Houston, TX- 5 Properties- Kevin Wood

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Houston, TX- 5 Properties- Kevin Wood

Kevin Wood
Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes

Followed the heading posting above. My 2nd post on this particular is not to ask for advice on a condo, but to share the first 5 properties my business partner and I purchased. All are located in Houston, TX. All are currently rented with the exception of one property where sale is conditional on new carpet, new paint, and rented. Not included here are holding costs at 8%. Insurance amounts are high. All costs are yearly. Here is a rundown of the properties operational costs. We have vacancy estimated at 8% and closing costs etc. :

#1 3 Bedroom 2 Bath

Purchase Price- $88,473

Rent Per Year- 12,806

Mortgage- 4287

Insurance- 500

Taxes- 1,914

Maintenance- 957

Management- 1,025

Miscellaneous- 1,000

#2 3 Bedroom 2 Bath

Purchase Price- $73,727

Rent Per Year- 10,113

Mortgage- 3,572

Insurance- 500

Taxes- 1,541

Maintenance- 770

Management- 809

Miscellaneous- 1,000

#3 3 Bedroom 2 Bath

Purchase Price- $93,388

Rent Per Year- 12,696

Mortgage- 4,525

Insurance- 500

Taxes- 2,056

Maintenance- 770

Management- 809

Miscellaneous- 1,000

#4 3 Bedroom 2 Bath

Purchase Price- $69,795

Rent Per Year- 6,996

Mortgage- 3,382

Insurance- 500

Taxes- 1,500

Maintenance- 729

Management- 795

Miscellaneous- 1,000

#5 2 Bedroom 1 Bath

Purchase Price- $58,982

Rent Per Year- 8,777

Mortgage- 2,925

Insurance- 500

Taxes- 1,287

Maintenance- 643

Management- 702

Miscellaneous- 1,000

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Steve RozenbergPro Member
Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
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I would be careful with condo's. Every time I have owned one and managed one we have had a few issues that we can not get around.

First, the HOA unless you can own the whole structure you can not control the HOA costs and they can go up anytime. I had 5 units I owned one time in Humble. When I bought them the HOA fees were $127 per month. After 3 years the HOA rose to 295 per month per unit. While this did not make it negative cashflow, it came very close. I was not able to raise the rent accordingly so my business model took the hit. When I investigated why they went up since there was no natural disaster and the place looked exactly the same as when I bought it they told me that since other people were not paying they had to raise the dues on the people that were. And basically since I was an investor in their eyes I had all the money and was S.O.L...

The other issue we have with condo units is they do not always allow you to advertise the property with signs, which makes local traffic basically nil to none. The access issue with  getting into those units is always tough for prospective tenants to view the place, as well as agents sometimes get denied access as well.

Lastly some complexes only allow a certain amount on non-owner occupied rentals so if you are coming in above that number they do not allow you to use it as a rental.

Again this is just my personal experience owning these types in the past as well as managing them. When people as our opinion of buying a condo I try to explain that they need to be ready for these types of issues and know what you are buying and the business model around that type of product.

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  • Amy Nguyen
    Houston, TX · Member since 2015 · 18 posts · 0 votes
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    Hi Kevin,

    Do you put 20% down to get the mortgage? What banker did you use? What are your rates?

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  • Kevin Wood
    OP
    Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes
    11y
    Originally posted by @Amy Nguyen:

    Hi Kevin,

    Do you put 20% down to get the mortgage? What banker did you use? What are your rates?

     We did conventional loans for four of the properties and used a mortgage lender. Our 5th property we bought with cash. For conventional there isn't going to be much variance in who you use as they all re-sell their loans anyway. You will see a lot of variance with portfolio lenders.

    0Reply
  • Trevor Rutherford
    Wholesaler · Dayton, OH · Member since 2013 · 172 posts · 16 votes
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    Did you have your own liquid capital for down payment money? Or did you raise it from investors?

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  • Kevin Wood
    OP
    Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes
    11y
    Originally posted by @Trevor Rutherford:

    Did you have your own liquid capital for down payment money? Or did you raise it from investors?

     We had our own money in capital.

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  • Trevor Rutherford
    Wholesaler · Dayton, OH · Member since 2013 · 172 posts · 16 votes
    11y

    @Kevin did you scope out a good property management co. before you bought, or after?

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  • Kevin Wood
    OP
    Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes
    11y
    Originally posted by @Trevor Rutherford:

    @Kevin did you scope out a good property management co. before you bought, or after?

     We property manage ourselves. I would highly recommend this early on as it gives you exposure to what that job requires and the type of requests that come in. My business partner's mom works part time for us as well to handle some of the day to day (4% of gross).

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  • Trevor Rutherford
    Wholesaler · Dayton, OH · Member since 2013 · 172 posts · 16 votes
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    @Kevin I own and manage 4 rentals in my Local market (do some of the work myself).   So Managing remotely, What do you do when a tenant calls about something like a plumbing issue at an odd time of the day.  Toilet ext. Or here's a good one, you require them to cut the grass and they don't and you get a notice from the city and you are over a 1000 miles away.  

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  • Kevin Wood
    OP
    Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes
    11y
    Originally posted by @Trevor Rutherford:

    @Kevin I own and manage 4 rentals in my Local market (do some of the work myself).   So Managing remotely, What do you do when a tenant calls about something like a plumbing issue at an odd time of the day.  Toilet ext. Or here's a good one, you require them to cut the grass and they don't and you get a notice from the city and you are over a 1000 miles away.  

     I have two local people on the ground (business partner and his mom) so I am lucky in that regard in that I am most often just offering my opinion. If I was in your shoes would 100% pick a property manager. The way I would do it is ask some of the mentors I have met in the area about who they recommend. We have a guy we use for general maintenance that does good work for us and pay him with Chase QuickPay. I'm no expert on remote management, but everyone I know and read recommends having someone on the ground.

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  • Trevor Rutherford
    Wholesaler · Dayton, OH · Member since 2013 · 172 posts · 16 votes
    11y

    @Kevin Wood Do you make you tenants on SFH pay their own water and if so, How do you enforce it?

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