How an Appraiser Avoids Overpaying for Real Estate | Houston Investing

Tita Obii-Obioha (00:00)

She asked the value, what the value was, and I did the value on that property and I got it at 640. She told me that’s what the appraiser got. But after the appraiser got six forty, the realtor went to the appraiser and said, No, this house is not six forty.

That it is 700,000. And they brought some other comps that made no sense when I saw them, and the appraiser gave them 705. Now she closed at 700,000. There the I teach appraisals, right? The appraiser got bamboozled by a realtor and a builder who’s calling him and saying the value is this, but you have to stick to what you know. Appraisal is not subjective. You have then the numbers are right there, right? I looked at that appraisal and I was like, my.

This. This is why I said before why I said we need more appraisals, but we need more educated appraisers.

Scott Bursey (02:17)

Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey. And today we’re thrilled to be joined by Tita Obii-Obioha, a true pro with 21 years of experience in real estate appraisal and a seasoned real estate agent who is now making moves with his first new construction investment project in Houston. Tita brings a level of valuation expertise that is rare

in the development space, giving him a surgical edge when it comes to pricing and market dynamics. Listeners, get ready for a master class on how to transition from a valuation expert to a developer in one of the most competitive markets in the country. Tita, welcome to the show.

Tita Obii-Obioha (03:02)

Thank you, thank you, thank you, Scott, for having me.

Scott Bursey (03:04)

It is awesome having you here. Just wonderful. And Tita, to help our listeners get up to speed, please give us the ninety second highlight reel, if you will, of how your career ignited and where you’re pouring your fuel now.

Tita Obii-Obioha (03:18)

How my cre career ignited in real estate. So I got into real estate in 2005. Right as an appraiser, an apprentice appraiser. I was an apprentice for two years, got my license, and ever since I’ve been doing appraisal for all the lenders that you probably could mention out here right now in America. And in the year 2020, I got into real estate because I figured that there’s a need for it. While doing appraisals, I already

interact with a lot of realtors and I saw a lot of problems that I could solve for a lot of clients. So I decided I was gonna get into it and actually merge both together. So you have the best of both worlds, an appraiser and a realtor. And it’s really been doing a lot for me right now in the real estate business out here in Houston, Texas.

Scott Bursey (04:02)

Wow, that’s an amazing journey and an exciting journey. Congratulations on your first adventure. You know, what really caught my attention about you was the way you’ve been able to take two decades of deep appraisal insight and turn it into actionable boots on the ground development success in Houston. You know, building on that, curious to know, since you have 21 years of experience.

What do you see as your biggest strength when identifying a site for your new construction project?

Tita Obii-Obioha (04:35)

Biggest strength is my appraisal because I mean there is nothing if you’re going to real estate, all you want to do is all you want to know is money. How much money am I going to make out of this property? Whether it is that you’re buying the property for to hold and rent, you want to know if this neighborhood is something that’s gonna be something tomorrow or is it gonna tank tomorrow, right? So valuation is very key. So my appraisal experience is all it is. I already told you that I have a couple of investors and

I’m the mastermind behind the whole thing in the sense that I’m the one who bought the land and who told them, you know what, this is where we’re gonna put our money in. Right. And I’ve been looking at the Houston market. Multifamily is a new thing here in Houston. All right, it’s a new thing because we have a lot of single family in Houston, all right. And right now the population growth is astronomical, right? So now they’re getting more dense in the in Houston proper, and now we’re building more multifamily. So

I knew that the area that I was looking at with the Southside Medical Center is an area that is already grown. There are a lot of new constructions in there in that area. You don’t want to be the only person, you don’t want to be the first person in the neighborhood doing something, right? You want to see there’s a movement. And I saw that movement and I saw that shift. And I said, you know what, this is the area to go to. And I picked the right neighborhood, the right street, and it’s been going well so far.

Scott Bursey (05:47)

Does that data heavy background ever make it harder for you to pull the trigger when the market is moving fast?

