All Forum Posts by: Cody L.

I buy a lot in Houston. What I do when someone sends me a deal
1) How much am I paying per door vs. others that I've bought (or have been sold) in that submarket
2) How much am I paying per $ of rent vs. others (keep it simple:  When you're buying an apartment, what you're really buying is a rent roll)
3) If it's being sold for more per door or more per $ of rent vs. others in that area, is there something that might justify that increase.  i.e., maybe it's 1/2 empty due to poor management.  In that case, if it's making 20% less rent per $ of purchase price, but you can easily double the rent, then you're getting a good stabilized rent roll per $ spent
4) What other items should you look at to take away or add to your offer.  i.e., same price per door and rent, but building has tons of work needed?  Or units are filled with section 8 or other voucher tenants?   In some cases you might pay more per $ of rent if the building is nice and brings in a lot of $ per unit (i.e., I might pay $300k for $3k/month units, but that doesn't mean I'll pay $80k for $800/month units).

Or reach out to people you know/trust in the market and see what they think about the deal.  Most people that are active can analyze a 32 unit in their sleep.  Or if they're in that market they'll know who bought it, when they bought it, how much they bought it for, what the ones next door traded for etc. 

Just sent you a PM

 Whoa, you called it...

 Well your account is closed -- and I don't publish the list openly as I try to keep my exact company off of my posts so it never seems like I'm using BP to advertise.

Sooo..  don't think I can help ya.

You have an uphill battle.  The option fee is never refundable as a matter of contract law.  The contract spells out the terms that you have to do your DD to protect the earnest money.  Lots of protections to seller regarding not relying on statements, do your own DD, etc.

Best bet is to threaten to sue if $ not returned, but I don't know that you have a strong case.   Better bet would be to lis pendens (or threaten such) as that would keep them from selling. Sort of a nuclear option though.

I can tell you that when I'm selling something, if someone tries to cancel after the DD period, I never return the $ and will pay more to fight the return then the amount of the return for the principle of it. 

I've bought deals without cash flow a few times, but there was a bigger goal in mind:

1) Bought a triplex in a 'hot' area of Houston (77006) because it was a good sized corner lot and I own an apartment complex on the full block across the street.  So more of a land play

2) I bought an old duplex in another hot area of town.  Huge corner lot (8,250 SF).  I got the property for a bit under the dirt value (paid about $80/sf, worth about 90/sf).  So I'll just sit on it's cash flow until I want to build on it or until a builder wants it

3) I bought a vacant commercial building on a small 4,500 SF lot.  In another 'hot' area of town (midtown).  Reason being is one owner owns the whole block except for the small sliver I bought.  So at some point a dev will want to build on the whole block and will buy my piece out.  (I joke that I own the whole entire block except for the part owned by one other owner)

4) I've bought various SFHs in my fav submarket of Houston even if they just break even (or slightly under) just because I like the area, believe in it's growth, and want as many homes in that area as possible (and am not bothered by negative cash flow as they're a rounding error when it comes to the portfolio)

I have several patio homes in Houston with room to add more.  I was quoted $120/sf.  I think that's about as cheap as it gets.  It was that price as they just stamp out 10 of them and copy what I have. 

 I'm a very risk tollerant investor, but I've always gone the fixed route.  For a decade, it proved to be the wrong decision (I'd have saved millions by floating).  It wasn't until all my refinancing in 2022 that I look smart by doing fixed.

Anyway -- I'm a fan of fixed.  But that doesn't mean I want floating to be outlawed.  Again, the rates and terms are up to the borrower and the lender.  Not Cody or Scott (or Biden)

Congrats on the deal!

Why should they be outlawed?   Personally I wouldn't take one, but the rates and terms should be between the lender and borrower, not the government.