Advice for a newbie in Houston

New to Real Estate · Houston, TX · Member since 2020 · 9 posts · 8 votes

I recently graduated from Sam Houston State and started my career. I am wanting to start real estate by house hacking in/around the Houston area. I'm waiting to buy until I'm close to being out of my current lease in February. I feel this is my best way since a lot of people consider house hacking to be REI on training wheels. What's some advise you'd give someone my age who is wants to get into real estate investing? Maybe something that you wish someone would have told you or something you feel is important in the Houston market.

Also, I'd love to connect with anyone from the Houston area! I need some REI friends, all of mine just don't have the same kind of mindset.

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Megan Hodges

Rental Property Investor · Houston, TX · Member since 2018 · 40 posts · 26 votes

@Joe Scaparra @Cheyenne Gamangasso

I agree with Joe but wanted to add that there is a rehab loan called a 203k which allows you to use it for buying and renovating a property. You can purchase a foreclosed property, ideally a duplex. If you do it right that's automatic equity because foreclosed properties are being sold for what's left of the loan- not market value. Run you're numbers right on how much of the 203k loan you are willing to bid with and use the rest of the loan to renovate the property. Because it's an owner occupant loan you would be required to live in it for the year so rent out the other unit and any extra bedrooms in your unit. That will bring your cost of living down to nearly nothing which allows you to build more capital for your next purchase. Once you've seasoned the loan for 6 months you can cash out refi and considering you probably bought the property way under market value (if you buy a foreclosed property) and then used the rest of the loan to renovate it (adding value) the equity on that cash out should be way over 2-5% Cash on cash ROI which is an extremely successful first investment and will undoubtedly lead the way to snowballing your investment portfolio!!

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Josh Caldwell
Investor · Dallas TX, United States · Member since 2014 · 1k+ posts · 1k+ votes
6y
I really like house hacking but it is one deal. Granted, that deal will pay for you to have a place to live, but then what? I usually advise new investors to learn how to wholesale. At it's simplest core, wholesaling is getting paid for real estate that you don't want to buy. Imagine if the dating world worked like that, imagine getting paid for the contract info of people you weren't interested it, how wonderful would that be?
Wholesaling gives you the foundation to get into both flipping and rental property. You have to learn how to find, evaluate, negotiate, and market properties. The most important part is that you get good at hunting for bargains. That will serve you well for the rest of your life.
1 Reply
Tyler Brantley
Member since 2020 · 20 posts · 4 votes
6y
@Josh Caldwell how can I learn more about whole selling and getting my feet wet. I’m a soon to be medical traveler and I want to learn how to wholesale on the side while I save up capital to buy rentals. Thank you.
0 Reply
Josh Caldwell
Investor · Dallas TX, United States · Member since 2014 · 1k+ posts · 1k+ votes
6y
There are two ways that you can learn about wholesaling. You can spend your time reading about it right here on BP.

