All Forum Posts by: Xi Chen

Hi BP family. I am doing due diligence on a 6-unit property. According to the seller, a septic system was installed on the property a few years back, but soon after that the property was switched to public sewer. The septic system is offline but remains underground. Seller has no plan to take it out and told me the system was only used for 6 months and could even be sold for some money. What concerns me is the liability that comes with the septic system if it leaks or collapses. What should I do as far as the due diligence goes? Do I need to order a Phase-1 inspection? If it turns out to be in good shape, should I have it taken out? Thanks!   

@Wayne Brooks Thank you, Wayne!

@Patricia Steiner Thank you Patricia. I really appreciate your input and advice.

Hi BP community. I would appreciate your advice on the following situation. These two propertied are next to each other. One property (with improvement) encroaches into the other property (unimproved). Both properties are listed for sale. I am initially interested in the one with improvement. However the encroachment makes me wonder what would be the best strategy. Of course I can have the seller to solve the issue as an contingency. On the other hand, I don't mind buying the lot as well if the price is right. And is that the best way to eliminate the enroachment issue? If I do go ahead and place an offer on each property, is there a way that I can list encroachment as the contingency on both offers and make the sale of one property contingent on that of the other property? Thanks.

@Joel Owens thanks for the input. I was looking at smaller multifamily from the beginning but have been discouraged by the overheated market. So I started to look at commercial properties as they seem to make more sense from the perspective of cash flow and adding values. As a newbie, I probably should be more focused though. 

Thank you all for the advice. I really appreciate all of them as well as the in-depth discussion. I have decided to not sign this agreement and will try to talk to other brokers and network more.

Hello All. I am a newbie investor interested in getting into commercial real estate. I recently talked to a local commercial real estate broker. After our conversation, he sent me an agreement to sign which grants him the exclusive right to represent me and will last for one year. Although I do like him during our first meeting, I am not quite ready to sign an exclusive agreement and didn't want to limit the sources of leads. 

Is such kind of agreement common and necessary in commercial real estate business? Are there any other ways to convince brokers that their interest will be protected?  I would appreciate any advice. Thanks!

Hi @Tim Johnson. First of all, I hope you are safe and staying in a dry place in the midst of the disastrous flooding. 

Thanks for your advice and information. I really appreciate them. Definitely will try to attend those events in the future. 

What you have suggested regarding my question actually makes a lot sense to me. I agree that it is more likely to find a reasonably good deal outside the loop and it is better to focus on just a couple of areas. Houston is such a big metropolitan area that I can easily get overwhelmed by all the listings from HAR.com. To me distance is also an important factor to consider since I have a daily job and wouldn't want to deal with rental properties that are more than 30 - 40 mins driving away. 

Going back to the issue on the rent-value ratio, one additional point I would like to make is that the high property tax here is a very unfavorable factor that kills deals for properties of 1% rent to value. I found that rent in the Houston market generally does not reflect the higher property tax that landlords have to pay, when compared to what is for other states. One of my colleagues has a lot success in investing in Louisiana but he said he just could not find anything good locally.

Hi BP, 

I am a novice investor located in Houston area that has never done a deal. This is my first post in the community. I have been looking for opportunities to invest in either single family or Multifamily rental properties. After about two months searching on MLS, I realized that it is extremely hard to find any that is close to 1.5% rule. I can find 1% deals but with my conservative calculation (10% for repair/maintenance, 5% for capital expenditure, and 10% for property management etc.) those cannot bring me positive cash flow, let alone $100/door that I aim for. At this moment, I am kinda lost. The housing market in Houston is hot, and there is a lot of competition even for seemingly not good deals.

I would really appreciate any advice/analysis on 1) Is the Houston market overheated right now? 2) What areas in Houston are more worth looking at? 3) Should I stick with 1.5% rule if I wanted to buy and hold. 4) Should I explore other niches that might be more profitable?.   

I have to add that I have only been in contact with one real estate agent and one wholesaler in the area. So it can well be that I am not trying hard enough to find deals. I look to network more in the future. I guess this post is a good start for me. :)

Many Thanks in advance. 

Best Regards!