Hello everyone, I'm currently at the beginning stages of buying my first rental property in Houston. We've just placed an offered on a property that has tons of potential and is in a great location in my opinion.
I've absorbed the information of 4 bigger pockets books within the past month and a half, have been watching my local market, running numbers, and I feel that I've landed on a deal.
Do ya'll have any advice for a new investor regarding this process, what to look out for, what questions to ask?
Thanks to all!
I’m a beginner investor as well. But from what I’ve read and understood. The initial analysis of any rental/multifamily is one of the most important things. Perhaps if you post your analysis and area it’s in, some of the experts around Houston can comment and newbies like you and I can learn from their comments!
Congrats on taking initiative! Most people don’t even get that far
Here are the details
Built in the 1950s, bungalow style home, pier and beam. 2/1 main house, 1100 sq/ft with a 2 garage/apartment in the back, 700 sq/ft, 17,500 sq/ft lot. 3 car carport in front of garage. Both structures have their separate utility meters.
The main house was leveled in 2003 so that will need to be taken care of; 4.5k. 1.5k for drywall repairs after the house is leveled. Majority of the house has wood flooring that looks great, just needs refinish; 1.5k. The kitchen needs new flooring. Both structures need exterior paint; 5.5k, only main house needs interior paint; 1.2k. The roofing should looks like it will last a few more years; 8k. Appliances for both units; 2.5k
I placed a bid last Wednesday and the buyer accepted another offer. Got a call from my real estate agent this morning saying that the buyer backed out of the deal. Buyer hadn't even gotten the house inspected, never even saw the house.
I used the 4 square method to estimate a monthly expense of 1150 a month. Accounting 1800 income per month from both units, 1100 from main house, 700 from garage apartment. It may be possible to get more for main house.
I'll be putting 6,750 down and financing 156,500, 128,250 for mortgage and 28,250 for repairs.
@Rolando Paz Congratulations!
Just curious, how are you only putting down only 5%, is this a privet loan?
Make sure you have all your cost including CapEx in your numbers.
What to look out for on the renovation side:
Electrical: have an electrician check the electrical. The last house I renovated was a 1955 pier and beam and the electrical was a rat’s nest, had to install a new panel and 1/2 the wiring.
Plumbing: scope the main lines to make sure there are no obstructions and check for water leaks. Water leaks can be costly especially if you are paying the bill.
Asbestos: Check for asbestos. Flooring tiles, siding, insulation, etc...
Lead paint: Anything build before 1978 could have lead paint.
I have never hit our renovation budget, it’s always been over because of hidden issues found during renovations. I would take you renovation budget and bump it to 36k. (You can thank me latter) :-)
Keep us posted, look forward to your success!!!
@Rolando Paz are the rental rates you're assuming the current rental rates or market rent?