My first MFH (4 unit) in Houston I want to purchase - review #s? (in HOA)

7 Replies

Disclaimer: I'm new to real estate investing (this would be my first property) - but I've spent a lot of time reading and researching.

I have a 4 unit MFH under contract, which I'm considering purchasing, and wanted to get a second set of eyeballs to ensure I'm not overlooking anything. For anyone that knows Houston, the property is near Westheimer and BW8, just a bit west.

Purchase price: 150,000

4 units, all filled. Average rent $750/each, this:

Gross monthly income: $3,000

Property in reasonable condition, no repairs needed.

Property Taxes: ~$3500

Monthly expenses - ~$810 - this includes $700/month HOA

Cash flow, with a 30 year mortgage, is ~$1k, which gives a ~40% cash on cash return.

note: the $1k above doesnt account for the 50% rule. It'd be less with the 50% rule if HOA is accounted for.

How does the above sound? A few questions/feedback I'd love to get:

1. Anyone familiar with the area? I live in Houston, but not sure of the specific area

2. What can I expect closing costs to be? (I'm a newbie investor)

3. Anything I should consider?

4. How do people rate the deal?

Thanks

@Steven Rogers

To find out about an area go to IREM.org search for ARM certified property managers. Call 5 ask them what sides of the city they like/dislike and why. Ask what they see them selling for and what expenses are by category. Ask for market occupancy and rents. Ask if they know anything coming up for sale.

@Steven Rogers  

 That area isnt to bad. Within a couple miles of that area you will find 300-400,000 dollar homes (and higher) and is close to what we call "The Energy Corridor" which is where a lot of oil and gas companies have set up shop. Halliburton, BP, Phillips 66 to name a few. Hope this helps.

HI @Steven Rogers  ,

The deal sounds pretty good. If you look at your cash on cash return, its actually a decent deal. Best way to always look at deals is your cash on cash return.

1. Anyone familiar with the area?

Area is pretty good. Good working class area.

2. What can I expect closing costs to be? 

I always shoot for about 1% or purchase price.

3. Anything I should consider?

Property management cost.

4. How do people rate the deal?

It sounds like a decent deal to me. 

Hope it helps,

Andres J.

Sounds like a solid deal in a great area. Depending on your financing and whether or not you are paying for survey and title, I would estimate closing costs to be around $3k to $4k. What does HOA cover, anything besides amenities? Great Find!

Why is there a HOA fee on 4 family property?

I would like to see a detailed list of your expenses. Does the $810 include, the taxes listed above? Insurance? Utilities? Etc

Assuming your numbers are accurate, it sounds awesome. 40% COC return and it meets the 2% rule and it's not a slumlord property! Cool.

Now -- are your expense numbers comprehensive and accurate?

@Steven Rogers   I know the deal you are talking about. But you need to ask if individually metered and what are the insurance costs. Ask the seller for financials on the properties before buying and double check expenses. 

I don't think insurance is included in HOA.

Property management cost?

You may be paying utilities also which will really change your numbers.

I don't think deals like what you are showing exist in Houston and on MLS.. I could be wrong but most houston deals on MLS are 6-12%CoC, be careful, a deal like this would be gone the day it is put on MLS at 40% CoC

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