Investor · Harlingen, TX · Member since 2021 · 50 posts · 28 votes
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Harlingen.
Purchase price: $198,000 Cash invested: $198,000 Sale price: $215,000
Duplex built in 2008. $215,000. Currently both units occupied at $750 a month.
What made you interested in investing in this type of deal?
Harlingen is growing and properties are going for sky high prices (for the area). I know in a few years I will be able to raise the rent the value of the duplex will have increased by at least 10 - 30 %. I'd say that is a nice return.
How did you find this deal and how did you negotiate it?
Rental agent.
How did you finance this deal?
All cash. No financing just yet but I will in a few years.
Lessons learned? Challenges?
Need to start looking for properties that are a value, upgrade them and then hold as rentals.
Grandview, TX · Member since 2017 · 143 posts · 79 votes
5y
I think you should consider your risk. You put up or risked 198k to make 1500/mo and you are hoping that prices continue to rise. What happens if the government decides to place a moratorium on evictions or caps the allowable acrual of properties? There are a million other things that can happen that are less far fetched. The renter burns the property down and the smoke detector wasn't found. Finally, I purchased a property for 65k that has already rented for $1200/mo and will spend maybe 10k out of pocket to get it done. If any of the things happen discussed above I'm out $10K. How do you like your deal now? I have numerous properties in the valley and I assure you I can find others like the one described above. I found it driving by it to get to another property that I was finishing a remodel on. I don't think anybody wants to stomp on your success least of all me. I would however like to point out that there are many points to consider but the primary thing to remember Is you make your money when you buy the property. That phrase needs to be in bold print and repeated often. Goodluck
Mcallen, TX · Member since 2019 · 55 posts · 41 votes
5y
Hello, @Jesse Flores is this your first deal? If so congratulations! Have you heard of the 1% rule here on bigger pockets? It basically says that if rents are $1,500 then your purchase price shouldn't be more than $150,000 so you can be more profitable. It doesn't work everywhere but here in the valley, it worked for me in Pharr, Texas. Best of luck!
Yes I’ve heard of the 1% rule and there is actually a 2% rule also but i digress. I understand I can go to the McAllen, Pharr, Mission or Edinburg area and do much better. For some reason I have not been able to find a good enough deal here in Harlingen. Been at it since November. I am buying with tenants in place and generating the $1,500 from day one. If you bought your place from day one and have been doing the same then I applaud you and would like to see if we can chat and we can figure this thing out. Please let me know how you got your deal done. Any advise greatly appreciated! Thanks and best regards...Jesse
Mcallen, TX · Member since 2019 · 55 posts · 41 votes
5y
MLS last October. 4 plex in Pharr, Tx (first ever real estate investment). Purchase 270k but really 267.5k (after seller concessions) with a mortgage. Total rents were $2925 monthly initially. With some much-needed maintenance and a new tenant, my rents are up to $3020/mo total. I'm still not quite to market rent either but I like the tenants and will slowly keep upping the rents every year or so to get the rents where I need them to be. The tenants are fine with the rent increases since they see how much better the property looks and is managed. This should also lead to longer tenancy. Feel free to message me if you have any questions. Thanks
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
5y
@Jesse Flores ;) with enough equity, almost everything cash flows and your risk is very low. Congrats on your purchase. Any upside available in current rents as-is or with minor improvements?
Grandview, TX · Member since 2017 · 143 posts · 79 votes
5y
I think you should consider your risk. You put up or risked 198k to make 1500/mo and you are hoping that prices continue to rise. What happens if the government decides to place a moratorium on evictions or caps the allowable acrual of properties? There are a million other things that can happen that are less far fetched. The renter burns the property down and the smoke detector wasn't found. Finally, I purchased a property for 65k that has already rented for $1200/mo and will spend maybe 10k out of pocket to get it done. If any of the things happen discussed above I'm out $10K. How do you like your deal now? I have numerous properties in the valley and I assure you I can find others like the one described above. I found it driving by it to get to another property that I was finishing a remodel on. I don't think anybody wants to stomp on your success least of all me. I would however like to point out that there are many points to consider but the primary thing to remember Is you make your money when you buy the property. That phrase needs to be in bold print and repeated often. Goodluck
MLS last October. 4 plex in Pharr, Tx (first ever real estate investment). Purchase 270k but really 267.5k (after seller concessions) with a mortgage. Total rents were $2925 monthly initially. With some much-needed maintenance and a new tenant, my rents are up to $3020/mo total. I'm still not quite to market rent either but I like the tenants and will slowly keep upping the rents every year or so to get the rents where I need them to be. The tenants are fine with the rent increases since they see how much better the property looks and is managed. This should also lead to longer tenancy. Feel free to message me if you have any questions. Thanks
@Joseph Ryan ... NICE!. Yes, I would like to chat some time. Thanks for the info and this is my first buy but will still keep going. Next one will probably be a 401K self directed investment. Thanks again Joseph!
@Jesse Flores ;) with enough equity, almost everything cash flows and your risk is very low. Congrats on your purchase. Any upside available in current rents as-is or with minor improvements?
