All Forum Posts by: Jacob Pereira

I think in most second-tier markets there are still plenty of 1% rule fourplexes available in the 400k range. I own a few in Austin in the 78724 area code. Take a look there; it's an easy hop on 183 to your property in Cedar Park, and it'll be even easier once they've finished expanding it to a 12-lane highway.

@David Ivy, in looking closer at the rules, it does indeed appear that renters are excluded from taking advantage of STRs. 

@Greg H., I said I don't ENTIRELY agree with you, not that you don't have a point at all. In fact I think the premise of your argument is sound, I just see a possibility of a creative solution in what @Andrew Parker is proposing. There are a few minor misunderstandings in what you're saying as well. Austin is no longer issuing type 2 permits, but Type 1 and 3 are still allowed, and I'm arguing that @Andrew Parker's proposal is a way to legally get extra type 1 licences. Here's the link to Austin's rules: https://www.austintexas.gov/str. 

As far as insurance, I'm not certain how much your regular homeowner's insurance would cover in an STR situation (although honestly I'd be surprised if that negated the contract), but Airbnb holds $1M in liability on your property, and an additional $1M in property and bodily harm. You can read more on that here: https://www.airbnb.com/host-protection-insurance

I'm not sure what you mean by occupancy tax, but Airbnb agreed this year to collect hotel taxes directly. Here's an article about it. https://austin.curbed.com/2017/5/2/15522428/austin...

Keep in mind that in many areas of town the premium for an STR is easily 3x a yearly rate with a lot more diversification of risk (Source: personal experience). Again, I'm by no means saying that you're wrong, just that I could see scenarios where this proposal could be mutually beneficial.

@Andrew Parker, I don't entirely agree with @Greg H. on this one. Because Austin rules are so strict, this is a possible (legal) way to get around them. You would have to do it right, though.

You would have to take possession of the property as your primary residence and then get the proper licenses from the city of Austin and pay hotel taxes on it. Austin does allow you to do STRs on your primary residence a maximum of 49% of the time, provided you pay for the privilege. In certain more expensive areas you would make significantly more doing an STR even accounting for all these things as compared to longer-term rentals. Some downtown owners might be willing to try this model, but I guarantee you'd have to pay a premium compared to just renting a place. In other words, are you willing to live in this property and do you have a good friend or significant other who will let you stay with them on the weekends and occasionally during the week?

I'd be willing to try it, except the Austin rental market is so strong that I don't have any units open and don't expect to this year. Try @Jeremy VanDelinder and please come back to us with your results.

Look at the fourplexes in the Colony park area. I own two, both bought for under $300k (they'll probably go for closer to $400k now), and their average rent hovers right around $1000 a month per unit.

You're right, the market isn't as good as it was 3 years ago, but back then it was BOOMING. The only property I ever sold went for 27k over my asking price in 2015 (about 8% above asking). Now construction has caught up a bit with demand, and you can't just buy anything above market and realize a gain in a year or two.

That said, I don't agree with your friends that now is not the time to buy. Ask them if they expect housing prices to drop, or just not go up as fast, and then challenge them on their assumptions. 

Price drops in Texas are rare; in fact, during the housing crisis Austin prices barely dipped at all, before a really rapid rise. Mortgage rates are still very low, unemployment is below parity in our city, and vacancy rates are still very low. You just have to actually do your homework or add a bit of forced appreciation, whereas three years ago you'd make money no matter what.

My realtors have helped me buy a few fourplexes and duplexes in the 78724 and 78758 zipcodes, and they're incredible. The wife focuses on SFRs and the husband works with investors. I've referred about ten people to them so far, and everyone has been very happy with them. http://moatsteam.com/

If you reach out to them, feel free to drop my name.

Are you doing it all yourself, and how much do you calculate your time is worth? If you have fast, skilled workers and you're paying them less than about $20 an hour, it might be worthwhile to skim-coat instead to save on material costs, but it's certainly a lot faster and easier to just put up new sheets.

Hi Stephen,

Austin does have fairly strict regulations on STRs right now, but while you're living in the home they're fairly relaxed. You do need to get registered and pay hotel tax, though. They're also a little bit more lenient in MF properties like condos, but there are use limits. Here are all the STR regulations: https://www.austintexas.gov/str

If you're a gambler, you could try it and see if the state overturns the local regulations in the next session. They've overturned a lot of our local rules lately and I know they had an eye on some of the bigger cities' STR rules. Outside of that, the fines are fairly low relative to the payouts, and they're complaint-based, so you could try and risk it anyway.

Thanks @Account Closed! 

It was great meeting you. Let me know if you need any eyes on the ground for that AirBnB you're looking at in Austin.