I've been following BP for some time now, but only recently joined. This is such wonderful place to come and learn- thank you all for contributing to the education that can be found here!
Here's the situation: I'm looking for guidance on investing in my first property in Austin, Texas around the July/ August time frame. Objective is to purchase a an owner occupied 3/2 duplex or triplex, with a 75-80% ARV (for under $325k; financing 80-85% via conventional mortgage via portfolio lender), in South (north of William Canon) or Northwest Hills of Austin, Texas that generates enough rental income to pay my mortgage, taxes, and expenses enabling me to live rent free for a year and then cash flows positive the year following (so I can purchase my next property). I'll be renting out one side and living in the other with 2 room mates (each paying $500/ month).
- First question: Given my objective and the rather hot real estate market in Austin, are my expectations realistic?
- Second question: I travel extensively for my full time job. I'm often out of the country for weeks at a time. For those of you in a similar situation- how do you manage the needs of your property and tenants while living/ traveling abroad- is this doable or am I setting myself up for failure?
Thanks kindly for your responses.
- Jeff D.
I guess you need a Property manager for approx 10% if yu are out of the country o a regular basis. Your scenrio is all too hypathetial right now. You have to be dealing with some real numbers and a real property to figure this out. You can't just talk about something in mid air. Find some property you are interested in, in the area you are interested in and then run the numbers.
I don't understand why you wouldn't go with an fha for a lower down payment and considerably higher return. Rents are going up every year so your net housing expense decreases and your net worth goes up with equity and appreciation.
Your location is familiar with me. Call me and lets chat
You do not need PM but you might want one depending on your personality. I traveled the world for a year with two SFR without a pm and that was my first experience as a landlord. I personally used American Home Shield at the time but I have had some terrible experiences with them since then and do not do business with them anymore. Either way, you can use google voice to find a contractor or to deal with AHS. Just make sure your lease says that they have to be present and let the contractor in.
I agree with @Aaron Gordy on the FHA. That is the way to go. 3.5% down is a sweet deal and gives you cash to clean up the place. You can also do a 203k on a duplex and do some major rehab if needed. 80% ARV is ambitious in those areas but it is out there if you are willing to rehab.
Even if you pay market rate, you can totally live for free if you also have two roommates. It is the magic of multifamily.
Check out 8101 Dowling CV and 8602 Fireside DR as examples of what might work.
Barbara, Aaron, and Will -
Thanks for your feedback. I've looked at a few properties listed on MLS, but they don't make sense give my budget/ constraints and model.
As you've pointed out, I think the best way to go is to find something that needs some work and fix it up in the areas I'd like to be and then run the numbers.
On the FHA suggestion- definitely something I'm interested in. I may look at the 201k loan - as this would enable me to make repairs and possibly improvements that negate some of the risk of owning an older property.
Will & Aaron- I may reach out to you guys when I'm back in the States next in the next few weeks.
If you are looking for next steps I would suggest that you talk to a local realtor about your goals and see what they say. As folks say, each market is different. I'm not super familiar with Austin (focusing on Houston at the moment), but I can say that it is a desirable city for folks to live and has a good rental base with UT in the heart of downtown. Hot markets aren't necessarily a bad thing and you can find the deals just takes a little more networking. I find Austin to be affordable, but then again I'm living in Mountain View, CA.
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