All Forum Posts by: PJ Singh

great work! good luck for next phase. keep posting updates

Thanks @Jon Holdman, @Account Closed for your feedback. As a novice REI, I thought everything can be fixed for a right price. Before I put non refundable earnest money to whole seller, I got a rough estimate from GC for $50k, which also matched with whole seller estimate. I got 3-4 rehab quotes ranging from 50k - 75k. However, non of quote mentioned about structural issue.

I guess I ll walk away from this deal. 

Question: Do any of you think, this property can be fixed and this will be tear down and build up from ground zero. The reason I am asking , if whole seller come back with counter offer (which is highly unlikely), is it worth considering it. 

Anyway thanks again everyone and BP for providing feedback. 

Hi BPer's

I am new REI in Houston TX and I am currently under contract for my first major rehab project. 

Project: SFH: Its a 1400 ft2, non-flooded , single story ,3 bed 2 bath, 1983 built in clear lake TX area zip 77062. It is a hoarder house with 6 ft hole in roof. Seems like this house has been neglected for quite a while. Below are the details for house. 

Purchase price : $80K

Major Rehab: $50 k 

ARV: 170K-175K

Rent : $1600/month

Rehab: Based on quotes I received from 3-4 contractors: new roof, foundation fix, sheet rock, new flooring, landscaping, new bathroom, kitchen, siding. Its a full rehab work. 

Question : Since this is a hoarder home, its not possible to see walls. Is there a possibility of structural damage ( stud rotting) due to rain pouring in through hole in roof? 1 of the contractor brought it up.  

Any other damage , which I am missing? 

I would like to hear from someone who has worked on hoarder homes and/or big hole in roof.

Thank you in advance for help!

@Kevin Coggins , I was also in similar situation with similar house 5 years ago. I decided to rent it instead of selling it. This was first rental property which I managed myself. I learned a lot and build my confidence to grow further in REI.

IMHO, if your starting out,  I would rent it and try to self manage it. If it doesn't work , always turn to PM or worst case sell it. Your have very low interest rate, Spring is going to get better (Exxon HQ), you have new AC and water heater (major capex ) set for another 10 yr. I would suggest to read rental property books ( like Brandon Turner's or any other one). It will give you all details and system in place. 

In realty your cash flow would be slightly higher as you capex reserve will be low. 

Before you rent it, get a HELOC on equity. It lot easier to get on primary residence in Texas. 

Contact me if you have any questions, Goodluck in REI journey! 

Lot of excellent information! Thanks @Dave Fagundes. @Dave Chapa and @Kyle Bryant for posting/responding this question? 

I would like to add-on to Dave F question related to inner loop. What is your opinion on mid -rise SFH buy and hold strategy in inner loop? I was always interested in Buy and Hold investment properties in Houston inner loop ( Heights, rice military, mid town , etc). In near future, I have to decide weather to sell my primary mid -rise SFH and convert it into buy - hold or Air BNB?

Rental are somewhere from $2.2 K - 3K /month for $1/ft2 - $1.4/ft2 ( sample size of 4-5 homes). As of today, Lot of rental available in market.  Thank you in advance!

Thanks @Jason S. for your feedback. I ended in redoing the entire shower with new shower pan, tiles, backboard, pipe and door. There was a green board before. Hopefully it solved problem. I will keep you in mind next time I have plumbing need. thanks

Thanks @Tony Castronovo and @Juan Monge for your feedback. For acquisition, I have few options:

1. Trying to get  convince seller to delay closing, so that I can get renovation loan with lender (30 day closing).  
2. combination of my private money and HELOC. Refinance after seasoning period (6 months). 
   

I am inclined towards buy and hold strategy ( CF, depreciation, Appreciation and low taxes) , however with CF @ $100/month, it would be a long road to replace W-2. I understand, that first few properties may not make a significant difference, but you learn the processes and network. 

I am thinking of keeping cash reserve of 6 months PITI on each SFH rental for future economic upsets. Is that enough?

Juan M, for HELOC I am trying to find a lender who can give HELOC on investment property. So far I am not able to find one. They say in Texas, it is not allowed, but I reading in BP forum , that it is allowed. If anyone has reco, please let me know. Thanks

Hello BP'ers,

I am newer REI in H-town, and I would like to get opinion from fellow REI on exit strategy for SFH in Clear lake, TX.

Goal: My current goal is to take action and learn every aspect of SFH REI ( acquisition, rehabbing and exit process) and potentially make some profit from my first deal. My long time goal is to have enough passive income through rentals ( SFH and then eventually to MFH), so that I can replace my current W-2 income.

Background: For past 6 months, I have been learning ( books, podcast , local seminars etc.) and recently started to search for deals. Made couple of offers, but always beaten-out by time or overbid price. I guess that was part of learning curve. Last week, I finally got my first SFH under contract. It may not be a home run deal and but good enough to get my feet wet.

Project: SFH: Its a 1410 ft2 , single story ,3 bed 2 bath, 1983 built in clear lake TX area zip 77062.

Purchase price : $80K

Major Rehab: $ 40k - $50 k (depending exit strategy)

ARV: 170K-175K

Rent : $1600/month

• Neighborhood: ZIP 77062
• Median rent: $1800
• great school district ( 7/10),
• median home value $175k , average home value $219k.
• owner occupied 69% renter occupied 27%.
• median income $ 88k, average $ 117k.
• population growth 0.9%/YR
• crime: safer neighborhood (per trulia)

Exit strategy:

• BRRR strategy: potentially 5k-7k profit after refinance, cash flow $100/month (including PITI, capex, maintenance budget and property management).
• Owner/Seller finance :potential 17k profit and cash flow $400-$500/month.
• FLIP: potential 20k- 25k profit .

Please advice. thanks

Hello BP'ers, 

I am newer REI in H-town, and I would like to get opinion from fellow REI on exit strategy for SFH in Clear lake, TX.

Goal: My current goal is to take action and learn every aspect of SFH REI ( acquisition, rehabbing and exit process) and potentially make some profit from my first deal. My long time goal is to have enough passive income through rentals ( SFH and then eventually to MFH), so that I can replace my current W-2 income.

Background: For past 6 months, I have been learning ( books, podcast , local seminars etc.) and recently started to search for deals. Made couple of offers, but always beaten-out by time or overbid price. I guess that was part of learning curve. Last week, I finally got my first SFH under contract. It may not be a home run deal and but good enough to get my feet wet.

Project: SFH: Its a 1410 ft2 , single story ,3 bed 2 bath, 1983 built in clear lake TX area zip 77062.

Purchase price : $80K

Major Rehab: $ 40k - $50 k (depending exit strategy)

ARV: 170K-175K

Rent : $1600/month

• Neighborhood: ZIP 77062
• Median rent: $1800
• great school  district ( 7/10),
• median home value $175k , average home value $219k. 
• owner occupied 69% renter occupied 27%. 
• median income $ 88k, average $ 117k. 
• population growth 0.9%/YR
• crime: safer neighborhood (per trulia)

Exit strategy: 

• BRRR strategy: potentially 5k-7k profit after refinance, cash flow $100/month (including PITI, capex, maintenance budget and property management).
•  Owner/Seller finance  :potential  17k profit and cash flow $400-$500/month.
• FLIP: potential 20k- 25k profit .

Please advice. thanks

Congratulation!