Hello All, I am new to this forum. Let me introduce myself.
I am based north of Houston, work fulltime. I am still learning about REI, got a few books from local library, visited a seminar form Lifesytle Unlimited in Houston etc.
I got interested in REI because a friend of mine has 34 single family homes in PA, another from NJ has 2 condos in Houston.
I am interested in dealing with single family homes (3 or 4 bedrooms), maybe duplex/fourplex apartments later. Not interested in condos as I heard they are difficult to sell and monthly dues will kill you. (MY NJ friend has experienced.)
Since I am a newbie, I am looking for relatively newer homes (say year 2000 or later). Although I am a handyman, I don’t want to spend my time fixing things. My time is precious & I already have someone who will fix things cheap & reliably. I have good relationship with local bank & with my 800+ credit score, it should not be a problem. Since I am new, I do not want to start with expensive houses, maybe ($50-60K range).
I don’t think that I will be able to do wholesaling as I do not know how to find people in distress + due to my full-time job. I would like to fix a house & flip it or I can fix it & rent it. Not sure, which route I want to take. I would appriciate any help how to start REI. Thanks.
I know you wrote that you’re not interested in wholesaling, but it is one of the two best ways to get started in real estate, along with options and lease options.
You didn’t get into details about financing, so I’ll ask. How were you planning on financing or buying properties? Banks won’t lend on fixers, so are you a cash buyer?
Welcome ub
I am in Houston also. Lifestyles has some really good stuff. I have been a member there for 5 years. They don’t help me much but it is a good place to be around people doing what you are doing. I am also a member of Real estate, Investors, Club, Houston (RICH club) and go to Glen Dickson’s monthly meetings also. The great thing about Houston real estate is that you can buy houses that actually cash flow. As you know you can live really well in Houston for not much money and you can get really good cash flow on rentals so it just works as a business model.
In Houston the median income is $48k/year. That means that the typical person can afford to pay 1/3 of their income on rent so pretty much everybody in town can afford $1,200/month in rent. So if you can buy a house so that you can cash flow $400/month if you charge $1,000/month rent you will make money on every deal. As you know you can find 3/2/2 houses that need very little work for sale for $50k -$60k that will rent for $1,000 - $1,100/month all day with very little effort. My typical Principle Interest Taxes Insurance (PITI) is around $600/month. My typical rent is $1,200/month. There are a couple of things I suggest you do while you are here. Use the search function on this website and look up 2% rule and 50% rule. That will help you find how much you can pay for your rentals. I will say that I have not found 50% rule to be true in Houston. As a matter of fact I spend very little on maintenance because in Houston we tend to buy houses in pretty good shape and make them right before we put tenants into them and we can get things fixed pretty cheaply when they do break here compared to the rest of the country.
I can tell you for most of this year all I have done on my rentals is cash the checks and pay the mortgages.
@AJ290 - The reason I said I am not interested in wholesaling is because, I assume, it would involve more work like finding people in distress who want to sell the house cheap which I can then flip quickly. My concern is no skills to find such deals & the full time job (so limited time). Otherwise I would definitely prefer to flip a house quickly. Any approach that makes money is welcome. LOL.
As far as financing is concerned, I can pay cash (at least partially), BUT I would prefer using bank’s money considering debt is so cheap these days. My own cash makes better returns in the stock market. Better to use OPM.
@Bluemoon06 - The way I look at REI is that (For property of $50K) I must make at least $400 p.m. in rent or $20K profit when selling the house. Otherwise it just doesn’t make sense to me. Considering the high costs involved in selling, taxes in TX, repair cost/effort, opportunity cost when the house is vacant etc. it just doesn’t make sense to me if the returns are less than 20% for the kind of risks I am going to take in real estate.
I will search the site for 2% rule & 50% rule. Thanks for the tip.
A few questions:
Do you think 3/2/2 houses are preferred or 4/2.5/2 in Houston?
What is the thumb rule price to pay when buying? I read 60-65% of ARV? Is that do-able? I found very few on har.com with such pricing. Where to find such deals?
ub, I agree with your answer on wholesaling. Tough beating down the homeowner to get the property cheap enough to quickly flip it. That’s why I prefer options and lease options. No need to beat down the homeowner, no need for financing. Tough approach to beat, in my opinion, particularly for the new investor.
Good luck.
Hi,
My name is camellia from australia. I am 22 years old and am still a student.
I want to join in this forum to learn more knowledge and have more friends.
Look forward to being a part of this community.
Wholesaling is a great way to start, you learn many of the basic fundamentals of real estate investing. However you seem to have a strategy and I think you should focus on only that strategy and in specific areas. Keep it simple. I would definitely find experts who do what you are looking to do and have them help you on the first one or two. Either a partner or mentor. Investors that build a successful business the fastest make very little on their first few deals, but they do get paid to learn and build there business while most sit on the sidelines frustrated. After that, the sky is the limit.
Better to use OPM.