Killeen Multi-family (Out of state investor)

19 Replies

Greetings,

I am an out of state investor looking into the Killeen, TX market specifically a 26-unit for sale. I am in a 1031 exchange and seeing more doors compared to where I live in Utah. My question for existing investors in the market is how has your experience been and is supply keeping up with the demand? The complex I'm looking at is 100% occupied and turn-key for the most part. I'm planning to hold for 5-10 years. Also, what is the nearest metropolitan/ tertiary market in the area?

Thanks,

Henry

Hey @Henry Lee ! I am not a multi-family investor in Killeen so I can't speak to the supply and demand for that asset class. But I can answer the last part of your question. Killeen sits between two metros in Texas: Dallas-Fort Worth and Austin. The closest is Austin. Depending on where you are traveling from DFW to Killeen is two hours and Austin to Killeen is one hour. I would argue the Killeen - Temple Area is a tertiary market to the Austin metro.

Killeen is a good rental market but has low rents. Properties are cheap there as well so it balances. I would just not over improve your purchase. Rehabbed rentals do not rent for substantially more than anything else there. I bought and sold a 12 unit property out there a few years ago. I made some money. I also have friends with multiple 4's on the ground there. They swear by the cash flow... 

Austin/Waco are good markets close by.

Thanks @Danny Webber for sharing your experience in the market. It sounds like a stable area but slow growth. My concern are the overvaluation of some of the listings on the market and the city having only a few major employers. If you have any off market listings in the $1.5M range in Austin/ Waco do let me know! 

Ensure you do a proper due diligence. I found the book The Due Diligence Handbook for Commercial Real Estate by Brian Hennessey to be very insightful. Just keep in mind that some deals sound too good to be true for a reason. I am very familiar with the Killeen market. I was in the same situation as you and found a killer deal for an apartment complex with 100% occupancy. On the surface, everything looked great. However, after further investigation and digging into the actual numbers (by linking up with the prop mgmt company), most of the numbers were false. Although it was 100% occupied, about 30% of the tenants consistently did not pay rents. Again, due diligence is key!

@Henry Lee

Pay close attention to neighborhoods in Killeen. There are some rough areas. I suggest you take a drive to Killeen and tour around before investing.

You hit the nail on the head @Derek Harris I found a deal that looks great on paper but some showing some concerns under the hood. How were you able to find out about the tenants not paying the rents? Did you eventually back out of the deal? 

Thanks @Pete Harper that's good advice. Things can change from block to block.


@Henry Lee I covered Fort Hood and Killeen as a TV reporter a few decades ago and most of Killeen is lower-middle income. Lots of low rents and C-class neighborhoods. It is too far from Austin to be a neighboring community anytime soon. The military drives the show, so if the Army gets deployed, the town can see significant vacancies. Definitely do your due diligence and don’t buy anything in Killeen without visiting first.

@Henry Lee

Have you looked into the Dubai real estate investing community. 

The real estate sector in the United States is crowded with too many investors already, this makes it very competitive and leads to higher prices. discuss investing in real estate in DubaiThere is a guaranteed 25% ROI yearly on invest in short holiday renta properties in Dubai

@Henry Lee, my wife visited the property management company in person and looked through their files. The first indication I should have known it was a bad deal was when I was notified the prop mgmt company did not communicate through email or have any digital files. All their files were hand-written. They did, however, have faxing capabilities. And yes, the deal did not go through.

Hey Henry,

Just starting out looking into where I would like to get my first property. I noticed your from St George. This was a place I was considering, but haven't started really digging into the market there. What are your thoughts? I heard it may be highly priced there. 


Thanks

Looks like you dodged a bullet there @Derek Harris ! Any company that’s still not digitalized is a red flag for me. 

Hey @Nick Taylor what sort of properties are you looking into? I heard Airbnb rentals do well in St George since Zion is not too far. There’s not a lot of inventory for apartments under 25 units and if there were they’re priced like CA

@Henry Lee Killeen is an awesome spot to get returns, but you may want to consider putting those units into a military rental program that eliminates your risk of 1-2 month vacancies. Military markets like Killeen have a large population that deploys every 9 or so months so you will have tenants move in and out within that time frame, having a manager and program that allows you to capture tenants looking for housing is always key.

Thanks @Ben Steelman I'm always looking at deals in the Mid-West. I have to identify for one of my exchanges by end of March so let me know of any deals in the $1.5MM range.

Account Closed I appreciate your insights, what does the military rental program entail? Is there a certification of some sort for the PM? 

@Henry Lee The program is for landlords to connect their properties for rentals to military members, I can send you more info if you want to DM your email. It is available through housing contractors like Reunion Investments and makes the whole military rental process significantly better.