All Forum Posts by: Adam D Rinehart

@Emanuel Morales the TREC sellers disclosure requires previous floods to be disclosed to potential buyers. There will also likely be a record of the Harvey damage/loss in the insurance databases which might require you to carry flood insurance going forward. It may not be an issue if you’re renting the house but it could be problematic when you go to sell. Be sure to get a thorough inspection and request an itemized remediation scope of work that was done. Verify all mold was removed and that none is present.

Condos and SFR homes typically appeal to different demographics. Condos typically don't have backyards and can have animal restrictions which make them less appealing to families with young children.

Hard money lenders will almost never lend 100% of purchase and rehab. Most will go up to 80% of purchase price and 100% of rehab costs, not to exceed 70% of ARV. The rehab costs will be released in draws after you've provided proof of the rehab work done. Getting the maximum from a hard money lender will be tough given your age and lack of experience rehabbing houses.

Flood houses are tough because of the stigma they carry makes them very difficult to exit via sale. I’d pass on it as a first deal.

@Lance Stahl I'm currently doing a blanket mortgage with a portfolio lender for my 3 properties. They are all SFH so it's based off comps for value but they will consider the rental income in my ability to pay the 70% LTV note in addition to my W2 wages. Watch out on the rates and terms though because it will be commercial and likely based on prime + with a 20 year amortization and some sort of ARM.

@Brennen Cook I wouldn't rely solely on what the CCR's say in this situation. I'm not versed in your local development ordinances so I'm only going off what what I've seen in other states. First thing I would check is the subdivision plat to see if any restrictions were placed on lot development when it was recorded. Since most homeowners don't get a copy of the subdivision plat at the time they close but will be given the deed restrictions, the CCRs will include some of same pertinent language so no one can claim it wasn't disclosed to them. If there's no language on the plat prohibiting what you want to do, I would attempt to replat the lot under the new zoning designation. If that's allowed or not will determined by the planning department during review of your application.

Well, my current investment path is a mix of a duplex, a single family home, and a single family home as a student rental. Currently, the commercial retail sector is attractive to me for the large nature of the deals and high returns they bring. But I'm not sure this model is sustainable or viable over the next 10-15 years as Amazon and Google start to grab more market share of retail purchases away from store front businesses. I think the catalyst and ultimate death spiral for the current model will be the FAA granting nationwide approval of drone deliveries of online orders that get delivered within 1-3 hours of ordering. When this happens, I'd like to be in position to develop industrial parks where inventory gets trucked in, warehoused on site, and then sent out for drone delivery. While the site function is very different the overall framework is similar with numerous large buildings on a large tract with multiple companies leasing storage and delivering from the same location. I could easily see Wal-Mart having a warehouse next to Amazon or Target. Still retail, but maybe more on the industrial side than commercial under that scenario.

I just barely made the age cut! Whew, I'm glad to know i still have a few months left in my youth! 

1. I wouldn't say it's been easy to get started at all, mainly due to when I got in the game. I have a full time day job as well as a side hustle consulting company before I decided I wasn't busy enough with 2 toddlers and took up real estate investing. For my first deal, I went through 4 different funding paths spanning all the way from a passive partner with money and no time to hard money lenders before taking out an unsecured business loan to be a cash buyer. I crammed that emotional roller coaster of an education into the first 3 weeks of my real estate investing career. Just to make it more fun I stumbled ***-backwards into two other deals before closing on the first. Maybe it's early onset dementia, but man that seems longer than 2 months ago. It hasn't been easy, but damn it's been fun and I have no intentions of stopping soon. Finding balance will be on my things to work on list for 2020.

• I haven't started sharing on social media yet. I'm waiting until my first rehab finishes (which should be this weekend) so I can show before/after pictures and carry that momentum into rehab number 2 immediately afterwards. I'll mostly be on Facebook since that's what I know (shout out to all of us who remember needing a .edu email to sign up). I'll probably let my 5 yr old set up the other accounts since he's likely better at it than I am at this point.

