Architect · Houston, TX · Member since 2016 · 81 posts · 25 votes
Hi Houston BPers,
My wife is interested in investing in Katy in a newly built SFH. What is the rental market like for SFH in Katy right now? I heard last year it was the largest number of renters in Houston. Is that true? I'm just not that in tune with single family now since I've been focusing on multifamily and in other areas. What are your thoughts on investing in a new build house in Katy for rental?
Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
9y
Investors can pay retail any day of the week simply by searching the MLS. When you buy a new build, you're buying at "HIGH" retail which means you're speculating, not investing. Depending purely on appreciation as an investing strategy at this point in the economic cycle likely won't end well for your wife. Not being critical...just honest. I've lived through 2 market corrections and things are eerily familiar right now.
Investor · Berkeley, CA · Member since 2016 · 242 posts · 304 votes
9y
I have owned a SFD rental property in Katy for over a decade. The rental market is very strong, not a bad area to invest. Why would you buy a new build home when you can try to pick something up that is newish and try to get a good deal?
Investor · Cypress, TX · Member since 2016 · 170 posts · 139 votes
9y
Major job growth in the area. Fedex and Amazon announced major builds/expansions that will bring thousands of jobs to the area. Katy is a great area for rentals. HAR (Houston Association of Realtors) report out for May and the Houston area is breaking records for both sales and rentals despite 2 years of Oil & Gas industry shedding jobs. Houston employment at it's highest in history.
Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
9y
Investors can pay retail any day of the week simply by searching the MLS. When you buy a new build, you're buying at "HIGH" retail which means you're speculating, not investing. Depending purely on appreciation as an investing strategy at this point in the economic cycle likely won't end well for your wife. Not being critical...just honest. I've lived through 2 market corrections and things are eerily familiar right now.
Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
9y
The Houston market sounds over heated to me... many other markets in the USA are red hot at the moment.... make sure you get a good deal and make your money when you buy @Account Closed.
The Houston market sounds over heated to me... many other markets in the USA are red hot at the moment.... make sure you get a good deal and make your money when you buy @Account Closed.
Unless you want mediocre investment....
Plenty of good deals in Houston. I just bought a 30 unit in a "hot" area of town (A area, Montrose), paid under $70k/door for $850/month rents. Outside of this A area I can still buy $35k/door stuff renting for $600
Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
9y
Greg,
Broad question. There are always deals and always solid rentals, you just have to know where to look and buy right.
We own 12 SFRs in Katy and they perform very well. Although I haven't see a turnkey investment that made sense for us. Your goals may be different. Does your wife want cash flow from the property? Appreciation? To learn about property management? Start there and then begin looking for investments that fit what you're trying to do.
Architect · Houston, TX · Member since 2016 · 81 posts · 25 votes
9y
@Ori Skloot My wife wants to buy new because some of the new builds are about the same price as buying an existing property and renovating it. We postulated the capex and maintenance on a new is minimal (I could be wrong). As others have said, Houston and Katy is hot right now, everything is getting snatched up fast.
Architect · Houston, TX · Member since 2016 · 81 posts · 25 votes
9y
Thanks for the tips everyone! I think we'll have to rethink our strategy. I've been telling my wife that we just need to do some comps and calcs to see if a new build even works. But alas, she's strapped for time with our family but wants to get in the game, thus turnkey seems more viable. We're looking at apartment syndications as well as investments since it's a pool of people to look over the deals.
Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
9y
Yes @Cody L. that's what i was asking. around 14.5% gross income on unit cost can go down pretty fast if you spend 5k per unit re-positioning and pay for the utilities etc.
Saying that if its A area and MF go for low cap rates so sounds like you have some equity there.
Hard to get fool picture of a deal without knowing the actual numbers, but as long as its good for you that whats counts.
I see you are from San Diego, can I ask how did you buy it? ie. via agent or off market etc...
Real Estate Broker · Cypress, TX · Member since 2013 · 822 posts · 468 votes
9y
I just leased up a Katy rental for a landlord client of mine, and it took about 45 days. Granted, we were super strict on our criteria and rejected several dud applications, but just be aware homes aren't renting as quickly here as in years past, unless you relax your criteria, which I wouldn't suggest.
Yes @Cody L. that's what i was asking. around 14.5% gross income on unit cost can go down pretty fast if you spend 5k per unit re-positioning and pay for the utilities etc.
Saying that if its A area and MF go for low cap rates so sounds like you have some equity there.
Hard to get fool picture of a deal without knowing the actual numbers, but as long as its good for you that whats counts.
I see you are from San Diego, can I ask how did you buy it? ie. via agent or off market etc...
Thanks. I've done enough of these deals to know that if I'm paying less than 100x monthly rent, the rest will fall into place.
