Las Vegas, NV · Member since 2017 · 12 posts · 3 votes
I am considering buying a SFR turnkey property in Houston market. Cashflow is very tight, about only 4-6%, cash on cash return. I was considering Jacksonville, FL, but it is much further away from where I live, (Las Vegas, NV), and the jobs and population growth doesn't seem as strong.
Anyone have experience in either markets?
My #1 priority is steady and reliable cash-flow. Appreciation is secondary. Any thoughts on which market might give me a good balance of both?
Investor · Cypress, TX · Member since 2016 · 170 posts · 139 votes
9y
My obvious bias is with Houston. Low cost of entry, critical mass (4th largest metroplex), strong economic & population growth. If we do get a correction (like 2008) I think Houston is better suited to withstand it than any other market.
Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
9y
Out of curiosity, why aren't you just investing in Vegas? A 5 cap is about where a descent property in the Vegas market is sitting and the appreciation in the city has been good for several years now.
Out of curiosity, why aren't you just investing in Vegas? A 5 cap is about where a descent property in the Vegas market is sitting and the appreciation in the city has been good for several years now.
-Christopher
That's a great question Christopher. For a great deal I would consider it, but those seem to be harder to come by unless I can find a flip, which I don't want to do. 5 cap does not meet my cash flow criteria.
Plus, I'm looking at property around 100-125k, and in Vegas that price range is in C class or worse neighborhoods in the current market.
Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
9y
I agree that you're unlikely to find a hot deal in Las Vegas, especially at that price point, but I'm not sure I follow the math. If you have a 5 cap, you are getting 5% back on a 100% cash purchase. If you finance it, your cash on cash return should be higher. I thought you only needed a 4 to 6% CoC return.
Investor · Cypress, TX · Member since 2016 · 170 posts · 139 votes
9y
My obvious bias is with Houston. Low cost of entry, critical mass (4th largest metroplex), strong economic & population growth. If we do get a correction (like 2008) I think Houston is better suited to withstand it than any other market.
Las Vegas, NV · Member since 2017 · 12 posts · 3 votes
9y
I agree with you there Brian. Houston seems to be more robust economically, with a major port close by and dozens of Fortune 1000 companies headquartered there.
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
9y
Property taxes are high in Texas, so be sure you account for that. Other than that, I can say I have had terrific appreciation in my properties in Jacksonville over the last 5 years. If you are going out of state, why limit yourself to these two markets. For appreciation potential. You can achieve much better cash flow in any number of other markets.
Investor · Vacaville, CA · Member since 2016 · 433 posts · 249 votes
9y
I don't have anything in Houston but I have Dallas, J'ville and Las Vegas. Overall Vegas has been my best. Nice properties in Summerlin ($200-300k - renting for $1300-1800). Rented within days, low property taxes, rent paid on time, almost no repairs, etc.... Jville slower to rent and property insurance is difficult. Texas is crazy on the property taxes.
Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes
9y
@Maximus Nguyen I think you're selling yourself short going with 4-6% cash on cash. We usually give an 8% preferred return on our syndicated deals, which I know isn't for everyone, but it's not that difficult to find deals that can return close to 8% a year. I actually am very bullish on the Houston and Jacksonville markets, and I couldn't say which is better, but you should be able to find a better deal in my opinion. I understand turnkey takes a ton of the stress and headaches out of REI, but if you're at 4% cash on cash it better be in an unbelievable growth market.
Las Vegas, NV · Member since 2017 · 12 posts · 3 votes
9y
@Chris Grenzig, I want to get my feet a little wet in being a landlord. Participating in a syndication maybe down the road for me when I can put aside only 10-20% of my liquid investable dollars towards it.
I'm open to deals in the 150K and under range right now to get my feet wet and learn, so if I make a mistake, it will be a good lesson, and not a painful one.
Thanks for the input on the two markets. I think I'm leaning towards Houston more so than Jacksonville, but may look to get a partner so we can do one in each market to learn experience both before we choose one to go more invested in.
Investor · Houston, TX · Member since 2017 · 129 posts · 62 votes
9y
i can put you in touch with a realtor who can find you the return your looking for and manage the property as well. he was a property manager for Waypoint Homes for 3 years before they were bought out. He's also born and raised here and knows the area very well. In addition, he's a contractor. Let me know if you'd be interested in speaking with him.
Las Vegas, NV · Member since 2017 · 12 posts · 3 votes
9y
@Marshall Hooper, thank you for the offer. Let me do a little more due diligence and get all my financing in order before I waste anyone's time. Let's connect thought so I don't forget you or your realtor friend when I'm ready to take the leap.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
Hey Maximus! Any reason for focusing mostly on Houston and Jacksonville? Both of those are low cash flow cities....well, low in comparison to other cash flow cities, at least they do cash flow. If appreciation potential is secondary (smart), there are much higher cash flow cities.
If it's just PMs that are the concern, you can always do due diligence on any turnkey PM that comes with the property as well as other PMs in the areas. You don't have to use the turnkey PM.
Las Vegas, NV · Member since 2017 · 12 posts · 3 votes
9y
Those two cities were recommended by Real Wealth Network because they have affiliates in those areas. I'm looking to be a very passive landlord. Bring me the potential big headaches, but calls about the toilet at 3 am in the morning is something I want to delegate out to a PM.
@Ali Boone what area's are better cash flow with appreciation potential that you would recommend?
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Buy a REIT ... you can get 4-6% cash on cash return, be a very passive landlord, get appreciation, and be diversified with world class property management at the helm and scale to boot, which is more than you can say for individual properties out of state. Otherwise, if you REALLY want to learn how to invest in RE, then just stay local and more hands on as others have already suggested, you still won't be diversified at least at first, but at least then you will have control over your own financial destiny rather than outsourcing it to somebody else's hands.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
By far the best chance for appreciation I know of right now (and that's a bit stretched, as all the markets are tight for any appreciation potential right now) is Baltimore. Chicago is also not yet to pre-recession prices, and maybe some room in Philly. Baltimore and Philly though are all-cash deals upfront though (cash out refi in 4-6 months) with the turnkey providers I work there. For a regular turnkey structure, I'd say Chicago of all the markets I like for turnkeys. But again, there's really no massive appreciation potential anywhere right now.
Las Vegas, NV · Member since 2017 · 12 posts · 3 votes
9y
@David Faulkner, for now, I have no interest in being in a pooled investment, like a REIT. I am considering all market options right now, including my local area. If I ever want to scale, I'll need to learn the "outsourcing" game and build my network of PM's, Contractors, conventional and alternative lending sources, etc.
@Ali Boone Thank you, I'll check out those markets. Yes, appreciation is harder to predict, that' why I'm more focused on net positive cash flow.
Real Estate Agent · Jacksonville, FL · Member since 2016 · 406 posts · 163 votes
9y
@Maximus Nguyen if you're looking at 4-6% in Houston I strongly recommend you consider Jacksonville. Even in the more expensive areas I'm seeing at least 6% return. Most of my investors are looking at 8-12% return. Cash on Cash you can get a decent property here with a higher return.
I'm happy to connect you with good property managers locally or discuss with you if you have any questions on Jacksonville.
i can put you in touch with a realtor who can find you the return your looking for and manage the property as well. he was a property manager for Waypoint Homes for 3 years before they were bought out. He's also born and raised here and knows the area very well. In addition, he's a contractor. Let me know if you'd be interested in speaking with him.
If its possible for me to get his information as well that would be much appreciated.