Subscribe via:
Show Summary
In this conversation, Chris Kimble discusses how savvy investors identify real estate opportunities by observing new construction signs and understanding neighborhood trends. He emphasizes the importance of recognizing when a neighborhood is beginning to turn and the critical mass that can indicate a tipping point for investment. The discussion highlights the strategies used by investors to navigate the real estate market effectively.
Resources and Links from this show:
-
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Chris Kimble (00:00)
You know, yeah, that’s a great question. It’s funny because oftentimes buyers, they sort of self prescribe, right? They say, well, this is what I need. And they’ll come to me and we’ll start having a conversation about, you know, what they want to do. And I’m like, well, that may not be the best fit for you. Might be better off with, you know, again, like, like maybe a DSCR loan or a bank statement loan, whatever the case is, or, you know, they’re coming to the fix and flip. You know, I have a lot of young borrower.and say, hey, we wanna buy a piece of property and build a house on it. And the first thing I ask them is how’s your marriage? And they’re like, it’s great, why would you ask? I’m like, because it’s gonna be tested while you’re building this house, right? But yeah, a lot of people, you know, I call it the gospel of Google. They get on the internet, they hear somebody on Instagram or whatever.
Dylan Silver (00:44)
Yep.Chris Kimble (00:45)
they know exactly what they need to do and it’s going to fit their needs and they start having a conversation with somebody and we find out that their goals or what they think, what they’ve self prescribed, right, is not really a match for what they want to do.Dylan Silver (02:31)
Hey folks, welcome back to the show. Today’s guest, Chris Kimble, is a lender with CMG Home Loans and his team, the Kimble Lending Team. Chris is based out of Houston and CMG primarily works with single family investors, one to four in DSCR up to 10. Chris, welcome to the show.Chris Kimble (02:55)
Thanks Dylan, I’m really excited to be here.Dylan Silver (02:57)
It’s great to have you on here. ⁓ I always like to start this show by asking guests, you know, how they got started in the real estate space. In your case, how did you get started in the lending space?Chris Kimble (03:10)
Well, I got started in the lending space about 13 years ago, really almost quite by accident. I was working for a family business doing commercial construction and we just took a downturn about 2012 and I had a friend who was recruiting for Nation Star, which is now…Cooper and something else even after that. anyway, long story short, he goes, come do mortgages. I said, well, no one’s buying houses right now. It’s 2012. He’s like, no, they’re doing refinances. And so that’s how I got my start was working for nation star, uh, doing the harp loans, right? The hung affordable refinance program. was the Obama loans and then moved into the retail space. That was consumer direct moved into the retail space in 2013, 2014, about a year, year and a half later. And I’ve been doing that ever since.
Dylan Silver (03:55)
Now, when we talk about the retail side, I think they’re especially as a realtor, it’s very divided. You you don’t have too many, although it does happen, you don’t have too many people that will work with investors and, you know, ⁓ retail buyers as a realtor. You kind of have to pick one a little bit. Is it the same in the traditional space versus lending and working with investors?Chris Kimble (04:22)
You know, I believe it is. have a lot of realtors that have, ⁓do really a mixture of both, right? They’ve got their buyers and certainly they’re taking on listings, but they also have a handful of investors and that creates a pool of buyers for them in many cases for somebody who might be, I don’t know, distressed or in a hurry to sell. They can bring in their investors to sort of compliment what they’re already doing. So, and I’d say, know, on average, you’re probably, it depends on the realtor, but I would say there’s probably an 80-20 rule if you’re 80 % investor, you’re 20 % residential.
And there’s probably plenty that are vice versa that are just 80 % residential and you know one to four and those that are working with again with a handful of investors
Dylan Silver (05:04)
want to ask you some granular questions about the lending space. I’ve had so many lenders on the show and it’s really driven home for me that especially in this segment, ⁓ construction loans, hard money loans, ⁓ fix and flip projects, when we talk about this space, each lender is going to be different. ⁓Chris Kimble (05:28)
Sure.Dylan Silver (05:31)
are the differentiating factors that you see and do people come into it with a maybe a misconception thinking it’s a one size fits all, every place is the same.Chris Kimble (06:30)
You know, yeah, that’s a great question. It’s funny because oftentimes buyers, they sort of self prescribe, right? They say, well, this is what I need. And they’ll come to me and we’ll start having a conversation about, you know, what they want to do. And I’m like, well, that may not be the best fit for you. Might be better off with, you know, again, like, like maybe a DSCR loan or a bank statement loan, whatever the case is, or, you know, they’re coming to the fix and flip. You know, I have a lot of young borrower.and say, hey, we wanna buy a piece of property and build a house on it. And the first thing I ask them is how’s your marriage? And they’re like, it’s great, why would you ask? I’m like, because it’s gonna be tested while you’re building this house, right? But yeah, a lot of people, you know, I call it the gospel of Google. They get on the internet, they hear somebody on Instagram or whatever.
