All Forum Posts by: Aaron Gordy

@Chendra Grandhi

Yes, achieving the 1% rule in Austin and in the suburb is tough for single family houses. The prices have increased 10% from last year to the present and rents haven't increased directly proportional so achieving it for sfr is going to be tough. Multifamily such as duplexes are a bit different. There are duplexes on the market that achieve that 1% rule but even those are few. If one goes up to fourplexes it goes closer to the mark. But fourplexes are a totally different breed than duplexes and very very different than sfr as an investment. It depends upon your strategy. If you are a buy and hold type investor then I would advocate a duplex or better yet a sfr in above average areas. The 10% increase is the average thus there are some areas that are achieving superior price increases than the 10% and some areas that are achieving less than average price increases. Rents and prices have been rising slow and steady since Austin has been around for the most part. The rate of increase has changed from real estate cycle to real estate cycle but it has been slow and steady. We don't have the large price increases that you see in SF-Bay area for a number of reasons. 

@Chendra Grandhi

Hi Chendra. I am a real estate broker and I manage properties in Austin Texas. If you have any questions about Austin let me know. I will fill your head full of info about the city as I have lived here for over 15 years and have been practicing real estate for over a decade. I am, obviously, a big believer in Austin. 

$150k down could buy you some nice properties here, btw. 

Welcome aboard!

Aaron

I would have a meeting with your cpa and discuss the tax implications for depreciation and 1031 tax exchange. Given the scenario I would most definitely do a 1031 tax exchange and buy 2 if not more cash flowing properties. 

my two cents.

Aaron

Randy

That seems like a good deal. Buy and hold in Austin is a tried and true path for real estate. The prices do not go up like a rocket but slow and steadily they rise. Its been like that historically. The best site to analyze that data is to look at texas a&m real estate center's website on house prices for the Austin area. That should put it into perspective relative to other cities. 

 It wouldn't be cash flow negative or even neutral if you choose to do a 30 year amortization. I prefer to have cash flow rather than feeding the property with cash. Why not do a 30 year amortization and then refinance in a few years when the rents have gone up enough to cover the 15 year note easily? You can always take the extra cash flow and pay down the 30 year mortgage monthly as well. I prefer to have a bit of cushion. But really, its a numbers equation as to what works best for you. In some instances its good to have a tax write-off if your income is on the border between really high tax rates and then not so high tax rates. I have come across some investors who wanted the last scenario. I have come across some investors who preferred cash flow and would get the the longest amortization note possible.

On the surface of the deal, it looks really good. The numbers that Peter J is putting out there is spot on, btw.

Aaron

Hi Peter. If you haven't found a good home inspector yet then I would suggest Gary Hart with Austin property inspections. He is worth his weight in gold and has saved me thousands on deals. 

Yeah. Fire your PM first. But instead of hiring an attorney I would seek out a better PM for the eviction. In Texas one doesn't need an attorney to do evictions. A PM is going to be considerably cheaper than an attorney.

I just looked at the mls. The following all reflects current listings. 3 bedroom 2 baths in cedar park are ranging in rents from .83$ sq ft to 1.94$ sq ft.  or $1295 to $3000. 4 bedroom 2 baths in cedar park are going for .79$ sq ft to 1.04$ or 1750 to $2200. One can get more rent per sq ft for 3 bedrooms in cedar park

Leander 4 bedrooms 2 baths are going for .73$ per sq ft to . 99 sq ft or $1300-1700. 3 bedrooms 2 baths are ranging from .82$ sq ft to 1.32$ sq ft or $1350-2200. 

Pricing is also all over the board in both locales. Cedar park 3 bedrooms 2 baths are ranging from $170k to $340k. 4 bedrooms are ranging from $229k to $452k. Leander, for a 4 bedroom 2 bath is going for $182k to $353k. 3x2's are going for $162k to $425k.   

Given the data I would really look at 3 bedroom 2 baths in cedar park. A couple of other things that you might want to think about are the historical trends for the neighborhood in regards to rents and prices, age of the housing stock and major events that have occurred recently such as new employers.  Those are just a few things that I consider when I advise clients or make purchases myself. 

I hope that helps. 

Hi Jeff

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

Aaron Gordy

512-293-0297 

I am a broker in Austin Texas and have been in business for over a decade. I am willing to be a sponsor depending on the terms and risk from my standpoint. Hmu and we can chat. Thanks

Interesting! Have you contacted the bank that the original loan is through? curious. If so did they speak to you? Sometimes they will only talk to the person on the note. In many notes there is an acceleration clause stating that if the house is sold then the original note is accelerated. Given that they haven't attempted to foreclose means that the seller has been paying the original note. It does sound like the seller was doing some fishy things, for sure. But before you contact an real estate attorney that will charge a bunch I would try a few things first to get possibly even more out of the transaction. Maybe the original bank will take a loss just to get out of a potential legal problems. Who knows? I have seen some really odd things occur. Document everything though so that you can show an a good attorney what has transpired though. He/She will appreciate it. The seller needs to take the haircut (loss) not you. That is for sure.