I buy via brokers most of the time. I wouldn't call them "off market" because you have to define what's "on market". If a major broker is blasting it out and has it on their site, that's pretty much 'on market' even if it's not on MLS or Loopnet. To me off market is if a broker sends me a deal and it's not via BCC. But anyway. To answer your question, mostly via brokers I know that send me stuff, but sometimes I'll call a targeted owner or look on loopnet.
Investor · Cypress, TX · Member since 2016 · 170 posts · 139 votes
9y
As for the Houston Market being "overheated"? Possibly, but it could also be that difficult decisions made back in the 90's to attract other industries and diversify the economy and the population have worked very well and built a solid foundation that continues to attract job seekers and improve the area. Check this out:
Houston ranked 7th in a recent list of America's 50 best large cities. I don't take these too seriously but if you're interested in why the Greater Houston Area is growing so rapidly it is worth a read.
Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
9y
@Account Closed You got your verdict already from various experts. My 2 cents, new home might be less of a pain when it comes to capex but you are buying it high and need to find real good tenant to rent out and take care. Otherwise after 2 years, it's going to trashed and you will feel like damn why did I buy a new house to get trashed like this.
Yes, you don't have to worry about AC, roof or heater at that point but still need to rehab and rent it out. It same case if you buy decently upgraded property and you can make return worth it by cashflow or appreciation quickly not waiting for long. Think about it!!
No more new houses in real katy, it's all Fullshear, Berkshire and they are getting expensive. I work with new home buyers too but it's getting far for Downtown commuters. You need to look for better homes Elridge and I10N and 99 area and invest wisely.
Investor · Austin, TX · Member since 2017 · 14 posts · 2 votes
9y
Harsh Guy. I've bought two new construction homes in the past 8 months and get $300 and $500 cash flow in Kyle and New Braunfels. New homes will get a higher rent.
Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
9y
@Ken F. Not all the places and not all the time my friend. It depends on varies parameters. That's the thing about Real estate which you know.. Every market is different.
West palm beach, FL · Member since 2016 · 36 posts · 5 votes
9y
Am I the only one that thinks something is not right with Houston RE market?
The big money and big salaries are in Oil and Gas which does not hire anymore. In fact they seem to layoff alittle
There is job growth but most of them is in Healthcare where most jobs pay less than $50K
Instead of all these negative factors, Houston population is still going up but I am not seeing the purchasing power in new comers. 10 years ago new comers were to be employed in oil and gas with higher than average salaries. Nowadays new immigrants in Houston are mostly from South America with no skills and income at all. Mostly from Venezuela, Mexico and Cuba.
So I am not sure how this growth in Real Estate is sustainable? One caveat is that there is too much money flowing from China. A real estate agent told me last year that one third of all transactions in Sugarland is cash money from China.
I once met someone from Venezuela who was a Spanish teacher in HISD and she arrived from Venezuela 2 years ago. I asked her why she choose Houston over Miami for obvious reasons. She said Miami is way expensive and the new destination for Venezualeans is Houston. She also added in her school only in the last 2 weeks 13 Venezuelan kids registered. (probably on a tourist visa or illegal)
Is this growth sustainable with no good jobs and with all these poor people and low salaries? I don't think so...
Investor · Cypress, TX · Member since 2016 · 170 posts · 139 votes
9y
@Matthew J. You might be right, perhaps Houston is not a good place for YOU to invest. Don't buy anything along the new Grand Parkway on the Northwest side of town, it probably will not work for YOU. Don't buy out in West areas like Katy where Amazon and Fed Ex are investing $millions because it will not work for YOU. Houston growth is just a fad (for the last 25 years) and it can't be sustainable. Whatever you do, don't actually study the Houston economy or listen to anyone who has been living in and investing in the area for decades. Just keep interviewing Venezuelan immigrants (although there are actually immigrants from all over the world moving here in record numbers you could talk to) and base your investment strategies on that.
Apologies for the sarcasm, you wouldn't be one of the laid off Oil & gas workers by chance? If you are, This is temporary , again read up on your history and you will see that the O&G industry has been here before and it always comes back too.
Spring, TX · Member since 2016 · 243 posts · 203 votes
9y
@Matthew J. I work in the Oil & Gas Industry and our company has grown about 5x in the last 3 years, so I wouldn't say that nobody is hiring and there is only layoffs.
Also, could you provide facts to back up your claims that most health care jobs pay less than 50k? Outside of low level admin jobs, I'd assume that all the doctors, nurses, etc make far more than 50k.
Spring, TX · Member since 2016 · 243 posts · 203 votes
9y
For fun I compared the Houston area Housing Index to the global crude prices. Below is the last 10 years:
I have seen countless posts about how how our market has been declining, with zero facts to back it up. I realize that the HPI isn't some perfect number to prove people wrong, and oil prices didn't necessarily cause this. Just interesting to see on a chart that these two, over the last three years in Houston, appear to be inversely related.