Tita Obii-Obioha (05:55)

Make it harder for me to pull the trigger because the market is moving fast? No. I mean if the market is moving, it’s moving. You’re not I’m not going to be pessimistic and say, hey, something’s going to happen. Because you know some people actually say, you know what, the market’s moving too fast. We cannot go in right now because it’s going tank. People have been talking about the market tanking since we had the depression in 2008, right? They’ve been saying there’s going to be a recession or recession, but we cannot predict the market. And that’s one thing I tell everybody, but myself inclusive, because I’m already in it right now.

If I kept saying, you know what, it’s gonna drop, it’s gonna drop, and I wait, I’m not gonna do it. Well, but it might drop right now doing the construction, but that’s me being optimistic. So I’m not gonna be pessimistic and go, if it drops, then we you know what? When we have a depression, rentability goes up. Yes, markets values go down, but rentability goes up because people who are losing their houses are gonna come and rent. So at the end of the day, you’re still gonna have to pivot some way or the other. If you’re in real estate, you just have to use your brain. That’s all.

Scott Bursey (06:46)

Tita, thank you for highlighting that. And what do you see as your biggest internal weakness or hurdle now that you are wearing the developer hat versus the appraiser hat?

Tita Obii-Obioha (07:45)

Well, I’m wearing all of them. I still do appraisals. I do every one of them, right? Weakness. Maybe you say that I’m doing everything, right? But I try to do everything well, you know. So I do appraisals, I devote time for it. And my investments, obviously, I just go there and inspect what’s going on. I’m not a builder yet, in the sense that I this is my first investment. So I’m not the first, I’m not the general contractor, let me put it that way, right? But I’m going there and overseeing everything, I’m making sure that everything’s going up

or according to the draw plan. Sales I’m there. So I mean, what’s my weakness? Maybe because I’m doing all of it at the same time? I guess. I don’t know. Yeah, someone will have to tell me my weakness. I really don’t know. Maybe because I’m just doing so many things at the same time. That’s the weakness, I guess. Yeah.

Scott Bursey (08:30)

I love the honesty there. Thank you for that highlight as well. And you know, it strikes me, Tita, given the current Houston landscape, yeah, what is the biggest opportunity you see for investors in new construction over, let’s say, the next 12 months?

Tita Obii-Obioha (08:47)

Okay. First there is job growth in Houston, right? You have different sections of Houston that have massive development. You have in Grimes County, Tesla is building the Terafactory construction over there, which is what six point five billion. I actually actually have a contact that’s that’s gonna drop on my page tomorrow about it. Actually my my page is Tita the Realtor on Instagram. So I’m gonna drop something like that and that’s people to know that.

Grimes County is just right off Montgomery County, Willis, which is The Woodlands, Montgomery, then you have Grimes County. And that’s jobs. So that’s growth up north. You have Cypress. You have the Texans training facility coming up over there. And with that facility coming over there, a lot of commercial is coming over there. So now they’ll have new developments and the existing developments, you’re gonna have value growth and jobs and all that stuff. So

There’s a lot going on in Houston and people move into Houston because if you look at the data in America, Houston is always popping up as the top five cities most move into cities every year. That’s people are coming in here because of the jobs, because of the weather, because of anything. But there is growth in Houston, Texas. So there’s a lot of money to be made here at real estate.

Scott Bursey (09:59)

And we love your take on what do you view as the biggest threat to construction margins right now? And how are you mitigating that risk?

Tita Obii-Obioha (10:09)

Material cost. Material cost is the big deal. The cost of wood, but we can’t do anything about that, right? We just source different vendors. You have the big box stores, the Home Depot, the Lowe’s. You have other stores that you can actually reach out to and you get lumber at cheaper rates. So right now we’re in the foundation stages, and I’m not gonna lie, some things are coming from international.

From overseas, right? It’s better quality and cheaper. All right. So not everything’s coming from here. The cost of materials is extremely expensive that sometimes if you use what you see out in you know, the stores, you are not gonna make money.

