All Forum Posts by: Mike Landry

I'm new to multis but am trying to learn like you. The ones around Houston that I watch are selling pretty high. Maybe experienced people see potential in value add, rent increases that I don't, 1031 money.....or there is "stupid money" that will be disappointed in a few years. I honestly don't know and I'm not sure where a good entry point myself would be. But every local market is different. I personally think the rents in my area are going to stay flat for the next 5 years. As a matter of fact the realtor data is showing rents on single families down by 5% from last year. Not sure where multis stand but Houston has had a lot of class A inventory come on line in the last year or two...I heard we had 5 years of supply come active in less than the last two years. 

I'm new to this but my quick look....

Gross income is 95000

Expenses will be about half

So net income about 47,500

Divide by. 08 (8cap)

Would value the property around $593,000

But if they are claiming a 11 cap then $431,000

Good luck. Everything seams overpriced. 

July stats

• Single-family home sales rose for the tenth straight month, up 5.0 percent year-over-year with 7,440 units sold;
• On a year-to-date basis, single-family home sales remain 6.8 percent ahead of the 2016 volume;
• Total property sales increased 4.5 percent with 8,821 units sold;
• Total dollar volume climbed 7.5 percent to $2.5 billion;
• The single-family home median price remained statistically unchanged at $230,000;
• The single-family home average price increased 2.4 percent to $299,131;
• Single-family homes months of inventory grew to a 4.5-months supply, the highest level since September 2012;
• Townhome/condominium sales fell 9.0 percent, with the average price up 1.8 percent to $201,148 and the median price down 6.2 percent to $150,000;
• Leases of single-family homes jumped 15.6 percent with average rent down 3.2 percent to $1,815;
• Volume of townhome/condominium leases rose 12.3 percent with average rent down 5.1 percent to $1,546.

Rents are coming down. Purchase prices are still going up but leveling off. Only way to find a decent deal is marketing for off market properties. Even then the cash flow will be minimal unless you are self managing. Long term appreciation..... Maybe when oil comes back...

@Rick Hernandez you might want to try a different lender. sounds like yours has overlays. I've done a few where I got %75 of appraisal up to %100 purchase price. they will not go over purchase price to include the rehab. @Jerry Padilla would be the guy to contact if he can do them in your state.

what's your exit plan. a "weird" property like this will be hard to sell in the future because the only people buying it will be investors... at a five cap most people won't touch unless it's a class A premium new build. what would it cost and be worth to convert it back into a normal house and sell on the market. will you have any real equity in the property?

market statistics show that rents are falling in the Houston area. 6% lower than a year ago. inventory for sales is at the highest level since 2012 at 4.4 months. while prices are still barely going up on average, their rate of increase is decreasing. I think too many people held on to their old house as rentals thinking prices will go up (they have been correct). Now it's making the rental market a little more competitive especially in the nicer suburbs, Katy, the woodlands, ect. Drop the price to avoid vacancy expenses.

FYI. Here are the June stats for Houston. YoY metrics are mostly up but at a lesser rate than previous month.  Supply is at the highest level since 2012 and rents are down 4% for single family's.  I'm going to update this post every few months to keep up with the macro picture.

• Single-family home sales rose 8.3 percent year-over-year with 8,414 units sold – the largest one-month sales volume of all time;
• Total property sales increased 8.3 percent with 9,993 units sold;
• Total dollar volume jumped 10.4 percent to $2.9 billion;
• The single-family home median price rose 2.6 percent to a record high of $239,023;
• The single-family home average price increased 1.5 percent to $304,155, which was also a record high;
• Single-family homes months of inventory grew to a 4.4-months supply, the highest level since October 2012;
• Townhome/condominium sales edged up 1.2 percent, with the average price up 7.6 percent to $215,713 and the median price up 3.6 percent to $171,000;
• Leases of single-family homes jumped 17.4 percent with average rent down 4.0 percent to $1,806;
• Volume of townhome/condominium leases rocketed 21.3 percent with average rent up 2.5 percent to $1,698.

seriously? @David Dachtera. it doesn't work. the simple arithmetic has been proven bogus above. ONE QUESTION FOR YOU DAVID..... HOW MANY RENTAL PROPERTIES DO YOU OWN? Those who can't do, teach. lol.

Until you have to pay it back at %25 tax rate. Might not be the best for someone in a lower tax bracket. it's just deferred, not forgiven and I think most people forget that little fact.