All Forum Posts by: Joshua Noth

Welcome to BP @Demetrius Hill, nice to meet you! It's great that you are already networking and building that foundation from the ground up.  Know where you're going to invest yet?  Starting off locally is a huge plus

Welcome to BP @Trevone Williams, great to have you! Find your preferred market/strategy, and find an agent to help you search for deals and submit offers.  The faster you can act (without being rushed), usually the better!

@Mario Gonzalez Not an expert in the areas, so I can't speak to those specifically.  But, your overall question of waiting it out... you may be waiting for a really, really long time.  Interest rates do not look like they are slowing down any time soon, and the prices of homes will very likely only continue to follow that trend as well.  

@Amir Navabpour You're definitely right, there is "risk" with investing, and no different for "long term plays" like appreciation and rent growth.  At the same time however, cash flow markets are not "risk free".  

What if your property in Cleveland never gets a tenant? Suddenly the property is stagnantly sitting, not making you any cash, and doesn't appreciate quickly to make it worth while. At least in a market such as Austin (just where I'm most familiar), even without a tenant, that property can increase in value by 74k in a year (median sales price increase of Austin SFH from Feb 2021 to Feb 2022 according to Austin Board of Realtors). Areas like Round Rock saw even more aggressive growth (median increase of 104k, same source).

Like @Nicholas Misch mentioned, for some people however, there is no option, possibly for their current financial situation.  In their calculations, the "risk" of not getting a tenant does not outweigh the potential cash flow they can achieve from the property, and those quick turnaround paychecks are necessary.  

@Suneel P. It's difficult to offer black and white advice such as "yes" or "no" without all the details.  We do know some big picture stuff, but some finer details may influence your decision as well...  How negative of cash flow is it? Losing $200/month is WAY different from $1000/month.  What area of Austin is it in?  All areas are growing, but is it a spot you see great potential in?  What was the purchase price? Again, a 150k equity gain in 2 years versus 10k in 2 years are very different.

If cash flow is your only deciding factor, strategies like STR or MTR are finding great success in the Austin area - they just tend to have more involvement/management than LTR. However, it's worth nothing that Austin currently has one of the fastest increasing rental markets in America, so your current numbers could easily change in the next year or two.

@Preeti Sampath Some buyers will like a property with tenants already in it; in their eyes, they may see it as less hassle and work to get it occupied, which can be great for some investors.  

However, I think more buyers will see it as an obstacle.  Touring the property with tenants can get messy, flippers won't be able to easily fix up the property, owner-occupied buyers simply can't live in it, very particular investors will want to screen the tenants personally, etc.  It can be helpful to say "rent at market rates with tenants in place", but vouching for the tenants means next to nothing to most buyers - of course you as a seller will say they are good.

@Joey Montefinese I think @Jay Thomas put it well - everywhere is crazy, and many places are good for various strategies.  A great place to start though is locally.  Househacking is a tremendous opportunity for first time buyers.  However, if it's not an option at all, OOS is great because you have no limit to your area.  Depending on your goals, different cities may be better for you.  Chatting with agents from markets you are interested in is a good place to learn the inside scoop of those areas

@Brian M. I agree with most on the thread suggesting to keep it as a rental.  As @David Ivy mentioned, there are no GUARANTEES your equity will continue to rise, but it sure looks promising in Austin - just look at the growth you've seen in two years!  If you can get a small cash flow, that's icing on the cake here.

Just to play the other side of the debate... *IF* you decided to sell, you would likely find an eager buyer quickly.  For reference, in February: in the city of Austin, condos/townhouses listed between 600k-850k with a median list price of 650k sold in 5 days (on median). Moreover, the trend appears to have gone upward through March, and will likely continue in the coming months.

@Yaniel Suarez love the strategy! Unfortunately, I'm not particularly familiar with the ins and outs of your market. Typically, you are at least more favorable for cash flow out of the gate with a MFH as opposed to a SFH, but I couldn't confirm the likelihood of positive cash flow. I would definitely get in touch with a local agent and pick their brain on that stuff, they'll have more tangible insights.

@Sooraj Maharjan to echo what has been said... You are correct in your analysis: LTRs in the Austin area with the traditional 20% down are highly unlikely to cashflow, almost impossible. A higher downpayment is a "simple" solution, but other alternatives are MTR/STR, rent by the room, amongst others. Keep in mind that if you go the STR route, the property must be owner occupied if it is within the Austin city limits - cities like Round Rock, Cedar Park, and others, don't have that restriction yet.