0 Reply
Ethan Perry
Minneapolis, MN · Member since 2019 · 54 posts · 53 votes
6y
@Cheyenne Gamangasso
I’m only a couple of steps ahead of you and by no means an expert, but due to obvious reasons, house hacking seems to be the way to go when starting out. I recently bought my first property and am currently looking for roommates. I think the best things that you can do between now and when your lease expire are 1) keep educating yourself (podcasts, books, etc), and 2) network. Spend lots of time talking to investors/homeowners to see if they have realtors or lenders that they can recommend. I got both my realtor and lender via referral and they both made the process SO much easier and less stressful for me than it otherwise could have been. I’m still a rookie as well but let me know if you have any other questions. Best of luck!
1 Reply
Jessie Cruz
Specialist · Overland Park, KS · Member since 2018 · 58 posts · 30 votes
6y
It's always a good idea to educate yourself to find all options of the real estate business so you can find the right choice for your needs/desires.
Wholesaling is my first choice to learn more about as it seems the least complicated for a newbie but I'm still looking at all the choices. I do want to recommend that once you find the avenue to start in, you find a reputable mentor. I've purchased training programs and they were worthless without the experience of someone you can trust to help you learn the right way to do it and avoid major mistakes by the do-it-yourself method.
1 Reply
Vijaianand Thirunageswaram
Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
6y
@Cheyenne Gamangasso I am so excited to see many college grads wants to jump in to real estate while they are just their first job or finding one. It's good you all wanted to start early. I want my son who just went to high school to have license when he is ready for college and start working on deals. Anyway, it might seem easy to start with wholesaling, it's not that easy unless you are willing to do hard work. Wholesaling is called sweat equity for reason. You need to do door knocking and drive for dollars to find deals. It's so competitive in the current Houston market, so many wholesalers already competing each other..
I don't want to discourage but make your decision which strategy is better for you and have a plan and start working on it and learn from your experience and mistakes. That's the key.
2 Reply
Cheyenne Gamangasso
OP
New to Real Estate · Houston, TX · Member since 2020 · 9 posts · 8 votes
6y
@Vijaianand Thirunageswaram
I completely agree. I've learned about pretty much every way you can make money in real estate. I have a full time job and don't see myself doing wholesaling at any point soon. Maybe once I've done enough investing that I want to leave my job (I know that's not anytime soon) I could wholesale to supplement what I make off of my investments. I would actually have the time to do it. I am very interested in BRRRR and just doing buy and hold. Possibly flipping once I'm more experienced. I'm not sure, but I definitely think house hacking is definitely the best starting place for me. I'm super excited!
0 Reply
Rolando Rivera
New to Real Estate · Houston · Member since 2019 · 11 posts · 8 votes
6y
@Cheyenne Gamangasso that is the same goal I had. I wanted to find a place to house hack before my lease was up. I closed on July, and my lease finished last month. Do you plan on getting a duplex or single?
0 Reply
Anne Nguyen
Investor · Member since 2020 · 15 posts · 4 votes
6y
I've been in REI journey in houston last 2 years. Soaking as much REI & BP knowledge. Got my first hiuse & plan to Get a rental in 2021. Would love to connect.
1 Reply
Larry G. Freeney
New to Real Estate · Houston, TX · Member since 2020 · 8 posts · 2 votes
6y
Hey Fellow Bearcat!
I’m also beginning my TE investing journey. I’d love to connect if you’re available.
0 Reply
Cheyenne Gamangasso
OP
New to Real Estate · Houston, TX · Member since 2020 · 9 posts · 8 votes
6y
@Rolando Rivera I’m hoping to get a duplex or maybe even bigger like a four plex. And congrats! How’s that going for you? And where did you end up buying?
0 Reply
Cheyenne Gamangasso
OP
New to Real Estate · Houston, TX · Member since 2020 · 9 posts · 8 votes
6y
@Larry G. Freeney awesome!! How do you plan on starting in REI?
0 Reply
Jiji John
Rental Property Investor · Houston, TX · Member since 2020 · 14 posts · 11 votes
6y
@Cheyenne Gamangasso I am from Houston and just joined BP but I started my Real estate journey much before.
My advice about Houston market is buy whenever you see a reasonable deal, rental market is really good compared to Austin or Dallas.(personal opinion).Just think about one simple logic someone is paying for your property.
You can buy new single family and exit once they are finished with that community and you will still make some margin if you select the right location.i have seen that in Missouri City and Sugarland area.
Buy newer homes so you don't have to worry much about repairs and btw repairs are cheaper than some other markets if you get the right people.
When you buy older homes foundation issues are the one killing your estimate so be aware about that and pay attention.
I did flipping/ rehab rental investment and owner financing . All these happened with my knowledge from the market and timing. I did lot of research whenever I had these opportunities.
I am happy that youngsters are getting into these simple trades with which you are seeding comfortable future. I am always open to sharing my knowledge in this market. I believe that's the best way to improve your knowledge.
2 Reply
Cheyenne Gamangasso
OP
New to Real Estate · Houston, TX · Member since 2020 · 9 posts · 8 votes
6y
@Jiji John
Thank you so much for sharing all of your wisdom! That was exactly what kind of reply I was looking for.
2 Reply
Daniel A.
Houston, TX · Member since 2017 · 35 posts · 6 votes
6y
@Cheyenne Gamangasso

House hacking is a great way to start! I am doing so in Houston inside the loop and it’s worked out better than anticipated. It’s a good way to secure a primary mortgage on a potential future rental. I’m a realtor in the Houston area and can help you with the search. I can also split my commission and contribute it directly to your closing costs!

Danielwwrealty AT gmail.com

0 Reply
Joe Scaparra
Investor · Austin, TX · Member since 2013 · 680 posts · 1k+ votes
6y
@Cheyenne Gamangasso, Ok here you go, I am about to give you the best advice a new college graduate can hear!

Forget buying a home/house/condo/townhome! Yes forget about it, and in fact treat those properties as properties you MUST avoid!

Ok, now that I have your attention and probably starting to hate my reply, let me get you back into feeling GREAT!

Save up for a downpayment on a DUPLEX. Small multi-family is where you should start. It is the least risk plan with the best cash flow. Buy a duplex, rent one side out and if you want to live for free, rent one of your bedrooms on your side out! Now you are cooking with fire. After two years with the money you save just from not paying rent or a large payment on a SFH then your ready to buy your second duplex.

Depending on location and quality of duplex your rents should be in the neighborhood of $800-1200 a month! Your monthly expenses between $1400-2000. Say monthly are $1800 and your rent on one side is $1000 and you rent a room for $500, your monthly out of cost is $300. If you buy the same priced SFH your nut is still $1800 and you rent out a room for $500, your monthly nut is still $1300. By saving $1000 a month in a duplex x 12 months X 2 years equals $24,000 to help you buy your next duplex!

Graduate at 22 yrs old. Save for a year for downpayment (unless you have it now). At 23 yrs old buy your 1st duplex. Two= years later your second one. Your 1st one is now renting at $1000 X 2 for $2000 a month and your outflow is $1800 assuming no rent increases. Repeat every two years until you decide to buy that single family home when you are married and start having kids.

