All Forum Posts by: Jim Berman

My best recommendations to folks looking to purchase locally is to take advantage of the ability to put your eyes, ears, and nose on any investment properties and look for issues that are going to be problems for tenants down the road. Does the home sit on or back up to a busy through street, are the neighbors running a car shop out of their driveway, etc. You've got the advantage to be able to see these kinds of things that don't show up on a listing, so take advantage now before you're stuck with trying to lease and keep future tenants while dealing with that. I have a rental I'm managing now where the home is near a gun range. Not something anyone would think to look for when buying out of state, but every time I go out to walk that home it's just non-stop pop pop pop boom and it really takes a special kind of tenant to be ok leasing a home with that going on. Don't get distracted by a home being a "good deal" on paper if something feels off. I'm a firm believer in "Perfection is the enemy of done" so don't get too caught up in small things, but don't have blinders on either.

If you end up with a property that needs some make-ready or rehab, bullet proof the home for tenants upfront. Hard surface floors everywhere & carpet in the bedrooms only. Try your best to not have carpet transition to more carpet so in the future you can easily replace just a bedroom without worrying about the color being mismatched due to fading or that particular stock no longer being available. 2" faux wood blinds hold up significantly better than the 1" vinyl or aluminum. Stuff like that. 

If you're going to self manage, do a good review of Texas Property Code section 92 as that governs tenant/rental management.  

If you're going to hire a PM, I'd really recommend avoiding the big box/national firms. I came from that world, and there is just a ton of outsourcing and profiting off tenants almost as much as landlords. If management fees are real cheap, there's a reason and don't let them trick you into thinking it's because of economies of scale... it's because they make the difference up off your tenants, which means less for you. They normally don't have actual employees that are local and if they do, they don't actually know the market or industry, just their specific duties, so you just loose a lot of real expertise vs property management firms based in Houston.  

Best of luck building your empire, this is a great place to find help and get answers for questions you didn't know to ask.

Welcome @Noah Francis. Lot's of great advice available here. What kind of property are you looking for? Is this for a long term rental, flip, multi-family, STR?

 Agree with @Jason Zundel about Padsplit. They've been a part of the conference scene for a few years now and this is really their niche. Traditional Property Management firms like mine are going to steer away from this model due to what are seen as lengthy complications, but Padsplit has built their platform entirely around this and if co-living was my strategy, it's where I'd start. I'm also completely unaffiliated with them, I've just seen them around quite a bit.

 @Vaughn Ramcharitar, it's definitely worth connecting with Networth to see what they can value your portfolio at. I've found them to be very professional with wide investor connections, and probably one of the 2 or 3 brokerages with experience with these kinds of larger transactions. + for them having a heavy local Houston presence. Roofstock would be another option, just more "corporate". 

Hello fellow Houstonian. Hope you enjoyed that lovely weekend reprieve from the humidity

 A little late to this post but wanted to chime in. Good comments here from everyone about these & I'll add my $.02

1. Historically the rule of thumb was you would expect to incur expenses that equate roughly to 1% of the property value annually, however with costs of services and materials "these days" I recommend 2.5% now. This won't cover all major events, but over the long run should be the average. Some years you'll have little to no expenses, some years you'll have a big turnover and make-ready, or HVAC replacement that add up. 

2. I always always recommend focusing on the neighborhood in Houston over anything else. Without zoning, a single small street can change the entire dynamic of the quality of your neighborhood, so it's always good to keep your comps "close". It's much better to buy the worst/smallest home in a nice neighborhood than the nicest/biggest home in a less than nice subdivision. As others have alluded to, you can improve the home to bring it up to the community, you can't bring the community up to the home.

3. Flood addendums should be provided with any listing which confirm if a home has flooded or not. This applies to rentals as well, fyi.

4. As others have mentioned - summer is best. October - March tends to be the slowest time of the year for rentals, outside of January. January is actually historically the month that most applications are processed, but December & February are painfully slow, so summer wins there. @Felipe Mendoza makes a great point here though in that you can also do yourself a favor by staggering the leases beyond the normal 12 months and use 16, 18 month terms to have the agreements expire in May which gives your potential vacancy all the best months available to help lease out and reduce vacancy.  

Most realtors I know that handle rental applications here in Houston use www.mysmartmove.com 

It seems to be the most common platform I've seen used by non-PM companies

I'd also suggest signing up for www.petscreening.com It's free for you, and charges an applicant $35. They verify a lot of pet details but most importantly do thorough reviews of service/assistance animals to valid their legitimacy. Fake ESA/Service Animal paperwork is very easily obtained and it's a very litigious subject to get wrong. They validate the paperwork and legitimacy of the provider as part of their screening, and know what to safely request to keep you protected from fair housing violations. I believe they've found over 60% of applicants that begin to claim to have a service or esa animal end up converting their screening to a traditional pet.