There is a group of townhomes near me.  Well, "near" = the galeria (I'm downtown) are of Houston .  There are 10 of them for sale in a bundle.  My bank will finance.  They're about $240k each and currently leasing for about 2,100/each.   That's not the "1% rule" I see on here but they're pretty new and it seems the more expensive the unit the more you can go off from that rule. 

I currently only have 2 townhomes but am looking to expand.  Anyone want to talk me out of this or should I do it?  I could wholesale as I bet others might like it but I want this myself. 

@John L. Where in The galleria are? I’m literally at the Starbucks on Post Oak and uptown Park Blvd typing this. I’ve never seen anything new for sale at that price. Unless it has a history of flooding or in a floodplain.

If they don't meet the 1% rule I wouldn't even bother liking into any further. The 1% rule in my experience is not a great deal, It is not a good deal, It is not an average deal. It is the minimum % to even be close to a deal.

I am sure you will find other opinions here. 

Originally posted by @Adam D Rinehart :

@John L. Where in The galleria are? I’m literally at the Starbucks on Post Oak and uptown Park Blvd typing this. I’ve never seen anything new for sale at that price. Unless it has a history of flooding or in a floodplain.

Comp wise it seems like a good deal.  as in if I wanted to sell them I could, at a profit.  But in terms of buy and hold cash flow it's marginal.  I don't want to give the exact address right now (I'm still new :) but it's in this map.  Maybe calling this "Galeria area" is being generous but when you're downtown everything around there is "galeria area'.  These are likely ~$300k patio homes. 

@John L. Yeah, I wouldn't call that the galleria area. To piggy back on to your other post as to how successful investors got to where they are, a consistent theme is setting a minimum criteria to buy the asset class they want and maintaining discipline to execute that plan. You're potentially talking about a $2.4M purchase that doesn't seem to cash flow enough to justify tying up that much capital and speculating on appreciation or appraisal value. That's a hard pass for me.

240k Price and rents are only just over 2k ? No that is not too bright . Hard pass but then again I’m not into losing money , I’d rather gain money 

i assume you're getting decent leverage. If you can get 80% LTV in low 4s there is a good chance you'll be near 10% return on cash. Plus principle pay down, inflation hedge, appreciation, etc is icing.

If you want to PM me the financials I’d be happy to give you my thoughts. 

Personally I’m an inner loop kinda guy. And like staying better than 1%. But I do have a few homes that do well that are not 1% properties. 

John L I am down there a lot and I know this area.  I'll say that is not a bad area but it is a little 'transitional' … there is really pricey and nice mixed in with sketchy and outdated.  I'd be careful.  North of Westheimer is Tanglewood and expensive & trendy.  Go south of Westheimer and it drops off dramatically.  Maybe if you have evidence that this pocket will turn and really start to appreciate, then you could have an amazing deal.

The other part of this is townhouses -- are they rented out currently?  Or owned individually?  Are these really condos?

Originally posted by @Mark Sewell :

John L I am down there a lot and I know this area.  I'll say that is not a bad area but it is a little 'transitional' … there is really pricey and nice mixed in with sketchy and outdated.  I'd be careful.  North of Westheimer is Tanglewood and expensive & trendy.  Go south of Westheimer and it drops off dramatically.  Maybe if you have evidence that this pocket will turn and really start to appreciate, then you could have an amazing deal.

The other part of this is townhouses -- are they rented out currently?  Or owned individually?  Are these really condos?

 

 They’re individually owned. Seller has all of them though. Selling them as a batch. Currently rented. Don’t know the legal distinction between “condo” and “townhome” and “patio home” so I may have been using the term incorrectly 

Just put these under contract (for anyone following the thread) and should be closing next week.  Super excited to join the ranks of multifamily investors.  HUGE thanks to @Cody L. for his help!!!

Originally posted by @John L. :

Just put these under contract (for anyone following the thread) and should be closing next week.  Super excited to join the ranks of multifamily investors.  HUGE thanks to @Cody L. for his help!!!

 You the man.  Glad I could help.  Just left a comment in your other post.  Well done