Starting out in Austin - Buy and Hold

[Nathan W.]

Hey Guys,

I'm on information overload and it's got me frozen like a deer in the headlights. I'm looking to invest money for the long term. I don't mind doing some repairs, renovations, and tenant management. But I'm not looking for the low end of the market or anything bigger than a duplex. I just don't want some of the headaches that come with those.

I'm trying to get the 1% rule working but it's been hard to find here. I know they are out there but they are few and far between. There's nothing I can see in the 2% range without getting really sketchy.

Do you guys think I'm crazy if I take a little under 1% to get my foot in the door? Or, if I'm looking in the wrong places please let me know. Are 1% properties out there and I'm just missing them?

Thanks for any input. Here to learn...

[Ali Boone]

You're absolutely not crazy to take less than 1%. That is strictly a guideline, not a rule. Well, I should specify, you aren't crazy to take less than 1% if that is what the market you are looking in warrants. Austin, it will be hard to get 1% but you are also likely getting higher quality and a lot of growth potential and demand. If you were in a market where say 2% was more common, then yes you'd be crazy to go for less than 1%. But Austin, you're fine. Don't stress over that one. But more than anything, make sure you run the numbers through before buying anything. Between Austin's prices, TX property taxes, and TX insurance, you could quickly end up in the negative on a property. So ignore the % rules and run real numbers. If you don't, you could be in a lot of trouble.