Real Estate Investor · Austin, TX · Member since 2012 · 50 posts · 5 votes
Has anyone that invests in the Austin real estate market found properties that meet the 2% rule? What other methods have successful investors used to determine the worthiness of a SFH investment property in Austin.
Investor · Spring, TX · Member since 2012 · 121 posts · 26 votes
12y
Hello Sharon thanks for the response. The rental market is excellent in Houston. All my rentals have been leased off the MLS which I firmly believe by going throughout the MLS with a realtor you are able to get top of the market rent rates. My last two deals I acquired via my own marketing so there was no middleman just me and the seller. This is the way to go! So because of this my cashflow on my last two deals are $492 and $565. My first property was a gift from my mother, thank you mom. This is what got me started. The other two were Foreclosures off the MLS via a realtor. I used hard money on the two Foreclosures and private money on my last two deals.. So believe it or not my last two deals I used ZERO of my own money. I am getting better and better at this.
Developer · Austin, TX · Member since 2011 · 286 posts · 88 votes
13y
Raquel Barela Here is a good forum thread on the 2% rule:
http://www.biggerpockets.com/forums/52/topics/76490-2-rule
Like mentioned in the thread, you will have to go ghetto or go cheap... and going cheap is not very common in Austin. I would say that if that becomes your business plan for acquiring rentals, you may miss a few good opportunities!
Developer · Austin, TX · Member since 2011 · 286 posts · 88 votes
13y
Sorry, I forgot to mention what I look for in the Austin area for purchasing rental SFH.
We personally consider cash flow, potential up-side appreciation, capital requirements, amount of initial work necessary, and distance from our home-base.
Every investors situation is so unique, that I think each one has to start with their priority (ie., I want $300+ in cash flow) and then look at those properties that come on the radar to see if they fit your other reqs:
- upside appreciation?
-how much of my capital is this going to absorb?
-how much trouble is it to me (distance, neighborhood, etc.)
For me, if it cash-flows $300+ and I can stomach the answers to the other questions, that property is a strong candidate.
Hope that helps. There is probably someone on BP with a much more prudent answer!
Real Estate Investor · Austin, TX · Member since 2012 · 50 posts · 5 votes
13y
Jason Grote
Thanks Jason for the link. Good discussion.
I prescribe to most of the methods you use and have been most successful in the appreciation aspect (have been investing since '98). I'm always interested in learning about what has worked best for others.
Real Estate Investor · Austin, TX · Member since 2012 · 50 posts · 5 votes
13y
Jason Grote
Actually my methods are pretty simple. I always invest in desirable areas or areas that are overlooked and have great potential (think East Austin - close to downtown and underdeveloped. Especially 5-7 years ago).
My goals are appreciation and cash flow. I've owned properties in Tarrytown, Rollingwood, Westlake, East & South Austin and downtown. These locations are usually easier to rent out and easier to sell when I choose to sell.
I'm always researching property prices in areas that I'm interested to insure I know a good deal when I see one. And by always, I mean even when I don't plan on buying a property. By doing so, I always know the market value of properties in a certain location and I can act quickly when I see a deal (given that I have the cash to do so).
If possible, I try to buy properties in the "off season" (November through February) although I've bought properties at other times as well. I've found that sellers are usually more motivated during the "off season". One of my best deals was on a house in Westlake that I made an offer on over the Christmas holiday (in 2004).
The Austin market is pretty tight and the city continues to grow, so I may have to change my methods and strategy eventually. However, this has worked for me and of course I'm always interested in learning what has worked for others. By the way, none of my properties would have ever followed the 2% rule but they still turned out to be good investments. :-)
Real Estate Investor · Austin, TX · Member since 2012 · 50 posts · 5 votes
13y
Jason Grote
I have considered it, but my full time job helps with many aspects of investing (cash down, financing, etc...). One of my goals is to generate enough passive income that full time REI is an option.
