Advice for SFH investment near Bellaire Houston TX

[Calvin Yeang]

I'm an out of state investor looking for advice on investment strategies for a distressed 3bd/2ba 2000 sq ft SFH near Bellaire that I'm purchasing from a family friend off market. Using my best estimates, the property would cash flow as a LTR but I'm looking for strategies that can optimize this investment. Specifically, I'm looking for a few things:

1) Recommendations for contractors who can do a complete rehab on a reasonable budget. 

2) The property has a sizable backyard and potential for a 1-2 bd ADU. Are ADUs attractive or considered an added value in the Bellaire area?

3) Does anyone have experience with mid term rentals in this area? Nothing that it is a short commute to nearby hospitals and offices. 

4) Does anyone have experience with STR in this area?

5) Advice on what renovations provide the most added value in this market. For example, would adding a 4th bedroom make the place more attractive for LTR? Does replacing the lawn in the backyard with synthetic turf add or subtract value in this market? 

Thanks in advance for the help and I look forward to making connections in the Houston area.

[Holly Brown]

Hi Calvin, 

One thing to check on the property is if it resides in an HOA. If so, you may have limitations on what you can build (the ADU) and restrictions on how you can rent it out.

I have multiple properties with ADUs in Houston and all of them do really well as MTRs and then we STR the vacancies between MTR guests. We do separate the yard so each tenant has a private entry and yard space.

For MTR, I would start a google search with "month to month rentals in ____" and see what websites come up, and search from the renters perspective. From there, you can usually get a good idea of if the market is saturated or underserved in the area. 

For STR, I highly recommend Rabbu for determining how much a property can make in an area. Their software really allows you to refine your search and remove comparables that don't fit the subject property. Its also free with an account, so worth a try.

As far as renovations go, I don't have a baseline of what you are starting with, but another bedroom will far exceed value when comparing to an upgrade such as turf. Anything that is more of a "personal preference" over a true value addition (kitchen or bathroom upgrade, or room addition) will likely end up as diminishing returns. 

Hope this helps!