Looking for Opinions - 25 years old and transferred to Austin...

Texas Real Estate Q&A Discussion Forum
9yFollow

Looking for Opinions - 25 years old and transferred to Austin...

Jeff T.
Rental Property Investor · Austin, TX · Member since 2017 · 12 posts · 7 votes

Hello BP Community, I've read enough great opinions on REI strategies here in the Texas forum to fill the Library of Congress. Y'all are truly the best.

This is a "Put Yourself in my Shoes" post... Imagine you're new to the real estate game looking to invest in the Austin area. Your goal is relatively simple, "Make the smartest investment from a cash-flow and/or appreciation perspective with a 10 year time horizon". Some background criteria you just learned about yourself: in your late 20s, engaged but no children, both work salaried jobs in downtown Austin, handy doing light renovations, up to $150k available cash down, credit score of 800+.

So the question is, what savvy strategy would you take to kick-start your investment in Austin area real estate? Would you look for a flip in Hyde Park or target multi-family down south in San Marcos? Go big on a quad near UT or rehab a duplex in East Riverside? Maybe you'd only target off-market deals because Austin is way too expensive... Whatever your thoughts are I want to hear them!

Feel free to get as detailed as you want, I think this is where the real gems sometimes come out ('Don't even consider looking south of Stassney street','UCFU always gets the best rates', 'Check out that little pocket in South Lamar on the east side', 'Go to the tax auction early and chat people up a bit'). Thanks in advance!

0Reply
38 views

Most Popular Reply

Kris Wong
Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
9y

@Jeff T. I would house hack. I would definitely not do what Jeff Sprunger is suggesting (not trying to offend anyone, but I have a very different opinion here). Put your money to work for you. Find a nice, small multifamily (2 - 4 units), in an area you want to live (with some appreciation), with as much or as little reno as you are comfortable taking on. Have someone else pay your mortgage, so that you can be accumulating capital to find your next deal. Having 2 salaried jobs with no kids and effectively no mortgage payment means you will have the ability to save quite a bit of money each month. Always keep your money (and hopefully other peoples' money) working for you.

8Reply
See this reply in the discussion

34 Replies

Jump to latestLatest
  • Account Closed
    Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
    9y

    Hi Jeff, I invest in Austin to San Antonio so I guess my question to you is how involved do you want to be? Do you want to be the financial partner with someone who does all of the work or do you want to be the working partner (finding the properties, rehabbing, cash flowing, selling etc) and let someone else be the financial partner? First, figure that out and that will determine who I send you to. regards, Ken

    1Reply
  • Jeff T.
    OP
    Rental Property Investor · Austin, TX · Member since 2017 · 12 posts · 7 votes
    9y

    @Account Closed Great question. We're young and ready to be extremely involved (buying, rehabbing, renting, etc all of the above). Would be looking for a financial partner to accomplish most deals.

    0Reply
  • Jeff Sprunger
    Lockport , NY · Member since 2014 · 265 posts · 124 votes
    9y

    If I had $150K cash as a down payment, and a 2 salaried income household, with no kids...

    I'd pay cash for a modest single family home (no mortgage=freedom).  and save like crazy, I mean...like live on half of one of your salaries and save the other 150%.  do this for several years, investing in index mutual funds, IRAs and company 401K's.  plan to have kids...open 529s and fill it up.  that way, when you do have kids, your wife (or you) could be at home with them through the critical years. 

    transition to a job that you truly love (money isn't a driver here=freedom).  go to every single kid's event that you can...create other opportunities to be with them (away from the internet/games/tv).  ie:  camping, hiking, traveling, walking, parks, hobbies, etc.

    my opinion! (for what it's worth!)

    2Reply
  • Patrick LiskaPro Member
    Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
    9y

    Jeff,

    how much Rehabbing experience do you have ? first time investor, and maybe some rehabbing experience, i would not recommend buying a rehab or flip property. yes you can do well if they are done right but you could also loose a lot if it is not. you two are young, i'm assuming when you say a quad by UT you mean student housing ? can you be a Landlord and be strict with others close to your age ? I would try and concentrate on maybe a multi family ( does not have to be real big ) that is in an area that gives you good cash flow and has the possibility to appreciate in value, try to get it for as little as you can, then possible do some upgrades to bring up he value.

