advice on investment Property in Conroe Texas

Buying & Selling Real Estate
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advice on investment Property in Conroe Texas

Sam Magi
Investor · Concord, CA · Member since 2013 · 22 posts · 5 votes

Buying my second investment property and just like the first one looking for some advice from my fellow BP members!! Thank you in advance for this portal it has been a great help to me. 

Property is 3/2 SFH one story. 2000 sqft , built 2013 in Conroe, TX . Trying to buy it for all Cash for 201,496/ (current loan). A friend of mine has to leave the country for job issues.

Down payment: $201,496

Current Rents: $1800 -$2000/ month

GSI: $21600 (low) $24000 (high)

Expenses: Vacancy @5% = $1080 (low) $1200 high

Taxes: $5625/-

Insurance: $1100/-

No home warranty since Builders warranty is valid until 2023.

Utilities: $2340/-

HOA: 660/-

Maintenance: 1000/-

Property Management: $2160/-  (i am in CA so will have to find some mgmt company)

Net Income: $7295 (low) $9575 (high)

ROI is 4-5% without accounting for dep.

Its hard to find anything in this market with decent ROI. Is this a good buy and hold investment?

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Casey Miles
Investor · Mesa, AZ · Member since 2014 · 176 posts · 54 votes
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I'm in Conroe every other week. I'm form Phx and only hold property in AZ. When you say buy and hold, how long are you anticipating the hold? I'm guessing your banking more on a quick appreciation? The reason I ask is I would never but up $200k cash to make $10k a year. Why not finance and leverage? Unrelated to the area, I just always wonder why people pay cash vs finance (with the exception of buy with cash and refi, etc.)

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  • Mike Landry
    Investor · Montgomery, TX · Member since 2014 · 386 posts · 151 votes
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    where in Conroe? Zip code or neighborhood? That's a high priced rental if it's not in the woodlands. 

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  • Sam Magi
    OP
    Investor · Concord, CA · Member since 2013 · 22 posts · 5 votes
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    Mike, thanks for your reply. The Zip is 77384. I dont know the area very well since i live in CA. It looks like its close to the woodlands. 

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  • John T.
    Rental Property Investor · Central U. S. A. · Member since 2013 · 296 posts · 149 votes
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    @Sam Magi  The bulk of 77384 is North of The Woodlands and West of Interstate 45.

    Your numbers seem a little low to me.  You ought to be able to get at least a 6% cap rate.

    If you like, send me a PM and I will put you in contact with my Realtor and Property Management Company.

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  • Casey Miles
    Investor · Mesa, AZ · Member since 2014 · 176 posts · 54 votes
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    I'm in Conroe every other week. I'm form Phx and only hold property in AZ. When you say buy and hold, how long are you anticipating the hold? I'm guessing your banking more on a quick appreciation? The reason I ask is I would never but up $200k cash to make $10k a year. Why not finance and leverage? Unrelated to the area, I just always wonder why people pay cash vs finance (with the exception of buy with cash and refi, etc.)

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  • Sam Magi
    OP
    Investor · Concord, CA · Member since 2013 · 22 posts · 5 votes
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    Jonh T. Thank you for your input. I will email you with my information. It would be great to speak to somone who knows the area. 

    @Casey Miles. You are right about financing vs cash. Unfortunately my friend has to leave in 10 days. Trying to close this deal with traditional financing will not work. The only was i get this done quick is make the cash payout to the bank and own it. 

    I am banking on quick appreciation knowing current houses are seliing for $250k. However, i dont mind holding on to it for 8+ years. 

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  • Tom Keith
    Investor · Longview, TX · Member since 2012 · 631 posts · 186 votes
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    @Sam Magi@John T. Be good idea to get John's Realtor and Property Management to get you good comps for That Neighborhood for value and Rental so you can make sure you are investing correctly.  Then you could do cash out finance later to make your leverage work for you. 

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  • Linval T.
    Investor · Bay Shore, NY · Member since 2014 · 1k+ posts · 688 votes
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    From my vantage point it seems as if you are rushing to close to meet your friend's deadline/expectation.

    That's good in and of itself. However, for that kind of money and you are not from the area, then, it would be wise to do additional legwork.

    What if your friend didn't know you to sell the property to quickly? He will still be on planet earth and you shouldn't have to rush to close so quickly.

    That's just my take on your outline, but, you would know best.

    Good luck!

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  • Mike Landry
    Investor · Montgomery, TX · Member since 2014 · 386 posts · 151 votes
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    sounds like a reasonable deal to me knowing the area. What utilities will you pay? It's not normal around here to pay utilities for tenants. Also I would recommend doing a delayed financing exception and leverage this one. Or do a quick flip. Good luck.

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  • Fred Heller
    Real Estate Agent/Property Management · Houston, TX · Member since 2014 · 1k+ posts · 827 votes
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    I just pulled comps for 3BR/2BA homes in that zip that have rented since January. The rents range from $1250 to $2700. But the average rental price is $1750. In order to give you a more accurate idea, I would need to know the address. Going a mile or two in one direction or the other can really make a difference.

    I also pulled sales comps for similar homes in the zip (again not knowing the location). What I'm seeing is telling me that at $201,000 you're getting a very good deal.

    PM me if you would like more detailed info.

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  • Sam Magi
    OP
    Investor · Concord, CA · Member since 2013 · 22 posts · 5 votes
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    Tom, Lindval thank you for your inputs. Mike, Fred thank you for your information. I have PM you about more info. 

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  • Jerry PadillaBusiness Member
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
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    @Sam Magi

    Why not purchase with a mortgage and increase your cash on cash return? Then you could purchase possibly 4-5 more with that cash as a down payment? 

    [email protected]585-204-6923
    PrimeLending 4.8583 Reviews
    WebsiteView Page
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  • Sam Magi
    OP
    Investor · Concord, CA · Member since 2013 · 22 posts · 5 votes
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    HI Jerry,

    Thank you for your advise. I wanted to do a quick flip or hold on if it did not sell. Had to rush in to close as my friend had to leave the country. After some advice and thoughts i tried to buy time and not rush in. My friend decided to rent it out instead as he did not have time on his hand. Win some lose some,

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