All Forum Posts by: Brian Alfaro

I agree with Landon, Erica & Cody! There are some good wholesalers here in the Houston area, but it's more about building a reputation with them and understanding how they work. They don't just blast out awesome opportunities all day via email or on Facebook - why would they do that instead of keeping them? The stuff you get on the "Buyers List" is often the stuff their A-List investors didn't want. Not always the case, but it is often true. They want to work with the investors that keep their word, don't play games, and close. Landon is right as most "deals" sent to me end up being around 75-80% of ARV in the Houston market. You have to be okay leaving some cash in the deal if it's a rental potentially. If it's a flip go after the light to medium cosmetic stuff that you can turn over quick and be in and out with a quick $10-15k. Not every one will be a home run.

Remember, the price you see is not set in stone. You have to start a conversation about what you can offer and why. Thats almost a golden rule in any real estate transaction - whether it be retail or an off-market deal. You'll never get a "deal" if you aren't making offers. If you see a wholesale deal for $100k but your numbers tell you the max offer you can make is $85k, then make them an offer for $85k. You aren't doing anyone any harm, and if they say no, you're right back to where you started with no property in hand. No harm no foul. Move on to the next one. There's plenty of fish in the sea.

I would recommend you attend a lot of local real estate investor meetups. Wholesalers are EVERYWHERE. Get on every single list you can and meet every single one you can to develop a relationship. Build win-win relationships with them. 

My personal recommendation to both of you is to make sure your personal life is in order, especially financially. Try to eliminate as much debt (if not all) as you can. It’ll help with your ability to get a loan since you don’t have a lot of money. 

If you don't have debt, you aren't making payments on things that won't make you money. You can take the money you would normally use for debt payments (like credit card or car payments) and save it until you have enough for a down payment on a house. There are many strategies once you have a little money. You can take an FHA loan and live in the house for a bit (house hack), or if you have enough money you could use Hard Money or Conventional Financing.

Don’t let money stand in your way of learning, meeting investors already taking action, or staying focused on learning a part of the business that can help you bring value to another investor who DOES have money. You either have to have time, money, or experience to invest in real estate. You don’t need all three. Find a good off market deal and partner with another investor who does have money and go from there. 

Jaz!

Congrats on thinking about changing the course of your life with real estate. It’s possible if you’re patient and focused. 

Finding a mentor can be a challenge if you are actively looking for one with intention. I find the best mentors in any field are found naturally. You never walk up to them and say “can you be my mentor?” It just kind of happens because you are bringing value to whatever they are already doing. The best way to find people already investing is to attend local real estate meetings (most are free) and educate yourself while rubbing shoulders with those already taking action. 

You don't need to brand yourself or get an LLC to start. I would personally vote for you to NOT spend money on those things until you have a few deals under your belt and the cash to do so.

Tariq,

The demand is definitely not low. Things have slowed a bit compared to a year or two years ago, but homes are definitely still selling. It just depends on the price point. Homes that are over $200k can sit 2-4 months on the market, but homes under $200k are still selling relatively quickly. There will always be good demand for affordable housing. If you push into the higher brackets ($300+k), they can definitely sit a bit. 

If you are building new construction SFH, that is something to consider as you develop your project. If you are building $200k+ homes, build it into your business plan/model that there could potentially be longer holding cost.

Here’s the latest update from HAR that gives you more details:

https://www.har.com/content/ne...

Patten Title and American Title

Awesome job! Sounds like you make a nice profit on this one and the struggles you experienced were ultimately worth it. 

Grant!

Not knowing where to start is extremely common because there is a wealth of information out there on places like BP that make it hard to choose a place to start. Good and bad thing! The good news is you’re thinking about it and reaching out for guidance. 

There is no “recommended place for new people to start.” It’s really about YOUR WHY and YOUR GOALS. Some things to consider on where to start: 

- Why are you investing in Real Estate? Are you trying to build passive income to retire/replace a job, flip houses to replace income, use it as a tax shelter?

