Investment property....follow up

Asked by Aj, 77077 Tue Oct 9, 2012

Hi... Can you please elanorate if remting actually makes some money for the owner. To keep the math simple, lets say i buy 100k worth of property with 20 k down. So the monthly mortgage insurance taxes work out to be~1000. I can probably rent a 100 k place for how much in houston,...maybe 800? Based on your experience, can you put this in perspective

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Al Geffon, Agent, Houston, TX
Tue Oct 9, 2012
BEST ANSWER
AJ ...

$100k won't buy you much more than a one-bedroom condo unit in Galleria ... and with monthly maintenance fees, it's hardly a cost-effective investment, especially if you plan to live in it a few years. Properties in West Houston are somewhat more affordable ... but still, you'd be likely looking at a townhome/condo in that price range, with the accompanying monthly fees. $200 and up is normal.

I've found the real values in the Copperfield and Champions areas. You can purchase a decent single-family home in the low $100's (figure around $120,000). They'll probably need a bit of work, but nothing major. At today's rates, you'd be looking at a mortgage payment of around $450 with 20% down. You can pay your taxes and insurance separately (somewhere around $3500), and there would be no PMI. If you wish to escrow them into your payment, add about $300 ... so you're in the $750 range. Depending on what you purchase, rents can range from $1200 to $1500 ... but understand that you'd be paying more for insurance (non-owner-occupied rates are higher) and you'd lose the homestead exemption, which would add about 20% to your tax bill ... probably in the neighborhood of $500. Overall, you'd still come out ahead, especially with the tax benefits.

Purchasing your new home while still owning the original property will likely require a written lease, in addition to a bit more documentation. You should definitely check with a lender to ascertain what you'll need.

I hope this helps. Please get back in touch, so we can further explore the possibilities. Talk soon ...

Al Geffon
(713) 213-6350
al@algeffon.com
Web Reference:  http://www.har.com/algeffon
2 votes
AJ ... have you decided to move forward? Is there any additional information I can provide? Please let me know if I can be of further assistance.
Flag Tue Oct 16, 2012
Al...thanks for detailed reponse. 100 k was just an example to keep math simple.
Flag Tue Oct 9, 2012
Alan Harper, Agent, Houston, TX
Tue Oct 16, 2012
There are plenty of investment properties that you could buy and flip, or buy and lease out and make a profit. I work with local investors, Canadian investors, and investors overseas. Most of them purchase properties 100k and below! I also have a construction company, so this helps ease the frustration of my client's when it comes to questions about repairs. I would be glad to answer any questions or help you with your investment properties. ** I also offer property management services at an affordable rate!

P.S. There are properties that are selling for 40k-80k, with after repair value of 100k+++ that have the possibility to generate $1,000-$1500 worth of rental income.

Alan Harper
World Wide Realty
2323 South Voss, Houston, Texas
http://allrealestate.us
http://har.com/alanharper
281-905-2414
1 vote
Good Answer Alan. Glad I am not the only investor on here.
Flag Tue Feb 26, 2013
Mike Matthews, Other Pro, Houston, TX
Tue Feb 26, 2013
This all depends on the side of town that your rental home is in. If your home is $1,000.00 a month payments Interest Taxes and Insurance I would not accept less than $1,250.00 if you can not get that you paid too much. The best rental homes are in the 70k and under range. It is much easier to find a tenant for a home at under 1k a month.

Most of my rental homes are about $850.00 monthly 3/2 at about 1200 sq ft.

These homes go fast, and make me about $300 cash flow.
0 votes
Bruce Lynn, Agent, Coppell, TX
Wed Oct 10, 2012
Well maybe the other way around.$100K property with $80,000 mortgage should have probably $700/month payment with taxes and insurance included. Hopefully you can rent for $1000 or $1100/month.

This does not account for vacancy, repairs, reserves, or rental costs or property management.