    0Reply
  • Kris Wong
    Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
    9y

    @Jeff T. I would house hack. I would definitely not do what Jeff Sprunger is suggesting (not trying to offend anyone, but I have a very different opinion here). Put your money to work for you. Find a nice, small multifamily (2 - 4 units), in an area you want to live (with some appreciation), with as much or as little reno as you are comfortable taking on. Have someone else pay your mortgage, so that you can be accumulating capital to find your next deal. Having 2 salaried jobs with no kids and effectively no mortgage payment means you will have the ability to save quite a bit of money each month. Always keep your money (and hopefully other peoples' money) working for you.

    8Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    @Kris Wong

    100% agree.

    Remember there is nothing more valuable than money. Do not leave it dead and buried in a rental property, spread it around and reap the rewards.

    If you do not want kids all the better otherwise postpone having a family as long as possible so as to reach your investment goals asap.

    0Reply
  • Cody Cook
    Investor · Austin, TX · Member since 2013 · 64 posts · 14 votes
    9y

    @Kris Wong I agree with your plan. However, are you seeing good deals for house hacking? 

    I'm in a similar position as @Jeff T. and I'm having trouble finding MF units that make a lot of sense.

    0Reply
  • Kris Wong
    Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
    9y

    @Cody Cook no question the market is very competitive. I think we've all been having a tough go of getting deals done in Austin recently. That said, one can afford to be slightly more liberal with their requirements on a house hacking deal, especially for a long term hold. Occasionally, reasonable deals do pop up. I've looked at a couple nice, value-add duplexes in 758 recently that were a bit too premium for my purposes, but that would be good buys for what you guys are after (as an example).

    0Reply
  • Kris Wong
    Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
    9y

    Here's one of those duplexes - http://www.realtor.com/realestateandhomes-detail/11815-Lochridge-Dr_Austin_TX_78758_M79289-26779

    0Reply
  • Jeff T.
    OP
    Rental Property Investor · Austin, TX · Member since 2017 · 12 posts · 7 votes
    9y

    Love these replies.

    @Jeff Sprunger, thanks for the thoughtful response. Our goal is definitely to reach freedom and have time with kids when we get there. Would you change your response if we mentioned that we're willing to be pretty aggressive in investing at this time (ie. use that cash to buy multiple units, etc)? 
    @Patrick Liska, Answers to your questions in order: No previous rehabbing experience, when I say we're handy it means we can install flooring, pour concrete, and things to that effect... I'd say putting up drywall would be a big stretch. We would be comfortable being a landlord to people close to our age (pretty good at the Good Cop (me), Bad Cop (fiancee) thing). The multi family/house hack option has been the most attractive to us... do you have any thoughts on specific areas around Austin or is that just the strategy you'd take?
    @Kris Wong, @Thomas S. since it looks like you're the only local who's commented on this so far what have you found to be successful as an investment? Your thoughts on living in an area we WANT to live in is great, neighborhoods we've loved have been pricey (mostly hugging the river on the north or south between Zilker Park and East Riverside)

    0Reply
  • Cody Cook
    Investor · Austin, TX · Member since 2013 · 64 posts · 14 votes
    9y

    @Kris Wong agree with that. I'm looking more in the South/Southwest area and just finding it really tough. I've been going back and forth on moving into a SFH vs. MFH because I figure appreciation will be more on SFH, but cash flow will be easier on MFH. I like the idea of house hacking an MFH, but a lot of MFH on market right now don't come close to cash flow once you move out. Hoping the inventory of houses picks up in April/May with Summer so there are some more options out there.

    0Reply
  • Cody Cook
    Investor · Austin, TX · Member since 2013 · 64 posts · 14 votes
    9y

    When I say south/southwest, more of a central focus. Basically 78741 all the way out to Beecaves, and then looking south to around Buda (although trying to avoid going south of William Cannon).

    1Reply
  • Kris Wong
    Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
    9y

    This one caught my eye - http://www.realtor.com/realestateandhomes-detail/2201-Mission-Hill-Cir_Austin_TX_78741_M79497-27992. It's a little overpriced, but once fully renovated could bring in some decent rent. You can see one unit has been renovated already. I have seen development in the pipeline for the SoCo and 71 area. Gentrification in the 741 zipcode has already been expanding outward from the river at a rapid pace.

