New build as investment in Austin TX

[Manu D.]

Hello, this is my first post in BP!

I live in a primary home with good equity ($400k) due to recent boom. Recently, I have a contracted a new build ($800k) last June which will be ready in Aug, where the plan is to move as primary and rent the current one. Given that builders are not selling to investors in austin metro, I somehow convinced the builder to sell me second one  ($950k) in the same community as the one I’m building currently. They will let me close first one as primary and then allow me to move to second one once it’s ready in March 2023. The sq ft price for this new build ($230) is coming to less than existing comp ($260). So I’m thinking to buy the second one as well so then I will one primary and two rentals. If I can’t make it to mortgage all 3, then plan is to sell one to close the 3rd.

The concern is rising interest rates and property tax rate of 2.8%. And Third one requires a EMP of 8%. But I’m thinking austin prices will keep rising , so by the time these houses are ready to close, they will already have good equity. Worst case I can sell them immediately after closing.

Given I’m just getting started, I’m not sure if this is a good approach for RE investment. Would like to hear feedback from experienced folks? Thanks in advance!

[Ryan Kelly]

@Manu D. a few things to consider. It isn't just the builder that you need to speak with, but your lender (unless you are paying cash). Are you paying investor rates or trying to use several primary home loans? You want to make sure you don't trip any mortgage fraud claims if you are being dishonest about your purchases with the lender. Second, this would be more speculation on future appreciation versus investing. I'm not saying they couldn't see nice appreciation, but you don't have any way to calculate it until after the fact. As @Marian Smith said, the builder will be your biggest competitor when you turn around to sell if you sell in the near future.