Thinking about buying some SFH rentals in the Pearland area. Looking at homes priced at 100k which I perform light rehab and rent at 1200. My strategy is long term buy and hold.
Anyone have experience in this area of Houston?
Really hard to go wrong with that price and rental income.
If those are your numbers, than your ROI should be pretty solid.
Let me know if you have any other questions.
Definitely check you insurance and tax costs! We have had those numbers in Charleston and have been brutalized by 3% tax costs and high insurance due to Hurricanes. Texas has those same issues!
I agree with @elisabeth 3% taxes and insurance south of I10 can eat some cash flow. Not sure the 1.2% would get me excited even with 30 yr fixed financing. PITI could easily be 750-850. PI on an 80k note is approx 450ish. I guess that is 150 in flow a month after all estimated expenses. With 20k in your rough cash on cash is 9% with no surprises. Add principle pay down and you get to oder to 11%.
Not a home run but a solid single.
Hi @Nicholas Guillemette , welcome to Biggerpockets! My husband and I are new investors looking for SFH's on the south side of Houston. too. We are not focusing on Pearland, but when looking at Zillow Rentals, I've noticed quite a few homes for rent (and some for sale) in Rodeo Palms. The rents are a bit high, and I suspect that's why there are lots of them available. The homes are relatively new, and they may be priced too high to make them good buy and hold properties. I haven't driven around over there, but someone told me that a lot of the houses aren't being well kept up, which leads me to believe that lots of them could be rentals.
Another little anecdote is that I have a friend living in a <1500 sq. ft 3 br house that was probably built in the last 10-15 years. It's in a subdivision behind Strickland Chevrolet. I think they're paying around $1600/month for rent, but those houses are valued in the $150K range.
Hop over to the new member's forum and introduce yourself. You'll be greeted warmly and will probably get some good newbie advice, too!
David said that a cash on cash return of 9% is a solid single. That seems lower than what I would suspect/hope. I realize that each part of Houston is different, but what projected cash on cash rate of return would you consider acceptable when you evaluate a property to buy and hold?
@Leigh Ann Smith
It all depends on what area of town you are looking at. I can say from experience and from what I see on a daily basis with the properties we are seeing, that after all your expenses are paid you should be getting a 15% ROI if you are leveraging your money. I have seen some that are as high as 25%, but that doesn't happen every day. There are great calculators online that do the math for you and show you what your PITI would be and they give you a solid idea of what you can expect your ROI to be.
Hope that answers your question.
To find out about an area go to IREM.org search for ARM certified property managers. Call 5 ask them what sides of the city they like/dislike and why. Ask what they see them selling for and what expenses are by category. Ask if they know anything coming up for sale.
Also note that Texas doesn't have high appreciation. So it is very important that your cashflow is high enough to be the sole form of income potential!
OMG stay away from this area!! Jk...
This is one of my favorite area, good tenants, solid return. But it's very hard to find anything that make cash flow sense on this area anymore . all the great deal got picked up one or two years ago
@Elizabeth C. is right on point. Cash flow should be the most important thing you should look at when buying rental. Consider appreciation as a bonus - If it appreciated, great, if not, no problem.
The Pearland rental market is very strong right now. Rents are up lately so if you look in the correct areas, you should be able to get some deals that produce decent cashflow. I'm a broker in Pearland, if you have some questions, let me know.
gregory, are there any areas you would avoid?
I wouldn't say avoid any areas. Deals come up everywhere. I would say evaluate each deal and make sure it meets your needs. Must be ready to purchase quickly.
Gregory what would you suggest doing to find a deal that cash flows in that area?
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