    1Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    @Jeff T.,

    If I were you, it sounds like you have the perfect scenario to leverage for a large multi-family building!   Use the power of leverage!      It's a numbers game, so get the most units can! Go big or go home, and it sounds like you are set up for success!   Since you're new to the game, I say start with the multi- family, as that will really set you up financially, and then move on to your next one-- do you want to learn more rehab skills, and do fixer uppers?  

    Find your niche, but a large multi-family is definitely the right answer IMO.

    1Reply
  • Kris Wong
    Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
    9y

    @Jeff T. how do you define success for your situation? Appreciation, cash flow, a mix? Define your requirements, taking into consideration the realities of the market (Austin is heavily weighted toward the appreciation play at this time). Once you know what you are looking for, you can hook up with an agent and start analyzing properties. You can get notified of every MFR that hits the market. Or if you feel so inclined, you could pursue a strategy like direct mail marketing, or working with a wholesaler.

    If the demand for your most desirable neighborhoods is too high, are there other areas of the city that offer similar features? Or could you perhaps land something just outside those areas in the path of future development? It sounds like you're looking for a trendy area in close proximity to lots of stuff. Maybe you could look east of Pleasant Valley, or a little further south around 71. Subscribe to the ABJ and read about the direction of development in the city.

    0Reply
  • Tim Macy
    Real Estate Agent · San Antonio, TX · Member since 2014 · 311 posts · 176 votes
    9y

    I would take a shot at putting together a nice personal letter and sending it to some multi-family owners.  

    It may get you absolutely nowhere (I'm sure the Austin market is flooded with mailers), but I think it's a good exercise to do some of your own marketing and go "on the hunt."  

    I send out a "My wife and I love your neighborhood and were wondering if you are interested in selling in the future" for homes that we actually want to buy (I never like false advertising).  Response rate is always higher and nicer.  

    You could also call property management companies and see if there are any owners that are looking to sell. 

    Sounds like house-hack is the approach, this is how I would go about finding the hack!

    3Reply
  • Patrick LiskaPro Member
    Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
    9y

    Jeff,

    That was just the best plan I felt you should go, multi - family, I agree with @Thomas S. if you two are up for House hacking, that would be the way to go. Do not dump all your cash into it let the banks money and your paying tenants make you money. Especially since it is your first property I wouldn't use the full 150K limit yourself to 75 - 100' down if you can, make sure you leave yourself money for emergencies and Life in general.

    0Reply
  • David IvyPro Member
    Real Estate Broker · Austin, TX · Member since 2016 · 352 posts · 699 votes
    9y

    @Jeff T.

    I second @Kris Wong. If I were in your situation, I'd be looking to house hack a duplex as close to central Austin as I could afford. Most of my investor clients at the moment are actually multi-family house hackers and people looking to do a live-in rehab on a single family home. So, there are definitely lots of people looking to make the numbers work in Austin's hot market by living in their investment for at least some amount of time.

    Below is a map of every residential multifamily property for $750k or less currently available or sold on the MLS in the last 90 days in Austin city limits. This should give you a good idea of where you'd be looking.

    4Reply
  • Jeff Sprunger
    Lockport , NY · Member since 2014 · 265 posts · 124 votes
    9y
    Originally posted by @Jeff T.:

    Love these replies.

    @Jeff Sprunger, thanks for the thoughtful response. Our goal is definitely to reach freedom and have time with kids when we get there. Would you change your response if we mentioned that we're willing to be pretty aggressive in investing at this time (ie. use that cash to buy multiple units, etc)? 
    @Patrick Liska, Answers to your questions in order: No previous rehabbing experience, when I say we're handy it means we can install flooring, pour concrete, and things to that effect... I'd say putting up drywall would be a big stretch. We would be comfortable being a landlord to people close to our age (pretty good at the Good Cop (me), Bad Cop (fiancee) thing). The multi family/house hack option has been the most attractive to us... do you have any thoughts on specific areas around Austin or is that just the strategy you'd take?
    @Kris Wong, @Thomas S. since it looks like you're the only local who's commented on this so far what have you found to be successful as an investment? Your thoughts on living in an area we WANT to live in is great, neighborhoods we've loved have been pricey (mostly hugging the river on the north or south between Zilker Park and East Riverside)

