Young Austin Professional Looking for First Property
Howdy BP crew,
I’m a young mid-20s civil engineer and have been stuck in analysis paralysis with regards to buying my first property. I currently rent ($1140/month) & work around the Sunset Valley area in southwest Austin with a $75k income.
Please poke holes in my plan (or give me the nudge to JUST DO IT already). A couple close friends of mine bought homes and I’m concerned I’m getting FOMO or being rash.
The Plan:
While my income still allows it, I would like to take advantage of various DPA and MCC programs available to those who make less than certain Austin MFI. These programs offer forgivable 2nd mortgage or grants for various percentages of your loan amount 3-5%, typically with a higher interest rate (set by the program administrator) than what I would get through a traditional lending company. The MCC is a dollar for dollar tax credit for 20% of the interest (can be recaptured).
My goal is to purchase a 3BD/2B+ SFH <360k (purchase price limit for the programs above), ~1250 sqft in south Austin, likely 78748, and house hack.
Assumptions:
- Purchase Price: <360k
- DP: 3.5%
- PI = $1512
- Taxes = $465/month ($5580/year, I looked up actual tax values for comps in this price range. Appraisals for taxing purposes are typically lower than actual market values in Austin. How does a recent sale of the property affect this?)
- Insurance = $120/month ($1440/year)
- PMI: $174/month (0.06%)
- HOA: $50/month
Total: 2,321/month
with MCC : 2,131/month
I plan to bring on 2 roommates, or 1 roommate and Airbnb single room to offset this by $1300/month or $650/month/room.
Bringing my total liability to $831 plus ~$250/maintenance, so generally, around my current rent, which I am okay with.
Possible exit strategies:
Realistic long-term rental in this area I think could rent for $1800-$2100 and potentially an STR for $2500-$3000/month. I also don't think I would have a problem selling in the future in the Austin market.
Specific Questions:
- Am I being too specific in my area? Would this be a realistic play for further south closer to buda/kyle or in the onion creek area?
- It's not technically cash flowing, but I need a place to live and I think this is the best investment opportunity at the moment. Are there other options I'm not seeing?
&& if this is a good strategy (ish) wish me luck in waiting for my property. :)
Thank you all in advance!