How investors can create a win-win to rebuild Houston

14 Replies

Many are discussing how to capture opportunity in Houston. Many fortunes will be made and lost in the aftermath of Harvey. My career has placed me in positions to help create win-win scenarios for families and business. I am from New Braunfels, TX (3 hrs west of Houston). I am passionate about my home state, the people, and real estate as a tool for good. 

My question is this for discussion: How best can the investor community deploy profit seeking capital and effort into the devastated Houston market area to create the most profit for the investor(s) and the most benefit/good for the individuals and community being helped by the solutions that only investors can bring to bear?

Hi. I am a native Houstonian with a strong interest in investing in small apartment complexes. So far I have been focusing on self-education and have yet to do my first deal. I really want to seize this opportunity to simultaneously aid recovery in my community and launch myself into active real estate investing. I would welcome an opportunity to begin working with someone knowledgeable about apartment investing in my own back yard. If a team is put together to aid Houston through this apartment recovery-and-readiness avenue I would love to get on board. I know the Houston area intimately; I am highly motivated; I learn quickly; and as a former military member, I take instruction well. I have also seen plenty of flood-damage first-hand. I would love to gain experience putting together financing, learning systems, and organizing teams to properly repair the damage up to code in order to get quality rental units market-ready ASAP because there is a real need. My primary area of interest is C+ or better small multifamily rentals inside the 610 loop.

Thanks for all of the interest thus far. I would like to continue as a brainstorming round table, then transition to an action team. Note that I am not a multifamily guy. I am SFR with a multifam brain though. 

Question: What is the greatest need and/or a need that the investor community can address?

Question to follow: How to best go about addressing the need?

Feel free to include aspects such as doing the most good, and making the most profit. We should not apologize for making profit as long as meeting needs ethically. The more profit that can be made, the more good can be done without burdening charitable efforts. 

The logical answer is housing. To be more specific I have heard commentary about the following variables:

1. Damaged houses with no insurance.

2. Damaged houses with insurance that will want to sell without repairing. 

3. Undamaged areas that will likely skyrocket with demand. 

4. Temporarily taking our core competencies from one market into Houston (construction, prospecting, lending...)

5. Buy vacant lots to build new homes in damaged areas. Then rent or seller finance.

6. Create a financial vehicle to help flood victims get in a home or back in their repaired home. 

I love working with other investors and look forward to more ideas developing into actionable steps and solutions. 

Originally posted by @Mark Allen :

Buy foreclosure or pre-foreclosures.

All these mortgages will qualify for six months to a year or more of no payments, due to disaster programs. Foreclosures will not happen for a long time. My guess is that short sales are a more likely the way to buy. 

It seems that people working office gigs downtown are expected to get back to business as usual as early as Monday. All the plants along the coast (Pasadena, Texas City, Baytown, La Porte) have steady work, and people with industrial jobs get back on the job ASAP because it's a no-work no-pay model. People are definitely back at work in the plants even if their families are in shelters or out of town. Investors looking to aid the blue-collar industrial region should look along the main industrial thoroughfares: Hwy 146, Interstate 10, and Hwy 225.

Dickinson is in a hole at about sea-level and it gets destroyed every time there is a situation like this where a big storm carries a high-tide in with it. Lots of blue-collar industrial workers live there because the lots are pretty, the land is cheap, and it has easy access to 146. Definitely a big need for housing recovery help there.

Friendswood is a really nice suburb with lots of amenities and it got flooded pretty bad. It has a great school district. Taxes there are higher than surrounding areas.

I'll know more when I get home next week.

I'm not as familiar with the west side. Would someone else like to chime in?

@Clifton Kaderli I'm not into investing as much, I simply don't want to take advantage of people stealing networth just because they are on the down cycle of their life through tragedy. Although there are half exceptions, such as bailing them from the horror of the tragedy, I simply couldn't stomach if I hit one that can make if they had a little push i.e provide a rehab loan or refi their equity to 90-95%, etc. Some people are forced to sell because they don't have savings, some maybe even thought they saved enough but due to the damage extent, not enough, or the stuff you mentioned. With that said, I think the win-win will be to provide repair loans in most cases, and for anyone who doesn't want to live in their dwelling, maybe a sub-to. An accidental landlord maybe? They already have the property with low down, and etc, they're a sure hit if they rinse and repeat, it also gives a plus on the business side if they do.

Hi @Clifton Kaderli we are creating our win/win through our contracting business. Both investors and homeowners with damage are looking for reasonably priced contracting work and we're here to help. Investors can help by buying property abandoned or under utilized and funding revitalization. Partnering with contractors that know what they are doing and local to the community will help re-vitalize the city.

@Clifton Kaderli thanks for bringing up the topic. Syndicating a group would be great. Offering refi loans or perhaps purchase and re-rent if they want to stay in the house but don't want the responsibility.
Let's take the group chat to the next level.

The biggest hurdles to any real estate based solution in this time of crisis down there is 1) going to be finding the labor force to handle remodeling and 2) building / maintaining relationships.   

I am certain you will be able to find opportunity to buy several "short-sale" like properties but... with any type of storm-based disaster there will be so much work available, local contractors will get choosy and expensive, especially to outsiders.  Bringing in out-of-area labor will be imperative to control costs/schedules.  

As to building / maintaining relationships:  have to make sure marketing comes across as a win-win to homeowners, city staff, and local contractors alike.  A few wrong words can easily be construed as predatory given the circumstance AND these folks have been through a lot.  You can guarantee there will be legal hawks watching; dot your i's and cross your t's in marketing / negotiation.  

You may want to find yourself a legal partner whom can assist the existing homeowners in negotiating insurance settlements effectively.  

SIDENOTE:  Some of my best purchases have been post-disaster (house fires).  In two cases, we were able to acquire the property after the insurance company had paid off the mortgage (mortgages encumbered the insurance proceeds) and the homeowner blew through the remaining lump-sum settlements.  The negotiation was easily converted to a win-win solution when the home-owner was informed of the "nuisance" status and demolition order hearing the city scheduled...

I would be interested networking for a solution on this, please keep me in the loop.

Updates:

New construction: Some business colleagues and I are discussing some systematic approaches to new construction that may be less cumbersome than remediation of a water damaged house. Their company can manufacture building systems (frame and exterior) and deploy labor for most of construction. They are checking with some of their suppliers to see if they are able to reduce or donate material. 

Syndication: The funds to fuel any solution will need to be organized, efficient, and protected. I have initiated conversations with some attorneys that are working some other projects in Texas. They have big hearts and the skills to make a syndication happen. I like that they participate in projects as well. I will let them share more and the conversation incubates. 

Rescue: Special kudos to all of my friends and colleagues that are still working to navigate the disaster. I wish I could be more boots on the ground in the Houston area. My point of this bullet is timing. They will be in rescue and first efforts for a while. I'm proud to lead some conversations that can potentially change lives as the people in this region rebuild lives. 

Thanks again.  

From staying in touch with friends and family in Texas as well as network on BP, here are some updates to thoughts?

1. No mass migration. The job centers are still in Houston and most will rebuild. 

2. There is still much sorting and regrouping. People are still being helped with basics and are returning and sorting. Programs and insurance are starting to make progress beyond clean up. Rebuild will be a long-term project. 

Thanks to all who have been in touch.