There you have it, the blue print to building wealth. Good luck and Cheers!
2 Reply
Zachary Ray
Investor · Tampa, FL · Member since 2017 · 589 posts · 251 votes
6y
Read as much as you can on this site. It is very helpful for all aspects of real estate. House hacking will immediately throw you into learning about property management. Be sure to cover yourself with insurance. Follow local laws and screen accordingly. Once you get a strong tenant in be sure to enforce the rules. Best of luck to you!
1 Reply
Vijaianand Thirunageswaram
Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
6y
@Cheyenne Gamangasso Wow! I see lots of people sharing their wisdom and trying to boost your moral. I am sure you are pumped up. I like what @Jiji John and want to re-insist the point again, you cannot just sit aside and keep learning. You gotta get the courage and JUST DO IT. I know it's nike slogan but it works all the time. Whether you win first time or lose but you still win by learning from that mistake.
I see from your reply you don't want to do wholesaling but want to try doing house hack. House hack is good concept which many new BP investors want to try out. Whether it really pans out good for everyone and especially is it good strategy in Houston, that's relative to many other criteria. If you researching many post, whoever have done it mostly done it inside loop or close to downtown. It doesn't make sense in suburbs and don't work out unless you have friend who want to share the house /room with you already. So decide on the area or location where you want to get the house and see whether market will support it. If you are trying to do in suburb, won't work. Even in some parts of town, it's not great strategy.
All the best!!
2 Reply
Brian Alfaro
Multifamily Syndicator · Houston, TX · Member since 2018 · 188 posts · 192 votes
6y
Best piece of advice I can give you @Cheyenne Gamangasso is don't wait! I wish I jumped into REI right out of HS or College. You have a big competitive advantage over everyone - TIME. Don't waste it!
2 Reply
Susan Tan
Rental Property Investor · Houston, TX · Member since 2019 · 212 posts · 149 votes
6y
Im trying to find a single-family home in Houston to househack by renting out the other 2 rooms to long-term tenants. I'll have to hire a property manager in Houston to help me screen tenants and follow the leasing laws.
0 Reply
Ailson Agib Pereira
Houston · Member since 2020 · 3 posts · 1 vote
6y
@Cheyenne Gamangasso
Hey Cheyenne, I’m also live in Houston and a newbie , like you!
I’m in a phase of searching !
Good look for us !
Ailson
0 Reply
Kali Sampaga
Member since 2020 · 1 post · 0 votes
6y
Hi Cheyenne, I was doing this for the better part of two years and it allowed me to travel and be away without too much concern of managing affairs. I recommend documenting all interactions and making sure you have contracts even though they are just room mates.
Lay out rules in the beginning so you're not the only one cleaning up.
If I could go back I wish I had went for a 15 year loan instead of 30 since the monthly rent I collect almost doubles my mortgage payments. Some things you will also learn as you go ! Feel free to contact me for any questions!
Hers my handle if you'd like to connect ! @kaliparissa
0 Reply
Stephanie Anguiano
Insurance Agent · Houston, TX · Member since 2019 · 2 posts · 0 votes
6y
Hi Cheyenne! Congrats on graduating!! Have you read the new book "The Only Woman in the Room" by Ashley L. Wilson? I highly recommend it - so many different success stories and how they started. I will be buying my first investment property in the Greater-Houston area in late December - or sooner (hopefully)! We should totally meet up for some coffee or drinks! I also have the same issue where a lot of my friends don't have the same mindset!
0 Reply
Megan Hodges
Rental Property Investor · Houston, TX · Member since 2018 · 40 posts · 26 votes
5y
@Joe Scaparra @Cheyenne Gamangasso
I agree with Joe but wanted to add that there is a rehab loan called a 203k which allows you to use it for buying and renovating a property. You can purchase a foreclosed property, ideally a duplex. If you do it right that's automatic equity because foreclosed properties are being sold for what's left of the loan- not market value. Run you're numbers right on how much of the 203k loan you are willing to bid with and use the rest of the loan to renovate the property. Because it's an owner occupant loan you would be required to live in it for the year so rent out the other unit and any extra bedrooms in your unit. That will bring your cost of living down to nearly nothing which allows you to build more capital for your next purchase. Once you've seasoned the loan for 6 months you can cash out refi and considering you probably bought the property way under market value (if you buy a foreclosed property) and then used the rest of the loan to renovate it (adding value) the equity on that cash out should be way over 2-5% Cash on cash ROI which is an extremely successful first investment and will undoubtedly lead the way to snowballing your investment portfolio!!
3 Reply
Matthew PorcaroBusiness Member
Lender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
5y
@Megan Hodges
Megan knows what’s up!
The 203k loan is the best way for a beginner to build quick equity in this game.
I bought my first duplex for 270k, wrapped the 80k renovation costs into the mortgage for a loan total of $350k
After renovating I had $130k in equity, (it was worth 480k when I was done) and lived for free in the meantime by renting out the other unit.
If you have any questions specifically about the 203k reach out!
Matt
The 203k Way
Website View Page
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