Houston REIA - FAQ's
Houston real estate investors often start by learning as much as possible about the industry and building their network of specialists and investors. Network building offers the opportunity to partner with another real estate investor with previous experience and knowledge. While partnering, you may split profits and grow your skillset.
You may also start by purchasing properties that provide consistent income, utilizing the buy-and-hold strategy, flipping fixer-uppers, or wholesaling real estate.
You can start your journey by signing up for our next free Houston Real Estate Investment Association free training and meeting HERE.
Real estate agents represent someone or a business purchasing or selling a property and need a license to work in their state. They must follow the license rules and can earn commissions of 1-3% and upwards on the properties they market.
Real estate investors do not require a license and purchase or sell properties for themselves and their own benefit. They make their money from renting, selling, or flipping the properties they find. They work for themselves, while agents work for others.
Real estate investors also have the advantage of having more options to accumulate wealth and incorporate the state of the economy to make money.
Houston real estate investors can sell properties on the MLS (Multiple Listing Service) when they have a license without paying an agent 3% of the sale. Some people want to list rental or retail properties on the MLS and obtain one to do it themselves.
However, you do not necessarily need a license to become a real estate investor.
You can still become a real estate investor when you have just a little money to start. Some options to get the ball rolling while having less money are:
- Work with an expert or investment company for guidance.
- Purchase a "turnkey" property that needs no repairs or fixing
- Purchase a multi-unit property or duplex for multiple monetary gains
- Purchase a home or rental property as a primary resident (live there at least once a year and utilize the space as a rental property income).
Owner financing helps people purchase a property in Houston, but the buyer must meet the following criteria for a lender to agree:
- Proof of a fixed monthly income
- Good financial history and credit score
Some people looking to buy a home have struggled with financing because of their credit score or missed payments on their credit cards. Even so, owner financing might help them.
Some people get started in real estate investing through real estate wholesaling. A real estate wholesaler searches for discounted properties and makes a purchase agreement with the seller. Rather than purchasing the property themselves, the wholesaler finds an investor who will pay more for it, matchmaking the parties.
The wholesaler makes money through the fees of connecting sellers and investors, and they have the potential to make thousands of dollars through careful pairings.
While wholesaling real estate is legal in Texas, you must strictly follow state laws and rules. Real estate wholesalers are not the same as licensed real estate brokers, and agents can get in trouble for crossing those boundaries.
Some of the options for real estate wholesalers are:
- Apartment Buildings/Complexes
- Commercial Properties
- Mobile Homes
- Run-Down Properties
Wholesalers help find a contract for sellers to work with motivated cash buyers, earning on fees.
Houston does not require you to have a real estate license to flip houses, but some agents, flippers, and industry professionals do have one.
A "subject to" deal involves a property buyer obtaining the property "subject to" a current mortgage and the seller inflating the cost for profit. Almost all mortgages now involve the clause "due on sale," meaning someone has to pay it before the sale.
However, in "subject to" deals, the buyer makes a down payment that goes to the middleman and seller, not the property interest. Situations like these can be profitable, but tricky for newer investors, as a lack of titles and documentation can cause buyers to lose money.
These deals are legal in Texas, but everyone involved should understand them thoroughly, or partner with an experienced investor.
Houston REIA members live and breathe real estate investing and can offer industry advice to you. Houston real estate investors often network and learn from professionals in the area.
You can sign up for free to attend your first meeting and training of the Houston Real Estate Investment Association HERE.