Dylan Silver (07:14)
Yep.Chris Kimble (07:15)
they know exactly what they need to do and it’s going to fit their needs and they start having a conversation with somebody and we find out that their goals or what they think, what they’ve self prescribed, right, is not really a match for what they want to do.Dylan Silver (07:29)
Now for folks who may be newer in this space, in the fix and flip space, I’ve myself looked at this even though I haven’t done a fix and flip personally. I know that there’s sometimes, you know, some, I don’t want to say hoops, but criteria that you have to meet in order to qualify whether that’s, show me the deals that you’ve done. What’s your record with the contractor? Are you the contractor on this?you know, what’s your exit strategy? Is there a general set of criteria that you look at when you’re looking at, you know, working with someone new?
Chris Kimble (08:05)
Yeah, well, experience does make a difference. I’ve flipped houses in the past. I’ve probably flipped about five houses with my now ex-wife who did a wonderful job of juggling contractors. you know, all kinds of things can come up, right, that people are just not prepared for. And that could be anything from the house sitting on the market for a prolonged period of time and they’re losing money just through that holding process. ⁓ And… ⁓permit issues, right? They run into something, somebody they didn’t permit something out and now it won’t pass code or won’t pass an inspection, I should say. So there’s all kinds of hoops. the one, the biggest criteria that I asked them, you know, even if they’re getting finances, financing is, do you have some cash set aside for contingencies? So that is a big thing. It’s like, you don’t, you just don’t think you’re going to get a loan and you’re going to be completely prepared
Dylan Silver (08:57)
When folks are coming to you and your team, ⁓ I’ve noticed this trend. It does seem like fix and flip is harder, but I’ve also had guests on this show tell me that I’m wrong and that there’s just as much fix and flip happening now as there was beforehand. In Houston specifically, are you seeing more momentum in the new construction area? Are you still seeing a lot happening in fix and flip?Chris Kimble (09:23)
there’s still a lot happening with fix and flip because of the regentification or gentrification, however that word is used, right? There’s all these places that people hadn’t considered living before where now investors can go in and find a deal, bring in their contractors and make it a really nice place and charge a pretty penny because of the location, right? Location solves everything. And again, places like Lindell Park orEven the Heights right? remember when the Heights was ⁓ a place you didn’t go after dark right and this would have been the 1980s and 90s right but but now it’s you know, it’s like one of the most or maybe the most popular area in Houston and we see you know 1.3 and 1.4. mean, it’s crazy to think that those ⁓ properties command that much and some of us new construction but a lot of us renovated and you’ve got some other challenges there that revolve around the historic neighborhood
designation right so there’s a whole other set of criteria that they have to fulfill right to make that flip work and make it cost effective for them.
Dylan Silver (11:01)
Right, you know, when I actually visited Houston, I experienced this personally, you’re jogging my memory. I was in the third ward in August, which I don’t know why. I don’t know much about the different neighborhoods within Houston. I hadn’t associated in my mind the third ward with being this super nice area. It was so nice. There was like yoga studio, cycling studio, retail area, first watch, you know, brunch. I was visiting my buddy who was a guest of this show in realtor.Chris Kimble (11:10)
Sure.Dylan Silver (11:30)
And I was like, wow, this is a beautiful area. But then right at the, what felt like the edge, you also had really, it was so wild to see really distressed properties, very visibly distressed properties. And then juxtapose that immediately. It was like beautiful town homes, ⁓ as well as retail areas. So I can, I can say firsthand, that’s what was happening.Chris Kimble (11:54)
Yeah, and that is that is true. I’ve seen it again. I wish I had known more about investing when I was younger because it has amazed me right ⁓ there are parts of town I was with the cycling team for years and years and we’d cycle all over Houston Just on a weeknight rides and you’d see these new construction signs popping up in areas where you thought nobody would want to move right these whole areas were being transformed like Even acres homes, which is kind of a weird area in town with big great big lots is starting to be transformed but the but going back to the wardsThose are inner city close to downtown. There’s fifth ward fourth ward and third ward and Yeah, it’s it has transformed unbelievably and it’s again There’s this challenge this push pull really with people wanting to live closer to work closer to this be in the city around things Have some walkability but Then there’s the you know, the the pull part of that I guess is you know I want to raise a family and I don’t want it to be inner city right and and the challenge is like you said right on the edge of these neighborhoods you have
I
don’t know if you want to call it inner city blight or distress properties It’s all of that is taking place as well or you know, these these communities are kind of they become enclave is really the best way to put it right this small enclave and it becomes a block-by-block neighborhood if you go a block in the wrong direction you’re in the wrong part of town right just that easily so it’s it’s really challenging, you know, it’s it’s it’s amazing, you know, but it’s it’s good and you know again, it’s good and there’s
Dylan Silver (13:15)
Yeah.I saw that personally.
again, I really don’t have too much experience with that type of environment because it was, I mean, legitimately block by block. Like you’re not even turning the corner. You’re just going over a street and all of a sudden you’re now in a distressed neighborhood. I was like, wow, what was here beforehand? And you know, someone’s going to come and someone’s going to come make an offer on that home. And maybe that’s that.
families, you family home, so they might not want right now to sell, but you know, eventually most people, they’ve got a price, right? And so you’ve got, you know, these beautiful areas that are popping up. I could definitely see there being a huge opportunity for flippers in that regard. I want to pivot a bit here, Chris, and talk about just how large Houston is and how there’s so many different areas within Houston where ⁓ folks are active.