Scott Bursey (10:51)

Are you seeing any signs of relief when it comes to material costs?

Tita Obii-Obioha (10:56)

At the moment I am not because this is not something that started today. We’ve been dealing with this now for years, even before me getting into construction. But because I’m in real estate, I hear it. I read about it. Right. The lumber cost has been something that’s been going on for years now, right? It’s just been going up and it’s not relenting. You know, so I don’t know what it is. Maybe it has to start from the top, obviously. And at this point right now, we don’t see anything.

Saying that it’s gonna scale back, so we just have to find alternate means to get what we need.

Scott Bursey (11:27)

Tita, wondering, how does your dual perspective as an agent and an appraiser change the way you negotiate deals compared to a typical investor?

Tita Obii-Obioha (11:38)

A typical investor, not a typical realtor, but a typical investor. Well, I am dealing with my first one, right? So I haven’t started with the sale part of it, if that’s what you’re asking, but getting the deal done. Like I said before, it’s all about valuing the property, showing them what’s going on, and not you know, I if I’m an

Even as I’m a real estate agent and an appraiser, I could actually get someone who’s just a regular investor that doesn’t know anything about real estate and I could just punch numbers and make them bring money, right? But for me, I feel integrity is everything, right? I’m in this to win. I’m in this for the long haul, right? And I show them properties that are exactly similar to what we’re building because real estate is all about apples to apples, oranges to oranges, right? You’re not gonna bring a two-car garage or duplex.

And compare it to a one car garage duplex. I could show them data letting them know that this is why this is comparable to what we’re building. And it was so easy because I’m gonna explain it like I’ll explain to my apprentice in an appraisal you know, tutoring. All right. And it wasn’t difficult to explain to them. And I show them not only sales, but I show them what are on the market right now because typically the ones that are on the market are gonna be listed higher. And if you see something listed lower than what you project to be the value.

That is a problem because that means that property is going to sell lower or even lower than it’s listed. So we saw that everything was listed higher. And when you calculate the list to sale price, which is something that I do as an appraiser, there’s always a way to calculate your list to sale price adjustment. When you apply to the list price, we’re still at what we’re supposed to be. So it was easy to explain it to my investors.

Scott Bursey (13:21)

Tita, this is an exciting time for you. You know, your first investment deal. What is your outlook for let’s say the next twelve to twenty-four months and and perhaps even beyond?

Tita Obii-Obioha (14:14)

Okay, so good yes. So this first one, I said, you know what, it’s so easy for one to look at things on paper and say, my god, I could make this amount of money, you know what? Let’s go build build two, three, four at the same time. That’s greed, right? And in real estate, you don’t go you don’t go with just the money and just go into it, you have to learn, right? So I like I told you, I am not a builder right now. I’m an investor.

But I have a builder who’s not gatekeeping anything. So I’m learning from him. Right. Now, my goal, and again, I haven’t gone to get money, right, from the bank. So this is my first time, right? And I’m learning from this investment, right? Certain things that I’m going to fix going forward. First, the architectural plan took me a month and a half. It should not take that long, right? But first of all, I already have

one plan that has been approved by the city so I can use that one rinse and repeat and sometimes alter as I could. Right. So that took a lot of time. And what what I I lost my train of thought. But anyway I am learning the the financing part right I know that I want to learn how it works and you know the interest, how the payments go, the draw plans and

How much money I’m gonna pay back to the bank before I sell. I already know what my marketing time is, right? But in reality, what’s gonna happen when I sell this one? Then after that, my projection is that we’re gonna build multiple at the same time, right? Not just one again. So I’m not gonna do this one and go back and do one, right? And I’m sticking to a particular neighborhood because we are going in that neighborhood and we want to change that neighborhood. From there, years down the line, I wanna go to commercial in that area because residential without commercial.

It’s not gonna be good for the neighborhood. You need to add a little bit of commercial too. So I have that in my future.

