77449 good for investment properties (Houston: foreclosure, homes, neighborhoods)

[cheryjohns]

Originally Posted by mtgmike

Id avoid lakeville. Buddy of mine flipped a few in there to people as investment properties. He wouldnt hold them himself because we all agreed there wasnt much chance for appreciation. I thought about buying one from him. Tried to pre-lease it. As me and the prospective renter pulled up to the house, a young guy drove up and screamed to a guy sitting on a porch asking if he had any weed right now. Renter looked at me and just said, "Dude, really?".

If that development was in another town, it might work. Great idea, wrong demographic.

That immediate area has some deals, but stay away from lakeville, IMO.

It's not the area - there are solid little subdivisions near it. There is an identical one (same plastic picket fences, even) in the north that has turnd out the same way. My guess is the builders' on-site lender threw in everyone in that could draw breath on a mirror. The foreclosures started before the community was half developed. Once that gets going, it's a downward spiral. Investors pick them up and they become rental properties. Before it's finished, you have a high number of renters versus owners. Then you have guys yelling about buying weed. Before anyone on the forum gets upset, thinking I just said renters are bad - no, I didn't - but drive into any neighborhood where the renters outnumber the owners - and it will be a Lakeville. The HOA boards are made up of home owners that have a vested interest in seeing that properties are kept up and property values remain high. It's going to be a weak board in the Lakevilles. In fact, good renters like the one above will also avoid the subdivision, which further creates a bad environment.

[mkmr]

< 70K and rent for $1100, that's about 18% every year!!!
Where to find a deal like that in good neighborhoods.

Originally Posted by cheryjohns

That's true! What you need to look for is a subdivision where you can:

Find one where cost, plus repairs, equals 75% or less of market value after repairs
Days on market - rentals - less than 30 days - the less, the better
Rental rates will give you a decent spread
Future appreciation very likely to be strong

Picking up one for $80K, probably needing a minimum of $6K, for a rental rate of $1000 - not a good investment. Repeat - not a good investment.

Here's one that just closed in the area - my investor got it for $60K - it will need $8K in repairs - rental rate a strong $1100 for that size in that subdivision, with a normal days on market less than 2 weeks. Rent can be up to $1250 but might be longer days on market. That's a good deal. Plus, if they sell in two years, the neighborhood will have appreciated.

There are neighborhoods to stay away from - Lakeville is one of them. Tealbrook another.

[cheryjohns]

Originally Posted by mkmr

< 70K and rent for $1100, that's about 18% every year!!!
Where to find a deal like that in good neighborhoods.

Foreclosures - which actually seem better than short sales. A short sale lender could be in la-la land considering market rate on distressed properties. By the time it has hit the foreclosure status - the lender has had to take a look at reality and the price comes down. I know, different people in different departments at the bank - the foreclosure side is more knowledgeable.

I want to point out that the house in question could be flipped now for a profit - but it makes better sense to rent for two years, with a cash flow - and then sell at a higher appreciated price. That's what they are doing.

[JustCinco]

What is good about investing in zip 77449, specially the section south of Clay Rd., is that it;s in the Katy School District, many look to be in KISD for their children, and you can find some very good deals.

[mkmr]

The reason for looking into 77449 is becuae I only have less then 100K cash, and the house in that area is kind of new, most of them are build after year 2000, so less maintenance, I guess.

[cheryjohns]

Originally Posted by mkmr

The reason for looking into 77449 is becuae I only have less then 100K cash, and the house in that area is kind of new, most of them are build after year 2000, so less maintenance, I guess.

Don't pay cash. There are mortgage companies out there that are experienced in working with investors. Interest rate is higher than if it is your home, but not bad (about 6%). With $100K - you will be able to buy only 1.5 houses (good luck with that .5 house - lol). With a small mortgage - you can buy 4 (they will only mortgage 4 - you won't use up your money). The rent needs to be enough to cover expenses and provide a cash flow. That $60K house will pull in enough rent to cover the mortgage and other expenses and still have a cash flow of over $400 monthly.

[mtgmike]

Originally Posted by cheryjohns

Don't pay cash. There are mortgage companies out there that are experienced in working with investors. Interest rate is higher than if it is your home, but not bad (about 6%). With $100K - you will be able to buy only 1.5 houses (good luck with that .5 house - lol). With a small mortgage - you can buy 4 (they will only mortgage 4 - you won't use up your money). The rent needs to be enough to cover expenses and provide a cash flow. That $60K house will pull in enough rent to cover the mortgage and other expenses and still have a cash flow of over $400 monthly.

But being a new investor with 4 loans, if he has a decent period when they arent rented, he is bankrupt.

Or if he has to drop rent by 100$ to sign someone, there goes his cash flow.

Slow and steady wins the race. Follow the money. If you leverage yourself like a madman, your cashflow may go up a little. The possible upswing if the stars align perfectly skyrockets. The only thing that is guaranteed to happen if you leverage yourself that way is a realtor and mortgage guy makes money.

If you stay with cash, you are much closer to being that guaranteed money guy. I like being that guy, not paying those guys.

[cheryjohns]

Originally Posted by mtgmike

But being a new investor with 4 loans, if he has a decent period when they arent rented, he is bankrupt.

That's why it's important to pick a subdivision where they go fast.

Or if he has to drop rent by 100$ to sign someone, there goes his cash flow.

That's why it's important to go with a property where he will have minimum of $300 cash flow, preferably more.

Slow and steady wins the race. Follow the money. If you leverage yourself like a madman, your cashflow may go up a little. The possible upswing if the stars align perfectly skyrockets. The only thing that is guaranteed to happen if you leverage yourself that way is a realtor and mortgage guy makes money.
See above.
If you stay with cash, you are much closer to being that guaranteed money guy. I like being that guy, not paying those guys.

Except you have no cash when you may need it.

.

[RCH99]

"Except you have no cash when you may need it"

......if that is all the cash an investor has, he shouldn't be investing in low end rental properties either.

[cheryjohns]

Originally Posted by RCH99

"Except you have no cash when you may need it"

......if that is all the cash an investor has, he shouldn't be investing in low end rental properties either.

If he has about $100K - $150K, I don't think he should sink it all into real estate. And low end houses are always a no-no. I am talking about working class homes. There's a cut-off point for every area. In that particular zip, it's $900. Rentals below that line are a headache. Rentals above $1400 are going to have too many days on market in between.