Austin, Vegas, Chicago, or… Help me decide.

[Bryce Y.]

Hey guys I made a post recently saying I was going to move to Austin specifically for REI, but now I am reconsidering. I checked out the RENC website and this is what worried me:

If you are looking for buy and hold investments, you’ll need to understand a few things about Austin. First off, because of property taxes, most investors don’t cash flow on rental property unless they put down a sizable down payment. We jokingly say that Cash Flow + Austin = Oxymoron.

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We use a strategy called Get Rich Slow or GRS. The basic principal for us is that we don’t care much about cash flow, although we do like to break even. But what we do care about is appreciation and in Austin, with the projected growth and by buying in the right place, you’ll definitely feel the appreciation. We get excited not when properties bring in $1,000/year in cash flow, but when they bring in $10,000/year in appreciation. Now that will make a significant improvement in your standard of living especially if you intend on keeping the property for a while.

Now, I haven't made a decision as to what type of REI I want to do simply because I have no experience. However, cash flow is very important to me, because at some point I want to do REI full time and cash flow is essential for that. My tentative long term plan is to work my way up to larger MFDs via flips and 1031s etc. The lack of cash flow due to high property taxes (about 1.8% I think I read somewhere) really worries me. I'm all for appreciation but I view that as an added benefit with cash flow being number one. Can any Austin (or Texas) investors chime in?

Vegas also crossed my mind. Prices are really down there and cash flowing properties seem to be abundant. However, when the economy recovers, I am concerned that the increase in prices will cause these cash flowing properties to grow less and less. While appreciation is a huge upside, I would still value cash flow more since cash flow can pay my bills whereas market appreciation cannot be controlled. Being a popular place for out of state investors also seems to be a negative. I think I also read that the Vegas flip market wasn’t very good (?).

The only reason I say Chicago is because I seem to see a lot of investors on this board posting about great cash flowing deals there.

Bleh, I know I am really overthinking this, but this is a big decision for me, and I’d like to get it as right as possible. Thanks in advance.