     Nope, my answer doesn't change.  You really need to ask yourself why you want rental property?  Most people say "freedom", but until you have enough properties that you can "afford" a PM, you will most likely manage them yourself.  Guess what?  You just created another job.  Now, say you don't have a mortgage, your cars are paid for, no student debt...how much could you really save...$40, $50, $75 grand a year?  Times a few years = $200k +(cash) in the bank.  With no debt, how much do you really need to live a modest life? To each his own.  I've bought, owned, sold, rehabbed, etc...til I could puke.  I tell ya though, cleaning up some one else's filth will really teach you the meaning of life.  It's a tough lesson!  Good luck!

    0Reply
  • Jeff T.
    OP
    Rental Property Investor · Austin, TX · Member since 2017 · 12 posts · 7 votes
    9y
    Originally posted by @Kris Wong:

    This one caught my eye - http://www.realtor.com/realestateandhomes-detail/2201-Mission-Hill-Cir_Austin_TX_78741_M79497-27992. It's a little overpriced, but once fully renovated could bring in some decent rent. You can see one unit has been renovated already. I have seen development in the pipeline for the SoCo and 71 area. Gentrification in the 741 zipcode has already been expanding outward from the river at a rapid pace.

     I actually viewed this unit about two weeks ago. It was a little too rough around the edges (junkyard dog chained in the backyard, empty liquor bottles everywhere, someplace I wouldn't want my fiancee alone) but I'm thinking along the same lines as you

    0Reply
  • Jeff T.
    OP
    Rental Property Investor · Austin, TX · Member since 2017 · 12 posts · 7 votes
    9y

    @Kris Wong for us success would be a mix of appreciation and cash flow. Appreciate all of the insight and it's been great to confirm that the house hack strategy seems to still hold strong.

    @Tim Macy Great tip on the mailers. We've actually found about 5 units in neighborhoods from driving around that we're targeting with letters (basically our criteria is find a great neighborhood, look for the run down house with little or no lawncare and target that one). I'd love to hear more about your mailing strategy (both in terms of how you position your offering as well as the frequency of following up).

    @David Ivy thanks for pulling the past duplex sales. Curious if you or anyone else you know has been able to buy a single family home (small home, large lot) and built a second mother-in-law unit on the the property? I had heard that some zoning had recently changed to allow for greater density, but maybe this was incorrect?

    @Linda S. thanks for the reassurance that house hacking is the way to go!

    0Reply
  • Tim Macy
    Real Estate Agent · San Antonio, TX · Member since 2014 · 311 posts · 176 votes
    9y

    @Jeff T. you should be able to get a list of small multis somewhere, I would mail them all instead of just mailing the run down ones.  I would send a letter a month for three months, then a letter every quarter. 

    0Reply
  • Andrew Campbell
    Multifamily Syndicator · Austin, TX · Member since 2015 · 127 posts · 247 votes
    9y

    @Jeff T.  There is some great info in this thread.  One idea that hasn't been mentioned:  rent an apartment when you move to town, and plow all your capital into investment properties. I love the small multi-family space for Austin--we've got 24 units spread across South Austin. 

    All the areas you mentioned you like are pretty pricey along the river, and will be tough to find a property to house hack in.  But with your combined incomes, you'd have no problem renting in those areas while your cash flow (and appreciation) accumulate on your first rental.  Given your reaction to the Mission Hill property referenced above, which I totally agree with, its something to think about. 

    Otherwise, you're going to be looking further North/South and will be sacrificing much of what draws you to Austin in the first place.  I like this strategy because it lets you enjoy being a DINK and living the Urban lifestyle you want, while putting your capital to work. 

    All that said, if you really want to house hack, have you seen this property on Ramble? https://www.redfin.com/TX/Austin/602-Ramble-Ln-787... . 

    Good luck! 

    3Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    9y
    I agree with Kris Wong house hack and save your money for other investments. I couldn't disagree more on the 401k route.
    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
    0Reply
  • David Zheng
    Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    9y

    @Jeff Sprunger

    Lol...why are you in this forum again?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free