Scott Bursey (16:03)

It’s surely evident that you have a a passion, a real a fire for investing. I’m interested. What does your professional network look like right now?

Tita Obii-Obioha (16:16)

I have everybody. I have the lenders. I have multiple. Like I just mentioned to you, I have bank, right? I did not go with a bank this time around. I went through the hard money. There was a reason why, because we have multiple investors and with the bank you have to have everyone sign for that loan, be guarantors on that loan, but the way this was structured, we couldn’t do that. But I have that bank, right? So I already know that I’m gonna use him. I have the general contractors, I have the builders, I have

plumbers, everything that I need. I’m already appraiser, I’m the realtor, so I have everybody. I have people who could chase my permits faster. I and I got that from my networking events actually. The the people who actually expedite your permit in time. So I have everybody right now and I save them on my contacts and I keep growing. All every networking event I’m gonna find somebody else. Yep.

Scott Bursey (17:05)

Your network really is your net worth, especially when you’re executing a ground up development. And Tita, if you could give our listeners one piece of valuation based advice to stop them from overpaying perhaps for their next investment, what would you tell them?

Tita Obii-Obioha (17:22)

It is easy to be deceived in real estate, especially when you’re a first-time home buyer, right? So people ask me this question a whole lot, right? Because I have a lot of people who come to me because they’ve worked with, you know, some other professionals and they want to work with me maybe because what they’ve seen online or referral. It’s easy to say, but sometimes you need a second opinion, right? It’s easy to say because when you’re working with a realtor, you’re kind of like stuck to that realtor.

Because what I I’ll give you an example if you don’t mind, right? There was someone who bought a property, a triplex in Houston for $700,000. She came to me after she had bought the property and asked me, I didn’t know her then.

She asked me what the value, what the value was, and I did the value on that property and I got it at 640. She told me that’s what the appraiser got. But after the appraiser got six forty, the realtor went to the appraiser and said, No, this house is not six forty.

That it is 700,000. And they brought some other comps that made no sense when I saw them, and the appraiser gave them 705. Now she closed at 700,000. There the I teach appraisals, right? The appraiser got bamboozled by a realtor and a builder who’s calling him and saying the value is this, but you have to stick to what you know. Appraisal is not subjective. You have then the numbers are right there, right? I looked at that appraisal and I was like, my.

This. This is why I said before why I said we need more appraisals, but we need more educated appraisers.

So yeah, it’s it’s hard, but you need a second opinion. I always tell people that I’m open to answer questions, even without getting commission. I say it on my page all the time. Reach out to me. I am so open to teach people. I don’t want to get money from that deal, but I just want to make sure people don’t overpay because at the end of the day, it’s gonna affect me too. I’m an investor right now, right?

You know, so if someone overpays for a property in the neighborhood that I’m building in and they can afford that mortgage tomorrow, it affects me. Because if that property goes in foreclosure, it affects me. So yes, I’m open to teaching. People just need to get knowledge some way or the other. I don’t know how, but they need to reach out to other people, reach out to a realtor, reach out to me. I am free to give that knowledge and I’ll help them.

Scott Bursey (19:27)

Tita, thank you for that perspective. And for those of our listeners that want to keep this conversation moving, stay in your lane, or perhaps even collaborate with you on future deals, what’s the best way for them to reach you?

Tita Obii-Obioha (19:39)

I’m on Instagram, TikTok, Facebook with TitaTheRealtor.htx. That’s Houston, Texas. Tita the Realtor on Facebook, Instagram, TikTok. But I’m very active on Instagram. So you can reach me on Instagram.

Scott Bursey (19:53)

Tita, thank you so much for joining us today on the Real Estate Pros podcast.

Tita Obii-Obioha (19:57)

Thank you, Scott, for having me.

Scott Bursey (20:00)

It was an absolute pleasure. And to our listeners, we appreciate you. If you received value from today’s episode, please subscribe. We’ll be filling your tanks with a lineup of elite guests, just like Tita, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.