I know as a realtor, for instance, that I’ve been told if you’re going to sell in Houston, you’ve gotta pick an area of Houston. Don’t just say I’m the Houston realtor. This is the area that I focus in. As an investor, are investors targeting specific areas for fix and flip in Houston? Or have you seen, folks might say, hey, I’ll flip anywhere in the city as long as the deal makes sense.
Chris Kimble (15:26)
You know, it’s really a combination of both, but I had a realtor friend telling me, I’m like, how do you know where to go by? know, how doand flip and he goes it’s easy I just start looking for the new construction signs right new constructions coming to new construction coming to a particular part of town and like okay this guy sees something here that maybe I didn’t before or an area didn’t consider like fifth Ward now which has been notoriously rough for you know decades it’s got lots of new construction going in so I think that’s how a lot of people sort of guide their way or you know savvy investors savvy fix and flippers anyway are
to look for signs that the neighborhood is starting to turn but there becomes a tipping point or critical mass if you will that you get in too late right so it has to make sense you know nobody you know I mean people want to be ⁓
Dylan Silver (16:15)
Yeah.Chris Kimble (16:18)
You know, not everybody wants to be a pioneer, I guess, so to speak in their neighborhood, right? But, and then the challenge of course becomes comps, right? What have you got around that sold? I’ve, you know, taken this older property, fix it up, invested, you know, a hundred or so thousand dollars into it. And I’m planning on a certain amount of return or yield and, ⁓ I can’t get comps to support an appraisal for a buyer. So that’s, that can be challenging too, but I’d say that the quickest way.Dylan Silver (16:44)
You know, I,I…
I can say the regionality of even within a city can be challenging as an investor. Because especially if you’re just looking at, does this deal pencil, but you’re not taking into account the migration within a city. You’re talking about the fifth ward, and you don’t want to necessarily be the first in certain areas.
you know, you can look at it, especially as an investor from out of Houston or out of the state of Texas and say, hey, this is a great opportunity, but there’s some risk there because, you know, what’s the trend of this area? And then also too, you know, you might force appreciate it beyond a point where the market will, will bring that kind of, of return on it. So you don’t want to do a flip so high that you’ve effectively set the market.
Chris Kimble (17:40)
No question about it, right?It really is can be tricky and and we’ve seen these these these things fluctuate over time right and and I’m you know, yeah, you can go back to 2008 what happened then but you know, we see areas, you know, there’s plenty of places where even when I lived in the Heights or Shady Acres, which is just west of the Heights Where projects were started and then not finished right either they ran out of money or they didn’t think it was
may have been you can see they’ve done the groundwork maybe put on a driveway ⁓ and some you know some site work has been done but then the property sat for a number of months or maybe even years right so it can be tricky and yes you don’t want to force value it as you said ⁓ to something that’s just not going to be achievable and that is in terms of getting it sold or getting it appraised or both so it is it can be challenging and the challenge with
Dylan Silver (18:30)
Yeah.Chris Kimble (18:34)
It’s crazy because we went through the boom of 2020 and 2021, or maybe even partially of 22. And it was…It was a real boom time and then we went, fell into 23 and 24 and the complaint for months was, well, we don’t have enough inventory. And again, I was having this conversation with a realtor friend of mine. was like, well, what’s the problem now? There seems to be plenty of inventory and buyers are still continuing to kind of sit on the sidelines. looking for, I don’t know, the perfect property or, know, again, I can’t really put my finger on what it is. They’re just kind of wishy washy. They’re not really in a hurry to make a
is again such a stark contrast to what things were like you know when things were booming and rates were low and I think a lot of younger buyers are waiting for you know rates to retreat and I don’t think we’re really going to see that anytime soon but but yeah it is it’s challenging it is it definitely comes and goes and in waves
Dylan Silver (19:31)
Yeah, no.I want to pivot a bit here, Chris, and we are coming up on time, but I do want to ask you, especially as someone who I grew up in Northern New Jersey, I lived in Texas for five, six years. I see just how appealing Texas real estate is, Houston real estate is in particular, especially for folks who, you know, I’m from Northern New Jersey. You’re not going to find, you know, lots of vacant land in Northern New Jersey.
you know, while you might be able to do a fix and flip, the entry point is, you know, four times, three times where it is in areas of Texas. Do you work with and see a lot of out of state investors and flippers who are looking at investing locally in Houston, but also anywhere in Texas?
Chris Kimble (20:24)
Yeah, absolutely. They see the bright lights shining down here and the, you know, the migration that we’ve seen even after the boom times, right? Even those things have slowed down or supposedly slowed down there. Texas is, it’s hard to go wrong buying real estate in Texas. It truly is. Right. That’s what I tell a lot of my, is it a good investment? Well, that, you know, that remains to be seen at the end of the day. We’ll know in five, 10 years, right? But at the same time, people are moving here in drove.Dylan Silver
Chris, thank you again. Thank you so much for coming on the show here
