Denver, CO · Member since 2016 · 69 posts · 41 votes
As 2017 kicks off, I'm newly motivated to pull the trigger on my first of hopefully many rental property deals.
I'm mostly looking at moderately distressed 3/2 SFRs in the Houston suburbs for buy and hold rentals. I'd like to target something in the 1.25%+ rent to "all in cost" (purchase + rehab) range.
Where are other investors currently finding deals in the 1%+ range?
MLS - seems like there are some, but they move quickly
HUDhomestore.com - doesn't seem like there's much inventory and the ones listed don't seem like great deals
Auction.com - I've just started looking at this, could be a possibility
Wholesalers - I've only talked to one of the "full service" wholesale brokers so far, haven't started networking to individual wholesalers yet. The deals I was seeing weren't all that enticing.
Direct marketing - could be the best option, but I haven't taken the plunge into this as of yet
Any suggestions or opinions on where I should be focusing my efforts?
Houston, TX · Member since 2011 · 673 posts · 360 votes
9y
Our office is in the Heights actually @Luke H. small world!
Let me give you my .02 on the pros and cons of each of the methods you laid out there.
MLS-great source for deals, just like any other type of marketing you have to do it consistently to get results. The best results are usually had by people that have a laser focus on a certain zip code or neighborhood. Networking with agents that specialize in those areas as well. If you go the shotgun approach you are going to get worn out pretty quick.
HUD homestore/Auction.com/Hubzu ect. These all take making A LOT of offers with A LOT of follow up. Its a full time job to get deals consistently off of these and its a black box of communication and understanding.
Wholesalers-(Full disclosure my company wholesales) There are a handful of reputable companies that have a consistent flow of deals. I would focus on these companies, especially the ones that have a sales staff that get to know your goals. You can sometimes have luck with the little guy but a lot of times they dont have enough experience to know what a good deal is, and that pass that "not a good deal" on to the buyer. The biggest thing you can do there is make sure the company knows what looks like a good deal to you.
Direct mail - I know this works because we spend a lot of money on it. But remember as soon as you send out a batch of letters you are in sales. Taking leads, meeting with homeowners and negotiating on the property. No doubt you will find your best deals by doing your own marketing, but you will need to work for it.
Real Estate Investor · Dallas, TX · Member since 2013 · 388 posts · 174 votes
9y
I live in the Heights, and was raised in Houston. It's such a seller's market right now and the wholesalers are aggressive, it is been lots of work to find deals. Keep me posted. Good luck!
Houston, TX · Member since 2011 · 673 posts · 360 votes
9y
Our office is in the Heights actually @Luke H. small world!
Let me give you my .02 on the pros and cons of each of the methods you laid out there.
MLS-great source for deals, just like any other type of marketing you have to do it consistently to get results. The best results are usually had by people that have a laser focus on a certain zip code or neighborhood. Networking with agents that specialize in those areas as well. If you go the shotgun approach you are going to get worn out pretty quick.
HUD homestore/Auction.com/Hubzu ect. These all take making A LOT of offers with A LOT of follow up. Its a full time job to get deals consistently off of these and its a black box of communication and understanding.
Wholesalers-(Full disclosure my company wholesales) There are a handful of reputable companies that have a consistent flow of deals. I would focus on these companies, especially the ones that have a sales staff that get to know your goals. You can sometimes have luck with the little guy but a lot of times they dont have enough experience to know what a good deal is, and that pass that "not a good deal" on to the buyer. The biggest thing you can do there is make sure the company knows what looks like a good deal to you.
Direct mail - I know this works because we spend a lot of money on it. But remember as soon as you send out a batch of letters you are in sales. Taking leads, meeting with homeowners and negotiating on the property. No doubt you will find your best deals by doing your own marketing, but you will need to work for it.
I live outside of Houston in the Waller area and hoping to make my first deal. My sister is a real estate agent in the Clear Lake area and told me about a property that is off Market. The owner wants to sell. I'm looking for a Wholesaler to assign this property. This is my first time and frankly I'm nervous. If anyone is interested let me know. I'm diving in head first on this one. She knows the market and it looks good. I'm going to work on analyzing it. I could also use a mentor. I feel that this could be an excellent BRRR property but would like to discuss it someone.
Denver, CO · Member since 2016 · 69 posts · 41 votes
9y
@Sam Craven Thanks for your take on each of the different sources of deals.
The way I picture it is all of the deals that investors are buying to flip or rehab and rent fit on a pie chart, and the different slices of the pie grow and shrink over time based on current market conditions. And of course the overall diameter of the pie grows and shrinks over time too with the total volume. Some years the MLS slice is big, some years it's small, etc. In addition to the ones I listed, there is a miscellaneous slice too, from word of mouth deals, craigslist deals, and various others.
I think my best bet is to just pick one or two focus areas and ignore the rest for now. I don't think I'll be getting into direct mail right now, so that's an easy one to put aside. Focusing on the biggest slice of the pie based on current local market conditions could make the most sense but probably any of the methods would work.
(By the way, I've listened to your two podcasts and enjoyed them both!)
Houston, TX · Member since 2011 · 673 posts · 360 votes
9y
Your take on the pie is correct, but what you should consider as well is that in Houston that pie is ENORMOUS!
I have helped a lot of people get started, doing all kinds of marketing and acquisition methods. What i have learned is the best marketing method is the one you pick to do most consistently.
Your criteria is spot on with the criteria I'm looking for in Houston (sorry - looks like we both have more competition)
That said, as I finalize my goals for 2017, a lot of the rental expansion is targeted for Houston and I'm really interested to see what approach you end up taking. I'm currently on my first Houston rental and it came from the MLS!
Houston, TX · Member since 2016 · 51 posts · 8 votes
9y
@Nick S. If you are looking for SFH with great price to rent ratios, you will probably need to look at properties below $200k, maybe even $150k. I have heard a lot of great strategies specific to Houston from Jason Bible on Right Path Real Estate. He has a radio show and podcast that I listen to in the car to work. The areas I am focused on are South 59 and between 290 and 249.
Rental Property Investor · Baytown, TX · Member since 2008 · 94 posts · 21 votes
9y
@Mercathea Hughes I'm looking for deals in Baytown. If you come across a distressed property and would like to wholesale it send it my way. I'm really focusing on the older areas of town.