First time home buyer - KB Homes

7 Replies | Houston, Texas

I am trying to buy my first home to live in for some time and then rent out in the near future in Houston, TX. I am looking into a 3,348sft KB Home that was built in 2012. It needs minor repairs (carpet changed, deep cleaning and paint interior). I don't really know too much about houses but a friend of mine mentioned that KB Homes is known for having poor quality construction, or at least in the past. I am trying to see if anyone knows more to this matter? I have tried doing some research but have found people that say that it's poor and others say that it's good. Thought maybe here I could get better answers. Also, if anyone knows an estimated amount for the repairs this house needs could you please share. Thanks!

I see 3 different questions in your post:  1. reputation of the builder you reference, 2. condition of the specific property, and 3. estimated repair costs.

1.  I don't know.  If this is a concern, go knock on the doors of the neighbors in that neighborhood, explain who you are and what you are looking purchase, and ask them if they would be willing to share their experiences.  I know if a prospective buyer in my neighborhood came to my door, I'd be happy to chat for a few minutes.  Might be an easy (free) way to get some real world opinions vs internet chatter.

2.  My suggestion would be if you are satisfied with #1 above, put a house under contract (with an option period of course), then get an inspection asap.  For the cost of the option and inspection, you will have all the information you'll need.

3.  Based on the report from #2, call some contractors and get repair estimates. 

The above 3 recommendations is a very very small cost compared to the purchase price of a home.  But then again, I get the sense, based on your question, that there may be other hesitations in buying a house?

I might add one more consideration. You mentioned the property is >3,000 ft2. I'd consider that a large rental property (assuming it is SF). Larger homes can be OK but tend to take longer to rent. Also the more expensive homes can be good rentals also but realize that the higher up the "food chain" you get the more challenging it is to find qualified renters to put in your property. 

I'll leave you with this thought. After investing in Houston since the 90's, I'd rather have two $150,000 homes to rent than one $300,000 home 

@Ruth Escobar Account Closed both gave good insight how you should handle the situation. Lately I am seeing lots of new investors wants to be safe and trying to buy newer homes. It's nothing bad about it because they don't want to hit by capex problem by buying older homes. I get it but you gotta be logical when you invest money. You are in it for a good return and taking risk is necessary. If you want to play safe, I would rather not invest. Any investment like stocks, real estate, currency all has the risk factor involved. 

Do not buy bigger homes and in this current rental market it's going to be increasingly hard to rent them out. 
KB homes are not great builders, they are starter builders and use very low quality materials from my experience. They don't use great upgrades so you are not getting worth for your dollar. 

As brian said, I always invest in older homes and less than $150k to be safe and not invest on higher budget properties. You will get better return and risk is small as well. 

Hope this helps.

@Ruth Escobar good question ... let me put a bit of spin into all the great point that have been made here . For me 

1)  No builder makes good/bad homes ....Builder may have good/bad design SINCE almost all homes (60K to 10MM)  in Houston are being built by a group of very hard working team of people who are barely making a living. Quality of homes will depend on the SUPERVISOR  which is mostly LUCK ...  on that note brand of a builder should not matter (this is true mostly for large home builder NOT small builder in midtown/heights where Brand would matter) 

2)  Return on Investments should be risk adjusted. If we assume 1 out every 12 month vacancy for smaller houses then we should assume 1.5 months for a larges house . And if we buy right then , cash flow should provide similar return even after we change assumptions. And then you should stress test your assumptions to understand strength of your cash flow.   Account Closed i always try to do a P10/P50/P90 :) 

Just my 2 cents   

Hello @Ruth Escobar :

I have worked for large national homebuilders and small locals for a long time.

Regardless of the reputation of the specific national builder, the local team (community team, subs, etc.) can make all the difference. 

I would do a few things:

1. Check to see if the community (HOA or just individuals) have a facebook page. Many times any chronic issues with the homes will appear there in comments.

2. If there is an HOA in the community, go to the next HOA meeting. You may get some good info there, not to mention you can see if they are discussing any major infrastructure issues with the community that might affect your HOA fees (the roads need paving, a bridge or dam needs to be replaced, etc.).

3.  Focus on the home you might buy.  Walk it and see if anything stands out.  Get a home inspection and see what it reveals.

4.  And if you do buy, make sure the seller executes all the warranty transfer forms from the builder and manufacturers so that you are covered for by the warranties that are still in effect (structural, roof, windows, HVAC, etc.).

Best of luck,

Bob