All Forum Posts by: Rick Reeder

I can't tell you how many times I have had this conversation in the past few months with my friends and neighbors here in Austin: 'Man, I would love to sell my house right now, but... where would I go?". It's true! This is a fantastic time to sell - competition is fierce and you can get top dollar and amazing terms. Let me share some ideas with you all, and perhaps we can chat some more if any of these resonate with you.

Move on up: We have some friends who have wanted to move to a larger house with room for a pool for a few years. They finally felt they were ready financially, but they were worried about the problem I just mentioned: they could get top dollar, but how could they compete for a new larger home? Putting in a contingent offer certainly wouldn't be competitive with cash. Here is what they did: listed their current home with a fairly aggressive (low) price. Buyers flocked and within a day they had an offer for cash, 10% over list, appraisal waiver and lease-back for free until September. Now they have cash in the bank and 4 months to shop for a new home!

Move on out: There is an old saying in real estate for first time home buyers: drive until you qualify. In other words, the farther from the city center you are, the cheaper real estate gets. That's generally true in Austin, too. If you're relatively central and you're like a lot of people who have experienced working from home during the pandemic, you may dream of a home with two offices or a pool. This dream could be a reality for you if you are willing to trade your current location for more comfortable living arrangements. If you are someone who won't be commuting to work every day any longer, it may make sense for you to head farther out into suburbia to get your dream house!  

Make an investment move: So, you know your home value has shot up in the last .year, but you aren't interested in moving. Is there another way you can take advantage of this market? Yes there is! If you've been interested in investing in real estate, but don't have a 20% down payment laying around for your first property - you may now have it laying right under your feet. One way to access the increased value of your home is a cash-our refinance. Here is a quick example with some made-up numbers for illustrative purposes: say you bought your home 10 years ago for $500,000. You put $100,000 down and had a $400,000 mortgage. Now your home is worth $1,000,000 and your mortgage is down to $300,000. If your credit is good, you can borrow up to 80% of your home's value - in this case $800,000. Now, you will have a brand-new mortgage to pay for, but you will also have $500,000 in cash to invest in something else. If your new mortgage is 3.5% but you find something with a 7% CAP rate, you're harvesting the spread!
Use your land: Another way to take advantage of this market is to use the land you live on today, potentially without moving. If your lot allows for it, you can build an Accessory Dwelling Unit (ADU) and rent it out. You could also move into it and rent out your old primary residence. You could even form a condo regime and sell the right to build an ADU to a developer.

All this to say - there ARE ways to take advantage of this market that you may not have considered.  Work with a professional if you still have questions.

-RR

Welcome to Austin @William Betteridge.  Happy to help any way I can.  Very familiar with the city, growth areas, residential, etc.  Happy to grab coffee when you're here and help find a place to live if you don't already have one.  Crazy hot market right now!

We have two STRs, one on Lake LBJ near Austin, and one in Angel Fire, New Mexico.  We use Vacasa at our Lake House - they have a local manager who is awesome and we have 2-3 same-day turns per week in the summer, so we can't afford surprises or lapses.  We pay 25% and it's worth it for us right now even though we're pretty local.  We are trying out a new company for our Mountain House - https://www.stayboutiq.com/bou....     Lower rates, great marketing, and a bespoke website for return visitors (saves fees).  So far, so great.  If they keep it up, we may look into changing things up at the lake.  We only have 1-2 turns in the mountains, and usually not same-day so we have more room for error.

Cedar Park is closing 117% of list YTD.  It's bananas.  I agree with @Jordan Moorhead - go northwest on 183 to Liberty Hill or hang a left on 29 and head towards Bertram for that price point.  Stop when you qualify!

I like SE Austin, too, with Tesla and their suppliers... plus rumored SpaceX, COTA and proximity to downtown.  I also like Leander, Pflugerville and Georgetown for appreciation.  To cash-flow with a 20% or 25% down loan, you'll need to get at least to Georgetown, and likely Jarrell, Temple or Killeen.

@Prash Manohar those are estimates, too.

@Sam Shirazi you’ll probably get a nice letter from the tax assessor in the county where you bought, asking you what you paid for the home. As mentioned, TX is non-disclosure, so you can through that in the recycle bin.

I'd personally want the appreciation you're likely to see in Austin, assuming it is somewhat close-in?  Maybe not the highest-best cash flow, but if that's not your primary goal, having anything that cash flows in this town while appreciating is like gold.  I've sold a couple of houses in Austin between 2004 and 2015 and I wish like hell I still had them.

I love working at Rose & Associates Properties.  Knowledgeable and available broker.  Fair splits.

A couple of quick thoughts - your property tax number is way too low. Rates in Austin probably average 2.25%/year, so on a $683,000 condo, you'll owe $15,367/year. And as an investment property the county tax assessor can raise your valuation substantially every year (you can fight it, but it's something to consider). Also, what about property management? Is the Natiivo going to do that for you? At what rate? STR Property Management can run as high as 30% of gross revenue to make sure guests have a good stay, it's clean and everything works when they show up, etc. If Austin continues appreciating at this clip, you may find you just want to flip it - but be mindful of tax consequences.