We are constantly being asked questions about our wholesale properties, as well as Houston investment properties in general. Here are some resources we use to help us as investors, as well as some answers to the most common questions we receive.
Q: Where do you get your property values from?
A: We use multiple online sources to determine the current market value of properties as well as drive the area and check to make sure we have apples-to-apples comparisons. These are the best sites to use:
1) HAR.com is the most valuable resource when it comes to real estate in Houston. You can look up recent sales information to get reasonably accurate comparisons, as well as see what other properties are for sale in that area to see what else is available. It’s always good to know who your competition is when it comes to selling homes or keeping them for rent.
2) Zillow.com provides a more accurate value in larger urban areas than in smaller towns. Values for Houston are generally within 3-5% of a home’s value, but can be outside 20% or more in a smaller city like Magnolia.
3) Local county auditor sites:
Harris County: hcad.org
Fort Bend County: fbcad.org
Montgomery County: mcad-tx.org
Galveston County: www.galvestoncad.org
Q: Where can I get financing for investment real estate in the Houston area?
A: What you plan to do with the property will determine which option is best for you. If you have the cash to buy a property at a discount without financing it, that’s always the easiest way to go. If you are purchasing a rental property that is in “move-in” condition or already has tenants, purchasing conventional financing from your local bank or credit union is an option if you have good credit and a 10-20% down payment. initial. payment. Local credit unions are friendlier to investors right now than the big banks, and you’ll likely get a better interest rate, too. If you are…
Rehab to resell or rent – hard money is the easiest way to do it. You’ll pay an interest rate of 12-18%, as well as a couple of points, but if you have a good offer on your hands, hard money lenders care more about the offer than your credit score. Just be aware that many banks will require the title to be in your name (seasoned) for at least 3-6 months (sometimes up to 12 months) before they will give an ultimate buyer a loan to acquire your property, or allow you to refinance. the renovated property to a conventional non-owner-occupied property loan. If you keep it as a rental and refinance the property, you’ll likely need a good credit score and possibly money for a down payment if the property’s appraisal is too low.
Rehabilitation to live in yourself: An FHA 203K loan is probably your best option. It gives you up to a year to complete renewals, and then you’ll be able to transition to a conventional 15- or 30-year mortgage with little difficulty. You’ll be required to have good credit and a down payment, but you’ll get the best interest rate available. http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
Q: What is wholesale/wholesale ownership?
A: A wholesale property is a property that a wholesaler sells at a deep discount from its fair market value. A wholesaler is someone who works with motivated sellers, puts their property under contract, and then sells the rights to their contract to the investor/buyer.
Q: What is the wholesale process?
A: A motivated seller, like a tired landlord, calls a wholesaler and offers to sell a house worth $100,000 for $60,000 that needs $5,000 in repairs. The wholesaler inspects the property and verifies the value, then places the property under contract. The wholesaler then offers the property for sale to his list of buyers for $63,000. The buyer meets with the wholesaler, purchases the rights to the original purchase contract for $3,000, and is assigned the original contract. The buyer then closes on the property, repairs it, and then resells it on the retail market for $100,000, or rents it out for passive income every month.
This is a win-win-win situation. The seller wins because he was able to sell his property quickly and without paying a realtor’s commission. The wholesaler wins because he was able to win a couple of thousand dollars by helping to put together a deal that otherwise would not have happened. The buyer wins because he now has a property that he paid $68,000 ($60,000 purchase price, $5,000 repairs, $3,000 assignment fee) that is worth $100,000.
