I'm currently evaluating two buy and hold properties. Both are $150k asking.
Property A: Built in 2003. Comps rent for $1350. Near Austin airport. Cash flow $200 (no HOA and slightly higher tax rate).
Property B: Built in 1974. Comps rents for $1200. Closer to downtown Austin. Cash flow $150 (no HOA and slightly lower tax rate).
My gut reaction is Property B may end up costing me more in the long run because of CapEx/ R&M. The location of property A isn't as ideal, but the numbers keep telling me that it's the better investment of the two.
What does everyone else think? Is this enough information to analyze? Thank you so much for your responses in advance.
From the info you gave i would go with the newer home.
Hi Rachel and welcome to BP.
On the surface, Property A looks like the better deal, however, the location of the properties is very important. Depending where Property B is, it may have the chance to appreciate significantly more than Property A, as the downtown areas of Austin have been appreciating rapidly for years, with many of the homes being renovated by investors. Typically, properties that are closer to downtown are also easier to rent and being near the airport is undesirable, depending how close you are.
Just a few items for you to think about. You need to speak to someone local who knows the precise location of the properties for a better evaluation of the locations. I haven't lived in Austin for several years now :)
My gut reaction would be to take the one closer to downtown. Everything near the airport I've seen is decidedly low-end and I can't see it ever being anything else; people don't like airplanes interrupting their barbeques. Which neighborhood is B in? Is anyone doing tear downs and rebuilds in the area yet?
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing