All Forum Posts by: Jacob Pereira

@Shay Olson, I also started out with a house hack (duplex) and I believe it is one of the safest and easiest ways to start in real estate investing. Unfortunately the Austin duplex market is insanely competitive, with most duplexes getting between 5-25 offers, depending on the price point, so I think your rent by the room strategy might be a better bet, even though you will have to live with roommates.

As far as STRs go, I have one of those as well, and those are insanely profitable if you do it right. Austin laws are currently in flux on that, though, so it's very unclear what you have to do to be legal. Here's the latest I've seen about it: https://www.kut.org/post/state-appeals-court-strikes-down-austin-rules-short-term-rentals. if anybody here knows more, I'd love to hear what's going on.

@Ani Kap, I'm in Austin Texas and have umbrella through USAA. They never gave me any problems about my older properties. Might be time to change companies.

@Cory Clay, neither. In Houston you won't find a legitimate 2%, and you'll only find 1% in the roughest part of town. Rather than use an arbitrary rule some guru came up with, try to find properties where you can do more of a value add than other investors. Easier said than done, I know, but if you want easy Investments buy S&P index funds.

@Jon Martin, I second New Western, and frankly all the major wholesale companies. Just remember it has to be cash or hard money, so you want to move quickly to get your money back out. Also, realize that there's a lot of "stupid money" in Austin right now, so you'll lose most of your offers to investors who are just buying a high-risk, low-paying second job. Don't be in a hurry, figure out where you can add value, and you'll do well.

@Dhirendra Ghidode, my sister and her family lived in Abu Dhabi (the emirate right next door, about a two hour drive from Dubai) about five years ago, and i actually looked into it then. The conclusion I came to was that the added complexity involved was not worth any extra gains I could get vs. investing stateside. I do hope you keep us updated if you end up investing there, though!

@Michael Tyler, I want to hear more about the hamburger in the hole. I've had some "interesting" tenants before, but never one quite that great. Care to elaborate?

@Ryan Kelly, man, those West Gate ones were a steal a few years back. I was a week too late to buy one for <300k in 2017

If you're living in it, you should be fine. I've actually bought two fourplexes in Austin by living in them (more as an investor, but you'll have to put a lot down), and I couldn't recommend it more. You can even use a portion of your future rental income to qualify for the loan. If you'd like I can put you in touch with the two lenders who I use for all my personal deals.

Keep in mind, as @Ryan Kelly said, the market for fourplexes here is highly competitive, so be ready to buy within a day or two of seeing it. Ryan, were those the ones I recently saw go up in Colony Park? I own a few out there too.

I notice that everyone who has answered your question is also local (with the notable exception of @Nina Hayden). That implies to me that the true answer is closer to what my answer is: It's where I live. Yes, the metrics are great, the economy is diverse, the appreciation is crazy, but we're still almost all local, and I expect that's the case of many urban investors in moderately to very expensive markets.

I accidentally fell into real estate investing when I moved jobs to a data analyst position on the other side of town and wasn't ready to sell my home, so I rented it out. Once I actually saw the numbers and had set up the systems, I realized I had to continue to expand. Austin was the town I knew, so I continued to buy out here.

Now that I'm a somewhat seasoned investor, I am looking at the suburbs nearby, but I have access to the local MLS, know the area very well, and like to actually be able to see what I own, so I don't expect to ever go more than about an hour from where I live.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $220,000
Cash invested: $25,000

This is a fourplex in one of the worst parts of Austin (full disclosure: no parts of Austin are all that bad). Nobody was willing to tackle it, and I'll admit, I was a bit intimidated as well. It now cashflows very well and has more than doubled in value. To anyone who is afraid to tackle a difficult project, absolutely do your due diligence, but if you've done the work and the numbers still pan out, you will be fine.

What made you interested in investing in this type of deal?

I had bought a duplex before and the money was very good, but this fourplex had insanely good metrics

How did you find this deal and how did you negotiate it?

It was an expired MLS listing. I reached out to the owner and made an offer. A bit of back and forth, and it was mine.

How did you finance this deal?

Conventional

How did you add value to the deal?

Remove the problem tenants, enforce the rules with the decent ones, and clean and repair the issues inside and out

What was the outcome?

It's currently worth about double what I put into it (including leverage), and with a conservative cashflow estimate that accounts for future capital costs and vacancy it's still cashflowing over $2k a month

Lessons learned? Challenges?

Not only don't be afraid of problems, actively seek problems. Nobody is going to give you a deal on something easy, but if you're willing and able to solve someone else's problems you will do well in this industry.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. Myself, of course!