All Forum Posts by: Luciano A.

@Corey Stubbs

Houston is a great market. League City is a great area just make sure to get the insurance policies from a good insurance agent as I have found cities in Galveston County to have much higher premiums thus affecting your cash flow but to flip there you will do well. There is a local meetup in that area with some knowledgeable people who attend it. They post the meetup on BP. There is a Broker there that runs his own agency and does both residential and commercial who I found with a tremendous amount of experience. He himself is an investor. PM me and I can send you his info to discuss League City and that area of town.

Safe Travels.

@Douglas Gratz

We all have to walk before we can run. You have gotten many experienced builders/developers/contractors telling you this will be a bad idea. Who cares what is selling around you. Go ask those builders and developers how long they have been doing this, and if I was a betting man all have years of experience. Right now we are in FOMO (Fear Of Missing Out). Greed and thinking this score will help you to reach new heights can become your downfall. I am not trying to put you down but I think the sales price and profit are making you blind to the risk. Consider me your big brother and I'm telling you with sincerity that you need to slow down. I have been doing this for a while and have seen many people come into this new build arena because they hear new construction is hot, HGTV builds a house in one hour and it looks so easy. It is only easy with the right team. I can assure you, GCs that are good have plenty of work, and supply chain issues will make things a lot more stressful. I have new builds sitting because the windows or floor trusses are taking longer than originally estimated. We have been waiting 6 weeks for them and still waiting. Especially if you have custom items as I do with windows, doors, etc. 

Since you have the option to flip these lots here is what I would suggest (IF I WERE IN YOUR PLACE):

Ask the architect to draft plans so you can get them priced out. This is before you submit to the city and have to pay all their fees. Drive around that area and find a Concrete guy, Master Electricians, Plumbers, etc that are working on these other builds. Just pull up and take their company info from their trucks or ask one of the guys for their boss's number. Call them and ask if they are interested in a build you have coming up. Send them these drawings and get a written bid. You can do this with a few different contractors for each trade. This will give you a quick understanding of what the going rate is and can help you see if the numbers are close to your budget. After you price out this build you can determine if the risk is worth it. If not flip the lots, take the money, and put it into a local bank that does commercial loans. This will help you start a relationship with them thus can get a construction loan. You will have to invest money into the architectural plans but that is nothing given how much the full build can cost if you don't have your numbers right. And a tax write-off. 

A hard money lender just like a bank will want a list of your costs and most will require you have a Builder/GC given you are not experienced in my opinion. A rehab versus new construction is a big difference. I don't use my rehab subs to work on my new construction. So why not build these with a smaller project. 

There is a distinction between a builder and a developer. I do both but not all developers are builders and not all builders are developers. And if your architect is designing you this house with 8 ft ceilings, FIRE HIM NOW. If you are building at a higher price point you will need much taller ceilings, especially in the entrance, kitchen, living room area. Minimum 9' in bedrooms and at least 10' in common areas if not taller. 

Others on here are being very generous with their time. Nowadays when I go to meetups I don't bring business cards because once they hear I'm a builder they swarm around me asking me 100s of questions. Emailing or texting with how-to questions. Inside I ask myself when I need professional advice I have to pay for it, from attorney to CPA but investors don't realize a builder has value. SO value their time. You got free advice with no alternative motive from people on here. 

Ask a local builder if he would be willing to consult you for a fee to help you through the process of this build and or help with the material take-off list so you can get a better idea of what your numbers are before you sign a hard money note or move forward. 

BEST OF LUCK 

@Rawn Wilson and Jay Shaw for putting this event together. Thank you for the free beer. Was nice coming to a meetup with no sales pitch just investors networking and trying to grow.

Happy Holidays 

@Suba Sudhakar

Not sure if you are looking to buy and live in one of the units but if you are buying strictly for investment I would target areas that are on the come up but still has some issues. In those areas, I have found properties at a much lower price point and better cashflow. I am in Houston but own a couple of properties in the Sac area. Both are near downtown but those areas are too expensive. Again if you are just looking to buy for just an investment you should check out Stockton. You can get larger than a duplex for a decent deal out there. 

Best of Luck 

@Shelby LeBlanc

PM me as I might be able to help. I live in Houston and am a builder. Depending on what you want can give you options or introduce you to other investors that might be interested in buying from you. I no longer buy SFR but be happy to help as I remember those days when I was rehabbing and the stress of going over budget. I have good trades that can potentially help. Not sure how big your kitchen is but should be able to get you better pricing on countertops.

@Alfred Amponsah

Send me a PM

@Dorys Prentice

Sounds like he learned renting by the room can be lucrative. Look at it strictly as business and not emotional. Spending two years and working hard will have you emotionally attached to the property. But treat like a business and not your baby, use guidelines that are spelled out on what qualifications are required and what will be denied. Have a list of what you are looking for and attach it to the application. If this is your first rental don't use gut feeling to weed out prospects. Regardless if he rents out rooms to staff or family etc it will be on him. The same would apply if you rent to a family. The person signing the lease has to meet all your qualifications like income, credit, etc. As others suggested you can double the security deposit and maybe do a quarterly check of the interior. Have him get an insurance policy that will protect you and your property. Use documents like pay stubs, bank accounts, tax returns, rental verification, background checks to qualify or disqualify a prospect. Using gut feeling will get you into bad situations real quick. 

Another thing to consider when a prospect shows up to view the property they and possibly the kids will be on their best behavior. It's like a job interview. The real truth is in the documents. Don't stress out or wait on anyone who hasn't submitted all the documents you require. Keep showing the place and tell everyone those who submit all documents get reviewed. Right now this guy is kicking the tire and is not serious.

Best of luck 

@Adah N.

The question I would ask the appraiser is if you were to put X amount of dollars into the property and have it turnkey would he have appraised it for higher. IF he says yes, there are comps that support higher values in your area then you really are not overpaying. You are paying what it's worth at that point in time. If you can add value and make the place look nicer and get it appraised for more than what you put into it then are you really paying more? I see people overpaying for a property because they are in FOMO (Fear Of Missing Out) and after rehab, they have a nice investment property that appraises for exactly what they have in it. Now that is what I would say was overpaying for a property. But if your rehab and purchase price is under the new appraised value then you have been rewarded for your time, money, risk. 

Another thing in this market is the appraisers are usually conservative to a fault because they do not want to get into trouble so most are appraising close to or at sales price. The good old days of having things comps well above sales price are few and far in between. 

Best of Luck 

@Christopher David Harris

Congrats. Never dwell on your past sales or mistakes. Always go into a deal with the end in mind. You sold, made a profit now it's time for the next one. I'm sure you were proud of your baby given it was your first but after a while, you will be more proud of how far you have come versus others around you that were too afraid to even start because they heard the taxes of a flip was high. You got one under your belt so celebrate then get back into the game. Keep up the good work and good luck on property number 2.

Best of luck 

@Stephanie Young

Sometimes a tenant doesn't work out. Count your blessings you got someone shortly after. I would charge a pro-rated amount based on the number of days the place stayed empty, any other expenses you acquired to re-lease the place and return the remaining balance. Being a landlord is a business, your customer is the resident. Treat them like how you want to be treated. The landlord business is not all spreadsheets and numbers. In this crazy market, the landlord has the upper hand so they have many applications to choose from but in a downturn how you treat residents and how well you take care of your properties will reflect in your vacancy numbers. 

We all know daytime showings don't always reflect the true neighborhood vibe once it gets dark.  

I let a resident move out before her lease was up and did not penalize her and that led to her sending over three quality residents that rented from us in one of our multi-families.