- How passive to you want to be? People start in real estate because they want passive income, but it’s anything but passive. Flipping is a full time job. Finding rentals to get passive income is hard, and if you don’t have a property manager or your portfolio grows big enough it can quickly become a job. It can become passive over time, but it is not starting out.

- Which asset class is the most exciting to you? I always tell people you shouldn’t invest in something that you don’t understand and that you wouldn’t be interested in working on daily. 

- How much money do you have to start - this isn’t a deal breaker for a particular asset class, but it can make it more challenging. For example, multi-family and storage/commercial is not a “no money down” or no cash field to enter. 

To answer your second question, what really accelerated my learning was two things. The first you mentioned - get out there and meet as many people taking action and already investing as you can. Go to local real estate investor meetings/meetups, reach out out to people already in the asset class you choose, etc.. Be surrounded by people doing what you want to do. The second thing is TAKING ACTION. Ive found the best way to learn is through experience. I read 20 books or so before I finally did my first deal, but that can be a weakness. You get analysis paralysis. Learn what you need to know to play the game so you don’t lose your shirt, but everything else comes with experience. 

Hope this helps! Reach out if you have any questions. Always happy to meet up locally with other investors. I’m no expert, but I can share my experiences so far. My big message is get out there and take action!

Brian,

I’m a little confused by what you’re asking particularly because Cash on Cash Return and Return on Investment are not the same thing. 

You are almost certainly going to have negative COC the first year you own a rental property because it is your total net cash flow for year 1 divided by cash invested. If you bring $10k to closing or you refi and leave $10k in a rental after using hard money, you're not going to profit $10k your first year owning a property, so it's going to be negative. Don't focus on that. If you're a buy and hold investor the negative COC the first year is irrelevant for a SFH. Year 2 and Year 3 are where you make money.

There are PLENTY of rentals available in Houston that cash flow and plenty of “deals” if you know how to make them a deal - they don’t just fall in your lap usually. You just have to know what you’re looking for and have a strategy for acquiring them. I know people that have cash flowing rentals all over the city - sometimes they pay with all cash, sometimes they use hard money, sometimes they use private money, sometimes conventional. You can’t be a one trick pony trying to put 20% down every time in A class markets and wonder why they don’t cash flow. Yes, finding off-market deals that need a rehab (value add) is a good way to find cash flowing properties. You’ll have a higher chance of getting them below market value, rehabbing them to increase the value/bring it to market value, and enjoying some cash flow because you can now charge higher rents for a good quality product relative to what it’s appraised for. 

I think the sweet spot for rentals is anything below $200k in Houston with $130-$150k being the sweet spot (because your mortgage is 75-80% of that and you aim to rent between $1200-$1600). These properties fit the criteria for middle class folks who want an affordable place to live. They’re usually C/D class neighborhoods with blue collar, hard working folks. You can still cash flow on properties above $200k, but your rents are going to be for a more limited amount of people ($2k+ per month). 

Jennie!

Congrats on beginning to take action!

My first question is why Houston, TX? Is there a particular reason you chose this city to do long-distance investing? 

Finding a Duplex in Houston that's not in a C/D class neighborhood for $200k or less with little or no rehab is a challenge. Single family is doable. You asked for neighborhood recommendations, but that is really dependent on your strategy. Are you looking for cash flow only, appreciation only, or both? The neighborhoods that are A/B class with great school districts that are prime for long term holding are not going to cash flow as well unless you are using all cash (no financing) compared to a C/D class neighborhood where you are likely to get higher cash flow and some appreciation/equity capture if you do a rehab.

There are a ton of property managers in Houston. I can name a few if you want to PM me.

I am a realtor and would be happy to speak to you more about investing in our market and what to look out for. I am an active investor. Feel free to reach out! 

Following! Curious about the cash flow of an Airbnb in the suburbs as well. I’ve heard from most experienced investors it’s harder to cash flow outside the loop. 

Congrats, @Colin Williams! Wish you the best of luck with this one.