Developer · Austin, TX · Member since 2011 · 286 posts · 88 votes
13y
Raquel Barela Sounds like a great plan, and it sounds like you are well on you way to achieving it. Please continue to share your experiences here on BP... you are well down the path that many are hoping to walk! See you at the meetup
Investor · Spring, TX · Member since 2012 · 121 posts · 26 votes
12y
Hey Jason I heard your podcast on bigger pocket yesterday, it was awesome. I am an investor in Houston. My wife and I own five rental properties which generate $2,700 cash flow. Our goal is to keep buying and holding until we reach $8,000 cash flow, we are going to accomplish this in the next 3 years.
One of the marketing techniques I use is driving for dollars just like you do but you call it something else I can't remember. Anyway when you drive for dollars how do you keep track of where you've been so you don't go in circles. Is there some tool on google you could use to help you map your driving?
Real Estate Broker · Cypress, TX · Member since 2013 · 822 posts · 468 votes
12y
Hey @Ronnie Sparrow are you achieving that kind of cash flow w/ financing or cash; and if leveraged, what % down do you normally have to make to get that kind of cash flow, if you don't mind sharing.
I'm moving to Houston next year to restart my REI career, which is why I'm asking. Thanks!
Investor · Spring, TX · Member since 2012 · 121 posts · 26 votes
12y
Hello Sharon thanks for the response. The rental market is excellent in Houston. All my rentals have been leased off the MLS which I firmly believe by going throughout the MLS with a realtor you are able to get top of the market rent rates. My last two deals I acquired via my own marketing so there was no middleman just me and the seller. This is the way to go! So because of this my cashflow on my last two deals are $492 and $565. My first property was a gift from my mother, thank you mom. This is what got me started. The other two were Foreclosures off the MLS via a realtor. I used hard money on the two Foreclosures and private money on my last two deals.. So believe it or not my last two deals I used ZERO of my own money. I am getting better and better at this.
Wholesaler · Katy, TX · Member since 2013 · 213 posts · 109 votes
12y
@Ronnie Sparrow it is always good to read success stories in the Houston area. I'm just getting started and my plan is to follow what you are doing. Buy and hold. If you ever know of a local meetup (other than the local REIAs) please let me know.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
There are few quality markets that you will hit the 2% rule on these days. Especially not Austin. You'll be good to get positive cash flow there! It exists, but prices tend to be a little higher there so between that and high TX property taxes, you definitely won't see the higher returns. BUT, that doesn't mean it's not still a great place to invest.
Developer · Austin, TX · Member since 2011 · 286 posts · 88 votes
12y
@Ronnie Sparrow Thanks for listening to the podcast, glad you liked it. What you call Driving for Dollars, we used to call "The Dirty Thirty" because we would try to get 30 letters out per week. We have no magic way of tracking, but we have many great areas to drive that by the time we get back around to one we have already hit, it's time to hit em' again. Plus, a repeat letter can oftentimes increase your chances of a response.
Great to hear your success story thus far. Hope the increase continues for you!
I just got started and my original plan was to try both a flip and a SFR in Austin to see which strategy I liked best. I toured a couple of quads in Austin that barely broke 1.4% and were basically slums. I'm working St. Louis instead and have a $33k rehabbed SFR under contract that will rent for $750.
As for flipping in Austin, I have a couple of people (including my broker) who I'm looking for potential deals with but even that seems to be hard to find in Austin. I don't mind doing out-of-state SFR (I have a good team in STL) but I wouldn't want to do a long distance flip even as just the money partner.
Austin, TX · Member since 2011 · 119 posts · 46 votes
12y
You aren't going to find 2% in Austin. You can find a 2% property in one of the small rural towns outside of Austin, such as Taylor, Granger, up to Belton and Temple, Waco, etc.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
I agree @Gunnar Teltow. I don't flip anyway but even if I did, long-distance would be too risky for me. That's why I go the sissy route and just buy perfect condition houses :) Lol.