Houston, TX · Member since 2015 · 4 posts · 0 votes
my husband and I purchased a fixer upper/foreclosure in downtown houston,tx. We are originally from the east coast so this is our first deal we've done in tx, so were building our network here, anyway, we purchased for 50k (arv is 380, so our goal was to flip it).
There are two properties on the lot: a duplex and a single family home. We renovated the duplex first and we have positive cash flow of $1500. We are now half way through the renovations on the single family home. We were riding around the area today and noticed that there is an abundance of development where investors are demolishing the homes and building between 4 to 6 newly constructed homes on the lots which are the same size as our lot. This brings me to my questions:
have we approached this from the wrong angle? Should we be looking to demo the duplex and single family home to build 5 townhouses on our lot?
Typically, how long does it take the build a home from the ground up?
In Texas, anyone familiar with the going rate to build from ground up?
Investor · Shawnee Mission, KS · Member since 2015 · 423 posts · 114 votes
11y
Just compare the possible alternatives after you invested already into this properties. You may be lucky to get another deal and try another strategy there.
Investor · Shawnee Mission, KS · Member since 2015 · 423 posts · 114 votes
11y
Just compare the possible alternatives after you invested already into this properties. You may be lucky to get another deal and try another strategy there.
Contractor · Nederland, TX · Member since 2015 · 27 posts · 16 votes
11y
Where exactly in Downtown Houston? The Houston market has been pretty crazy the last few years, but has slowed some due to oil prices. Certain areas investors are buying 100 yr old houses for $400k+ to tear them down. If you can get that, I would take the money and run.
The actual cost of building would be between $90-$100 per sq foot plus whatever your contractor charges you.
Houston, TX · Member since 2015 · 4 posts · 0 votes
11y
@Mack McPhatter thank you for your response. my property is located off Hutchins and Elgin. On my lot, based on what I've seen I'm sure that 5 maybe 6 townhomes can fit. What are your thoughts?
Houston, TX · Member since 2015 · 4 posts · 0 votes
11y
@Mark Parzych hello, thank you for your response. I just joined this site so I couldn't figure out how to reply. My property is off of Hutchins and Elgin. Please let me know.
Houston, TX · Member since 2015 · 4 posts · 0 votes
11y
Jane A.
@Jane A. this area is hot now, I fear that if we wait, prices will be soo high that we will lose this opportunity. At this point, we already own the land. That said, I think if we change course with new construction we would be looking at making upwards of a million vs. a couple hundred thousand flipping. My husband thinks there is too much risk involved and headache with new construction. Me, I'm ready to go all in, but just looking for insight to make sure we make the right decision.
Investor · Orlando, FL · Member since 2012 · 183 posts · 155 votes
11y
@Natalie H., new construction can be a completely different world if you have never dealt with it in any way before. Your first steps would be to check the zoning and setbacks to see if what you want is even allowed and if it will fit based on the size and shape of your site. If you determine that what you want will work you should call and talk to someone knowledgeable in the city planning division and see if you even have a chance of getting your idea approved. There's no reason to go through the whole process of engineering and architectural plans if the city has a different idea than you for your site. They know what they want throughout the city and there's not much you can do about that.
Also, without any experience you could be really taken by the wrong contractor so if you make it to the point of looking for one make sure they come highly recommended. On your first big job like this it might make sense to pay more for a better contractor who will take you through the process.
There's no right or wrong here, just all depends on the numbers and your level of risk.
Contractor · Nederland, TX · Member since 2015 · 27 posts · 16 votes
11y
@Natilie H.
HAR.com is a pretty good website tied into the Houston MLS. It will give you a general idea of your area and you can do search by map which would help. I would contact a Realtor who works in that area, but from what I just pulled up listings of townhomes in that area seem to be $550k plus.
Houston, TX · Member since 2011 · 673 posts · 360 votes
11y
That part of Eado you are going to maximize your return by building new townhomes.
You got the land for a good price, but keep in mind the rules are changing in houston. Just last year you could build 6 townhouses and now it may only be 4 or 5. The rules are changing pretty quick.
Cost to build a town house in that part of town, finished out nice to attract a fast buyer, will be $100-$110ft.
Bet on it taking 3-4mo to get the plans completed with a good architect and a good builder getting them approved through the city.
Building in some ways is harder than rehabbing and in others its easier. Also, just understand now that 5-6 townhomes will be about a year long project from the day you decide.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
11y
I would stick with your plan and renovate as exists. Following the herd isn't always best. You will be on the market long before them. Don't want to be the last townhome being completed as demand dries up @Natalie H.!
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
11y
Given you are already halfway done with the renovation, I would be surprised if it is cost-effective to go back on that and begin to develop the land, especially since it sounds like you don't have any development experience. You might as well go ahead and try to run the numbers and compare if it makes sense at this point. But I would only do it if it becomes obviously apparent that development is the better option given how far along you are and the fact that, well, development takes a long time. Even if you can make more developing it, does it make sense to tie up your money for that long?
Wholesaler · Houston, TX · Member since 2014 · 73 posts · 57 votes
11y
Building would definitely get you the most money now. The area supports new townhomes as mentioned before. Even if oil causes Houston real estate to slow down I still think it'll give you the most ROI in the short term. If you are able to it may make sense to finish the remodel, cash out refinance, rent, hold, and build in the next market up cycle. The area is in the beginning stages of revitalization and should see demand/prices increase as the neighborhood changes. The park it's next too is also undergoing a major renovation and could become a central point for the community.
my husband and I purchased a fixer upper/foreclosure in downtown houston,tx. We are originally from the east coast so this is our first deal we've done in tx, so were building our network here, anyway, we purchased for 50k (arv is 380, so our goal was to flip it).
There are two properties on the lot: a duplex and a single family home. We renovated the duplex first and we have positive cash flow of $1500. We are now half way through the renovations on the single family home. We were riding around the area today and noticed that there is an abundance of development where investors are demolishing the homes and building between 4 to 6 newly constructed homes on the lots which are the same size as our lot. This brings me to my questions:
have we approached this from the wrong angle? Should we be looking to demo the duplex and single family home to build 5 townhouses on our lot?
Typically, how long does it take the build a home from the ground up?
In Texas, anyone familiar with the going rate to build from ground up?
Thank you in advance for your input!
Typical build is more like 1 year, permits and etc. Considering you wont snag on the rezoning. Your duplex is already done and positive flow, that is it, and if you are halfway with your SF, then go with it, leverage those two to get a new lot and start building, maybe you could get a better deal.
Hi Natalie, if it's not broken dont fix it. If you are getting a positive cash flow, i'd recommend staying with your rehabb. Doing new builts is a new game. I'd recommend finish your first rehabb then do new builts when opportunities arise. Hope you find my advice helpful.
Rental Property Investor · Houston, TX · Member since 2015 · 43 posts · 28 votes
11y
Congratulations! They are renovating Emancipation Park. Better for community, better for future prices, and attracting desirable tenants.
This particular area is pretty mixed up. On the one hand you have the new developments, townhomes, parks, etc. On the other, you have traits of unsafe, undesirable homes. Gentrification at play here, but demographics predominately black at this time. Demographics are quickly evening out with the new construction.
Building new townhomes would be ideal for maximizing highest, best use on vacant land; however, your situation may benefit more by sticking to your plan. Unless you are in town, and/or have a close partnership with Lovett, I would recommend sticking to your original plan.