However it also does not count depreciation. So hopefully over 30 years you make money five ways. Cash flow, appreciation, buy below market (equity), equity build up, tax benefits.
0 votes
Margie Johns…, Agent, Cypress, TX
Wed Oct 10, 2012
In general you can get about $100 rent for every $10,000 worth of home. So on a $100,000 home you will probably be able to rent it out for about $1000 per month. As the other agents pointed out, the area and condition of the home will determine if the home will reap you more or less than this average calculation. Another consideration in purchasing investment properties will be who your prospective tenants will be. It has been my experience that buyers and tenants tend to select homes in the high end of their range. Most landlords will require applicants to have 3 to 4 times the rent in income. So a home leasing for $1000 will most likely attract prospective tenants who make $3000-$4000 per month. If you purchase a home for $150,000 and are able to rent it for $1500 per month the income level of prospective tenants will increase to $4500-$6000 per month.

You will have to consult a lender to determine what your monthly mortgage payment will be. Calculate what your taxes, insurance (make sure you get a quote for non-resident insurance), and home owners association fees will be. Also make a guestimate of what your home maintenance budget will be and whether you are going to purchase a home warranty plan for the property. And finally decide whether you are going to use a realtor to market your home when you need to find a tenant and whether you are going to use a property management company or are you going to manage the property yourself and find out what these services will cost. Take the total figure you come up with and subtract it from your anticipated rental income and that is what you will make or lose per month.
Web Reference:  http://margie.garygreene.com
0 votes
Margaret...this is great information
Flag Wed Oct 10, 2012
Sharon Frits…, Agent, Houston, TX
Wed Oct 10, 2012
HI AJ,
With the price range of $100K that you are working with, it will be difficult to find a property in the areas that you mention -- the Galleria and the Energy Corridor. If we do find a property in these areas within that price range, the property will be small and would need much repair. Being a first-time home buyer and a first-time investor, I'm not sure how much repair you want to tackle. Al mentions Cooperfield and Champions -- both areas are down Hwy 6/1960. You may also consider some other areas such as Katy (further out I-10 than the Energy Corridor) and Cypress (out Hwy 290).

If I can assist you further with finding properties with your specific criteria, please emal me. It would a pleasure to assist you.

Much thanks!
Sharon Fritsche
Principal - Broker
Step By Step Real Estate, LLC
(713) 303-8160
Sharon@StepByStep.pro
0 votes
Persis Behra…, Agent, Cinco Ranch, TX
Tue Oct 9, 2012
AJ,

Send me your email. I will send you some numbers to help you make sense.

Persis
persis.realtor@gmail.com
713-294-7747
0 votes
Persis...pls email To aj.10baggers@gmail.com
Flag Tue Oct 9, 2012
Aj, Home Buyer, 77077
Tue Oct 9, 2012
Sharon / Persis...let me pick couple of neighborhoods - galleria and west houston (energy corridor).
0 votes
Sharon Frits…, Agent, Houston, TX
Tue Oct 9, 2012
Hi AJ,
Yes, as the other agents indicated, it depends on factors like the area and subdivision. Sometimes age of property or how updated the property is factors in. Many subdivisions also have mandatory HOA (Home Owner Associations) which have annual or monthly fees, so you'll need to consider this expense as well when determining if the numbers work for an investment property.

I have assisted many first-time homebuyers including first-time investors and would welcome the opportunity to assist you with your real estate goals and needs. If I can assist you further or answer other questions, please contact me. My info is below.

Thanks for the privilege,
Sharon Fritsche
Principal - Broker
Step By Step Real Estate, LLC
(713) 303-8160
Sharon@StepByStep.pro
0 votes
Sharon ...let me pick couple of neighborhoods - galleria and west houston (energy corridor).
Flag Tue Oct 9, 2012
Stephanie Mc…, , Texas
Tue Oct 9, 2012
you could possibly rent this type property for approx $1200 per month depending on the area.
0 votes
Persis Behra…, Agent, Cinco Ranch, TX
Tue Oct 9, 2012
Hi AJ, as in the previous forum, your rent depends and varies by the area and the subdivision. If you can come to a decision on 2 or three areas, we can help you with some numbers by checking what the current market is bringing in for rent or resale. Since Houston is such a vast area it is hard to give a global answer. Start by deciding where you would be happy to live in your home and then you can make a few more choices.
Persis
713-294-7747
persis.realtor@gmail.com
0 votes
Persis...let me pick couple of neighborhoods - galleria and west houston (energy corridor).
Flag Tue Oct 9, 2012
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