• I see young people moving to 18 hour cities in warmer climates that are a hub for their preferred industry. They' get the feel of a vibrant social setting without the increased cost of living in large cities. This and wherever tech jobs set up new campuses.

• I'd love to get into commercial retail real estate if that's where this takes me. Many of the developers I work with build these massive town-center shopping centers and lease out to the biggest companies in America. Then they sell pad sites up front to secondary players (restaurants, cell carriers, gas stations, etc) once the anchors (Target, Bed,Bath,Beyond, etc..) announce. It's a beautiful business plan and highly lucrative when executed correctly.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Houston.

Purchase price: $100,000
Cash invested: $21,000

Duplex with existing long term tenants in 5th Ward.

What made you interested in investing in this type of deal?

Location, existing cash flow, value add opportunity.

How did you find this deal and how did you negotiate it?

Bigger Pockets Marketplace. I messaged the seller and after a few phone calls and emails came to an agreement on purchase price and terms.

How did you finance this deal?

Seller financing. 20% down at 7.5% interest only payments for 5 years with balloon payment. No prepayment penalty.

How did you add value to the deal?

N/A.

What was the outcome?

So far so good.

Investment Info:

Single-family residence buy & hold investment in Houston.

Purchase price: $87,000
Cash invested: $25,000

Currently under renovation to go from a 2/1.5 to a 2/2 to rent out for $1,150/month. ARV estimated to be $145,000 once renovation completed. Will be included in a blanket cash-out refinance of my first 3 properties set to close next month.

What made you interested in investing in this type of deal?

Underserved housing market in a redeveloping neighborhood.

How did you find this deal and how did you negotiate it?

MLS

How did you finance this deal?

Traditional mortgage

How did you add value to the deal?

Added 2nd bathroom, installed Central HVAC in lieu of window units, upgraded interior material quality.

What was the outcome?

Work in progress

I think you are chasing a unicorn, honestly. I live in this area, specifically, Cypress. I also "work" in this area. The areas that you are looking for 12% CoC are some of the fastest growing and desirable markets in the region primarily due to an abundance of new home construction. I know this because I'm the developer's engineer for numerous ones including a 600 AC master planned community. Finding a distressed property is almost non-existent because there's enough buyers available with good paying jobs that are paying retail for what's available waiting for what's coming. Of the area's you listed, the only one that's forecast to have a year over year decrease in home value is Katy at -1.1% but none of them have a measurable % of negative equity. Check these reports out. Take Cypress for example. The current average home value is $252,700 while the average rent is $1,787. Let's assume for simplicity sake that you find one of these average homes and are able to buy it in cash for $212,000 ($40k discount aint bad) and it only needs a fresh coat of paint and new carpets in the bedroom ~$7,500 worth of work. Renting it out at the average rate and assuming 0's across the board (vacancy, cap ex, management, etc) you get a 7.63% CoC return after taxes, insurance and HOAs (you can't get away from them out here). Assuming everything else remains the same, you would have to buy that house for $131,500 to get a 12.05% CoC return from the average rent. You could get there the other way by raising the rent, but I imagine your vacancy would be 100% at that number and your actual CoC would be negative because you're still paying taxes, HOA dues, insurance, and now utilities to keep them on for showings.

https://files.zillowstatic.com/research/public/realestate/ZHVI.Houston.394692.pdf
https://files.zillowstatic.com/research/public/rental/ZRI.Houston.394692.pdf

@Juan Abreu 1 was an MLS find, the other was in the BP marketplace. The BP one is a duplex and we did seller financing on that one. The MLS deal I just negotiated with the seller. I recommend reading never split the difference by Chris Voss, and then I highly recommend immediately reading it again. Keep in mind that the list price is just an ice breaker in most cases but you have to be willing to make a deal happen by knowing what you want, at what price, and under what terms.

@Ho Chi Chris Cheung I don’t see anyone paying $4k for a 3/2 townhouse that far out. 3/2 homes go for about $2500-$2600