You are welcome to contact me through my website and I will be glad to give you further information on these units.
Web Reference: http://sherrieasley.com
0 votes Thank Flag Link Wed May 21, 2008
Hi J,

Houston is a great market for investors right now and there are several areas of town with properties that can give you a positive cash flow. I would recommend staying away from neighborhoods with high taxes. My recommendation would be to purchase 3 or 4 properties ("bread and butter" homes) instead of investing all the money in one property. I will be glad to send you a list of properties that I think could result in a positive cash flow for you.

Hope this helps.

Juan Carlos
Web Reference: http://www.har.com/jch
0 votes Thank Flag Link Wed May 21, 2008
Have you thought about Bryan/College Station? Not that Houston is bad, but we do have some excellent returns here. There are some 4 plexes selling for $155K that are pulling in $2000 a month. Interesting numbers there!
Web Reference: http://www.ChrisTesch.com
0 votes Thank Flag Link Wed May 21, 2008
J,
I handle the North Houston area as well I just mentioned Montgomery County because the taxes are lower. If you want something in Harris County I would then stick to the single family units and a neighborhood that did not yet have too many rentals.
You mentioned flipping, are you looking for forclosures. I have a page on my site where you may visit to view them.

Margaret
0 votes Thank Flag Link Wed May 21, 2008
J - Home Buyer
I have an investor I have been working with in Montgomery county -( If you were in L.A. Montgomery County would be Ventura only closer. I don't remember how to describe it using Oakland and S.F. )
The duplexes are becoming very popular. You can purchase two fairly new units for that or close to 3 resales. depending on the rental rate you are aiming for. With a duplex you will not need a managment company. A Real Estate Company can lease it for you and repairs over $75. or $100 can be arranged long distance. If you are too busy for this there are some management companies or we can do it.
When I was in Calif. I was ourside an Air Force Base and near a Borax mine. I handled anywhere from 25 to 50 rentals in our Real Estate office.
With the duplexes you will be in a positive cash flow , we have a next to 0 vacancy factor in this area.
I will be happy to tell you about all that is going on in our county - But what counts is that we are one of the fastest growing areas in the nation.
Margaret


Please contact me if I can be of assistance.

Margaret
0 votes Thank Flag Link Tue May 20, 2008
You need to first speak with a mortgage broker lending is tough for commercial. I am a Texas real estate investor and a loan officer it goes into your overall short and long term goals. If you purchase 2 separate locations then more time to manage the property vs properties close to where I live. Manangement companies are GREAT... however I have also had mgmt companies allow a tenant to destroy my investment properties... finally I took the mgmt over myself.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Tue May 20, 2008
You may want to invest in income producing analysis software:
http://www.realtor.org/rmomag.nsf/pages/buyersguidesep07

I would also talk to owners of similar types of properties and get a feel for the market. Ask local property managers for references before you buy. Both SF and multiunit have pros and cons. More tenants = more headaches, but possibly bigger rewards.

Also, check on financing with a lender. Multifamily requires different down payments and has different rates.
0 votes Thank Flag Link Tue May 20, 2008
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