New to this, need advise on where to begin

Member since 2018 · 17 posts · 7 votes

Interested in the Austin Market, not sure where to start. We own our home and would like to start looking at either flips or buy and hold but it seems like buy and hold mostly would be a cash negative situation in our area - is that correct? Any guidance on our market specifically or how to better educate ourselves on this new journey ?

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Beau Fannon

Real Estate Agent · Austin, TX · Member since 2017 · 229 posts · 259 votes

I tell people to start with pre-qualification at a credit union so you can see what you can afford. Really no point playing in Austin if you're $450,000 in debt and have a credit score of 502.

Sure there are lots of other avenues you could pursue but it's best to know yourself before you travel those roads.

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Beau Fannon
Real Estate Agent · Austin, TX · Member since 2017 · 229 posts · 259 votes
8y
I tell people to start with pre-qualification at a credit union so you can see what you can afford. Really no point playing in Austin if you're $450,000 in debt and have a credit score of 502.
Sure there are lots of other avenues you could pursue but it's best to know yourself before you travel those roads.
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James Freeman
OP
Member since 2018 · 17 posts · 7 votes
8y
We own our home with 150K + equity and have decent credit (over 700) - Thanks for your reply Beau!
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James Freeman
OP
Member since 2018 · 17 posts · 7 votes
8y
Nothing to manage yet but id love to start building out my team as the ultimate beginners guide says! @Lexi Teifke
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Danny Webber
Real Estate Broker · Austin, TX · Member since 2016 · 834 posts · 449 votes
8y
James,
Here are some suggestions. Bullet points because it is late where I am.
1. get a mentor
2. get a written plan of what you want/need to make and when (passive/active income)
3. asses your resources
4. get your RE license
5. get a mentor (bears repeating)
so much to go into but would need more data to advise
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Beau Fannon
Real Estate Agent · Austin, TX · Member since 2017 · 229 posts · 259 votes
8y
Dude, you already know the most complicated part of this game. You already bought a home. Surely you've already learned how to do maintenance. Just jump in. There's enough resources on this website and the rest of the internet to answer almost all of the other questions you're going to come up with as you dive in.
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Zachary Barton
Georgetown, TX · Member since 2016 · 96 posts · 74 votes
8y
Do you currently live in Austin?
Typically, it does require a large down payment or low purchase price to cashflow in Austin right now.
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James Freeman
OP
Member since 2018 · 17 posts · 7 votes
8y
We live in Round Rock. Assuming its best to do out of Austin proper due to prices and do flips to build up reserves to buy and hold eventually?
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Beau Fannon
Real Estate Agent · Austin, TX · Member since 2017 · 229 posts · 259 votes
8y
Originally posted by @James Freeman:

We live in Round Rock. Assuming its best to do out of Austin proper due to prices and do flips to build up reserves to buy and hold eventually?
That's a catch 22. The further you get away from the city out past Round Rock, the easier it is to find good deals but the harder it is to sell them after the flip.
If your goal is to buy and hold, just buy and hold. My in-laws sounded a lot like you a couple of years ago(no offense James). They hemmed and hawd for a year and then finally bit the bullet and bought a SFH as a rental last summer. Worst house in a great neighborhood with a 30% down payment or $108k. Took 6 weeks to rent out. On a normal month, they loose $80 on a 15 year mortgage. Since the house needed work, they've sunk an additional $10,000. By next summer, I'm forcasting they could sell the house for $54,000 more than their purchase price. But they plan to hold it for 20 years so you can imagine what that $118,000 investment will turn into.
Just do it.
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Jeremy VanDelinder
Real Estate Coach · Round Rock, TX · Member since 2015 · 431 posts · 235 votes
8y
It’s in part a matter of preference and goals. Personally I love Williamson County!—still room for growth but a very active market. Good luck and let me know if I can help!
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Allison Stewart
Rental Property Investor · Austin, TX · Member since 2018 · 76 posts · 46 votes
8y
Do you have the experience to do flips? Austin is also a difficult market to flip in without experience.
You own your own house already, which is great. What about house-hacking? You could rent out your current house if you buy another house to hack - and if your next house is a duplex (or more) that gives you 2+ doors right off the bat. That's a start.
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
8y
@James Freeman you can still find cashflow in any market. You just need to be patient, realistic with what you're looking at and ready to do a bit of rehab!
[email protected]512-888-9122
The Moorhead Team5140 Reviews
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Perry Farella
Lender · Chicago, IL · Member since 2016 · 189 posts · 153 votes
8y
I have always liked the idea of not putting more debt on your personal residence to be cautious at least at the start ( like HELOC to get cash). That way if worse comes to worst your residence is not at risk. There are some nice renovation purchase combo loans amortized for 30 years that give you the dollars to rehab, albeit using a licensed GC, not you doing the work, with a 20% down payment. The numbers tend to work because you get credit for 75% of future gross rent when house is rehabbed which is used to help you qualify for the loan. Plus the future , finished value of the house is used or ARV (after renovated value) to approve the loan. My Blog has stories about these loans. They can be for 1 to 4 unit type properties as well. I have helped investors just starting out to acquire properties this way, at minimal risk to themselves while learning the basics.
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