Hi Jill F.... I wish. The tenants have both just re-upped to a new one year contract. One in November and the other in January. I will be doing some minor improvements but that will be after 6 - 9 months. Then of course get a few more $'s from each tenant. Both are long term tenants and I don't want to them to leave but will also work with them. Thanks Jill F....Jesse
I think you should consider your risk. You put up or risked 198k to make 1500/mo and you are hoping that prices continue to rise. What happens if the government decides to place a moratorium on evictions or caps the allowable acrual of properties? There are a million other things that can happen that are less far fetched. The renter burns the property down and the smoke detector wasn't found. Finally, I purchased a property for 65k that has already rented for $1200/mo and will spend maybe 10k out of pocket to get it done. If any of the things happen discussed above I'm out $10K. How do you like your deal now? I have numerous properties in the valley and I assure you I can find others like the one described above. I found it driving by it to get to another property that I was finishing a remodel on. I don't think anybody wants to stomp on your success least of all me. I would however like to point out that there are many points to consider but the primary thing to remember Is you make your money when you buy the property. That phrase needs to be in bold print and repeated often. Goodluck
@Jesse Flores I like your attitude. Congrats on getting in the game, your game will only get stronger.
John D. - Thank you John. I will take any and all feedback. I will get stronger and will keep going. Lately I have been reading quite a bit of getting in touch with the universe (I know that is way out in left field but I find it important) and hope others here on BP can/will do the same. Of course, there are quite a bit of articles, e-books, books and you tube videos. I always like to quote Nikola Tesla... "If you want to find the secrets of the universe, think in terms of energy, frequency and vibration." - Find your frequency and vibration and the energy will come and the universe will help you find you what it is you are looking for. Sorry for going into left field out of the scope of BP but please consider it. Thanks again John and best regards...Jesse
Small multi-family (2-4 units) buy & hold investment in Harlingen.
Purchase price: $198,000 Cash invested: $198,000 Sale price: $215,000
Duplex built in 2008. $215,000. Currently both units occupied at $750 a month.
What made you interested in investing in this type of deal?
Harlingen is growing and properties are going for sky high prices (for the area). I know in a few years I will be able to raise the rent the value of the duplex will have increased by at least 10 - 30 %. I'd say that is a nice return.
How did you find this deal and how did you negotiate it?
Rental agent.
How did you finance this deal?
All cash. No financing just yet but I will in a few years.
Lessons learned? Challenges?
Need to start looking for properties that are a value, upgrade them and then hold as rentals.
A good asset in a good area plus a smidge of equity going in is a solid first deal.
All the 1% and 2% cf people would be shocked at my latest deal also.
In equity/more expensive markets, it's all about equity capture at the buy. The real money is made (saved) when you do this a while and there are less mouths to feed solo, off-market.
So no partner or lender? All your own cash? Congrats and please share how you made that happen!
Why not cash out refi right now and rinse and repeat? Your CoC will thank you for it.
@Nick Q. I am trying to cash flow for a bit and save the cash. Then go ahead and refi. I will definitely do at least one deal by the summer using self directed IRA and hopefully a third before the end of the year. You are right as I could probably do 2 to 3 more deals if I did it now. I'll definitely keep my options open! Thanks Nick!...Jesse
I would strongly suggest to not invest anymore money into this property, only necessary cap ex and R&M. If it's rented why do additional unnecessary improvements? At the current amount invested 198k and 1500 in income your sitting at .75%, even if you raise rents by 30% you wont hit the 1% marker and thats on the back end after operating it (your suggesting it needs improvements to get these rents?). Granted the 1% rule is very general and if you're in an expensive market you need to aim way higher. You seriously need to take a look at the opportunity cost of your cash. Also be VERY careful with inherited tenants.
I would strongly suggest to not invest anymore money into this property, only necessary cap ex and R&M. If it's rented why do additional unnecessary improvements? At the current amount invested 198k and 1500 in income your sitting at .75%, even if you raise rents by 30% you wont hit the 1% marker and thats on the back end after operating it (your suggesting it needs improvements to get these rents?). Granted the 1% rule is very general and if you're in an expensive market you need to aim way higher. You seriously need to take a look at the opportunity cost of your cash. Also be VERY careful with inherited tenants.
Maybe I wasn’t very clear. I will not be doing any improvements. The duplex is in very good shape for a 15-16 year old property. I’m thinking down the road when I raise the rent. I will not spend much either. Now the ‘inherited tenants’ got me thinking. Can you elaborate so the rest of us are enlightened? Thanks Christian and best regards!...Jesse
@Jesse Flores congratulations on your purchase. Just curious on why you didn’t finance it?
I just retired and was given a buyout and I also sold my home. I was living on that $ and had no income. That is the gist of it. No income. Now thinking about doing contract work part time. That should be enough so this doesn’t happen again. Thanks Jaquetta and best regards!...Jesse
Real Estate Agent · McAllen Texas · Member since 2018 · 188 posts · 186 votes
5y
@Jesse Flores Congratulations on your first deal man! Happy for you. Harlingen is a great place to invest and that exciting that you were able to get in on a multi family. We host a monthly investor meetup in the upper valley. Would love to have you come share about your investment and network with some guys that are also actively investing. Could be a great opportunity. Best of luck in the future.
Investor · Harlingen, TX · Member since 2021 · 50 posts · 28 votes
5y
@Boone Tyson that sounds good. I’d be happy to attend. Let me know details and my wife and I will attend (of course that depends on if her schedule is open - LOL). Thanks Boone. Keep me posted! Best regards, Jesse