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Introduction

Newsletter is a tad late this month. I was hoping to share some epic news with the group, but I have to wait until next month!

January was a crazy month. It always hectic in Texas with property tax season. Our tax bill this year was a whopping $75k. At one point in January I got a frantic call from my business partner we had just $1,000 in the bank! Now we have money outside the company, but when you are running a business the expectation is that you make money every month! I had seen this before working at a small company in 2010, but when it’s your money and your business it’s on a whole new level. I freaked out a bit, to say the least, for a good hour or so. The normal fear questions running through my mind, “Can I do this?”, “Did we go way over budget on something?”, “WHAT AM I MISSING!” etc.

After ringing my hands for a bit. I took a deep breath and begin attacking the problem. We did a deep dive analysis of our cash flow over the last month. Looked at every transaction to try and find a culprit. Within a couple of hours we had identified three things:

  • We had a draw coming soon on our Rice Village property that just needed a couple days of labor
  • Three or four contracting jobs were waiting to be paid and we had come out of pocket for materials and labor
  • We had just paid off some large credit card items and expenditures
  • We were looking at Net Income every month and needed to be looking at CASH every week

Once we identified the problem we then developed a solution to ensure it didn’t happen again. Every week we now have a running a Scorecard metric to identify our change in cash. For cash deficits we identify why and how long until it will be remedied. Cash surpluses we discuss what costs have not been realized. The goal is to have more cash up front and paid out later. We also changed how we draw and collect on contracting jobs so we aren’t so far ahead of our clients.

Since that fateful day we have been more on top of our cash flow then ever before. Problems happen whenever you are growing any business. What’s important is that you develop systems to prevent problems from repeating. I’m very glad we went through the struggle as I now don’t sweat our cash reserves ever because I know where we stand every week.

In positive news we sold one of our remaining single family homes to an owner occupant. We got out of it for a nice profit and the owner got a great deal. One of the best things about real estate is the opportunity to create win-wins with other people.

Contracting is Officially Re-branded

Houston Renovators is officially live. We’ve begun marketing under our new banner this month. Our website is currently being finalized and we’ll roll that out within the next month. Make sure to follow us on Instagram to get the latest pics and videos of our projects. Feel free to reach out for a free quote at any time.

If we can help you with your contracting needs don’t hesitate to email me at kevin@houstonrenovators.com.

I Need a $4-10M Apartment Complex

Woodbaker and our investors are looking for an apartment complex between $4-10M in the Houston area. If you have any leads please reach out to me at kevin@woodbakerllc.com.

MLS Monthly Article

n mid-February the MLS released their monthly report. Here is a look at the table for January:

Monthly Inventory Estimates

The Houston market appears to have slowed year over year. Active listings being up 16.8% year over year is very interesting. Maybe we’re seeing a bit of a downturn in Houston. With home sales down and inventory up if this continues for another quarter or two there should be some great investment buys on the market.

Here is a breakdown by segment

  • $1 – $99,999: decreased 13.9 percent
  • $100,000 – $149,999: decreased 24.7 percent
  • $150,000 – $249,999: decreased 3.5 percent
  • $250,000 – $499,999: decreased 7.4 percent
  • $500,000 – $749,999: decreased 4.1 percent/li>
  • $750,000 and above: decreased 4.2 percent
  • Consumers that weren’t buying homes were renting properties at volumes not seen since November 2017. January single-family home rentals shot up 16.5 percent while rentals of townhomes and condominiums jumped 16.4 percent. The average rent for single-family homes edged up 0.4 percent to $1,755 and the average rent for townhomes and condominiums dipped 0.8 percent to $1,504.

    Articles

    I linked some important articles below. I read 20-30 articles and cherry pick the ones that I find most valuable. Here are a few articles worth reading:

    Missouri City to Add 600 New Homes

    The Sienna Plantation development in Southwest Houston continues to expand with new builds. With these new builds comes additional infrastructure and amenities. Buying up older homes in this area could lead to rental appreciation over the next couple of years.

    Two New Apt Buildings Coming Up

    More development inside and just outside the loop on the horizon. Just Northwest of Memorial Park and a block outside the loop a new apartment project is coming up. There is already a small pocket of units back here. I’m not a huge fan of the area as there isn’t a large amount of infrastructure nearby. I’m more in favor just east of Memorial Park where a new 270 unit is going up at Dell and Washington.

    The other complex consisting of 357 units is being developed just south of i10 off Montrose. This is a prime rental market. With the addition of jobs in Texas Med Center as well as the proximity to Rice I expect these to fill up fast.

    Home Prices By Area Since 2017

    Checking growth of new home sales year over year is a great way to get a sense of where folks are moving to. From the chart it also appears that Harvey may have impacted some of the movement as well. Here is a list of delta price changes by area.

  • Central (includes West University Place, Bellaire, Galena Park, Pasadena): $361,716 (up $21,664 from 2017)
  • Northeast (includes Kingwood, Humble, Crosby, Cleveland): $300,157 (up $16,987 from 2017)
  • West Northwest (includes Towne Lake, Bridgeland): $371,951 (up $12,637 from 2017)
  • Northwest (includes Louetta, Jersey Village): $378,365 (up $6,284 from 2017)
  • South (includes Manvel, Pearland, Friendswood): $336,460 (up $3,60)
  • West Southwest (includes Fulshear, Pecan Grove, Cinco Ranch, Sugar Land): $361,857 (down $11,973)
  • Far North (includes The Woodlands, Willis, Shenandoah, Conroe): $334,018 (down $14,079)
  • Southeast (includes La Porte, Seabrook, Baytown): $325,901 (down $17,503)
  • Southwest (includes Richmond, Rosenberg, Greatwood): $350,679 (down $20,862)
  • New Apartment Development In Spring Branch

    Spring Branch is an area I’m following and have started prospecting in. Prices are rising over there rapidly in the last couple of years, but it’s not quite as overbought as the Katy area. I highly recommend checking out SFH in this area. With increased development rents should continue to rise in the area. It’s not too far outside of the loop either just a short drive west down i10.

    New HEB Coming Just S of Third Ward

    A 90,000 sq ft HEB is opening at MacGregor and 288. This is huge news for third ward. The northwest corner was gentrifying with the addition of funds in Emancipation Park as well as growth with UH and TSU. Now with the HEB it adds a bookend grocery store to the neighborhood along the southern border. The newer HEBs are much nicer and larger than older ones. This 90k sq ft is very close to the recently opened 92k sq ft in the Heights. You know from previous letters that I am very high on Third Ward.

    Med Center Continuing to Blow Up

    Houston healthcare continues to do well. From 2015-2017 16,000 medical jobs were added to the Bayou City. Another 1M in medical office sq ft will be developed in the next couple of years. The medical center alone generates $25 billion with B annually. At 160,000 employees it will continue to expand.

    Have A Deal?

    WoodBaker creates win/win situations for the sellers of properties. We buy, rehab, and rent properties for investors all day every day. If you need advice, help, or an exit strategy we can help you. Feel free to email me with any deals at kevin@woodbakerllc.com.

    Need a Deal?

    WoodBaker is one of the premiere real estate buyers in the Houston area. We get 3-6 deals per month. If you would like to invest as a cash buyer or are looking for rent to own opportunities let us know. If you are on this list you’ll get the first opportunity to buy any deals we find. Email me at kevin@woodbakerllc.com.