Newbie seeking advice for buying his first house in Austin, TX

Austin, Texas
Starting Out
2yFollow

Newbie seeking advice for buying his first house in Austin, TX

Account Closed
Austin, TX · Member since 2023 · 10 posts · 16 votes

Hi, 

I work remotely and can live anywhere in the US.  About a year ago, I decided to move from Kansas to Austin to see how living here feels, which I've liked so far. Now, I am planning to buy my first property, but I am not sure which part of Austin, and whether to buy a single-family or duplex (if I could!). I am thinking of house hacking. One advantage that I have is that two of my current roommates agreed to move with me when I bought my first property. They can give me around $1500-$2000 for rent together depending on the house. 

A little bit about myself. Single male, in my 30s, have made $85K on average for the last 2 years, 0 debt, my credit score is around 805, cash is around $40k, 401K is around $11k, can save $2.5k per month and currently pay around $900 for a furnished room (with all the utilities it gets to around $1000). 

My questions:

1- Cash flow doesn't matter to me. I am currently paying around $1000 for rent. If I can find a house for which I only need to pay this money out of my pocket, I will be happy :). Therefore, my focus is on appreciation. So, which Autin neighborhoods or suburbs fit my budget and have a better chance of appreciation? 

2- Do I have a chance to qualify for a duplex with my current salary using FHA loan? There are duplexes in the $500K-$550K range that I think I should be able to qualify with around 3.5 percent down, a 6.4 interest rate, a worst-case scenario of $1500 projected rent income for the other unit, and a 0.5 debt/income ratio but I am not sure if it is possible.

3- In general, for a first-time home buyer, do you suggest a single-family or a duplex? 

This is my first post in BiggerPockets. Thank you all for your help :)

5Reply
84 views

Investor-friendly agents in Austin, TX

See the agents BiggerPockets members work with in Austin, TX.

Most Popular Reply

V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y

1) Your price point will dictate what areas you can go to. You can find something solid, but nothing outstanding but that should be expected. You will not get to choose this with your situation. I would look at houses sub $450k, and your options will be east of 183, just south of 290 and some fixer-uppers in East Austin. You could go north and sort of towards Round Rock, but I am not too familiar with those areas .

2) You'll need to talk to a lender, but take into account property taxes here. They're atrocious so you're P&I may be okay, your T&I may be rough. At 3.5% percent down, your P&I would be very, very high. 

3) Both. Honestly, a SFH will likely appreciate better-- and you can rent by the room. So a different way of house hacking. But I'd get the best property in the best location that you can reasonably afford, and not limit your choices.

The no debt, credit score, etc., is going to be very helpful for this. Take into account you'll also need some reserves set outside because you're now managing a house-- so dishwasher, HVAC, etc., all that stuff fixes and repairs need to happen. Plus, if you need your roommates income to survive it's best you earmark money for that, too.

3Reply
See this reply in the discussion

5 Replies

Jump to latestLatest
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    1, I don't know Austin so hopefully some local investors will chime in.

    2, call a bunch of lenders and ask them.

    3, whatever works for your commute, lifestyle, and the rental numbers.  Importantly: look at a whole bunch of properties.  Most people want to look at 3 and make 1 offer.  And then they get discouraged when that 1 offer isn't accepted.  So look at 50 and make 10 offers, and don't get discouraged if you go 0/10.  Keep going.  Make more offers.

    2Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    1) Your price point will dictate what areas you can go to. You can find something solid, but nothing outstanding but that should be expected. You will not get to choose this with your situation. I would look at houses sub $450k, and your options will be east of 183, just south of 290 and some fixer-uppers in East Austin. You could go north and sort of towards Round Rock, but I am not too familiar with those areas .

    2) You'll need to talk to a lender, but take into account property taxes here. They're atrocious so you're P&I may be okay, your T&I may be rough. At 3.5% percent down, your P&I would be very, very high. 

    3) Both. Honestly, a SFH will likely appreciate better-- and you can rent by the room. So a different way of house hacking. But I'd get the best property in the best location that you can reasonably afford, and not limit your choices.

    The no debt, credit score, etc., is going to be very helpful for this. Take into account you'll also need some reserves set outside because you're now managing a house-- so dishwasher, HVAC, etc., all that stuff fixes and repairs need to happen. Plus, if you need your roommates income to survive it's best you earmark money for that, too.

    3Reply
  • Campbell Key
    Investor · Austin, TX · Member since 2019 · 19 posts · 28 votes
    2y

    Hi @Account Closed - you seem to be in a good position with the 2 roommates willing to move and rent from you. I would recommend you look in south Austin (78745/78748). There are several cool bars/hangouts along Manchaca with a couple larger planned mixed developments in the works. You can find properties in the $350k-$400k range. I'm currently under contract on a property near Manchaca and Slaughter that I plan to househack myself - i think long term its a great place to invest in a primary residence/househack. I was looking for duplexes too but at $500k+ its hard to justify it and hard to afford it, even with the rental income from the other side. You dont cash flow and SFH's generally appreciate more anyway - if a good duplex deal comes up and its in your range of affordability then its a no-brainer though. You'll need to talk with lenders (if you havent already) to see what you can afford. I have a really good one I can put you in touch with if interested. I'm also a realtor and have bought a few homes in the Austin area for myself - I'd be happy to get in touch and help you with your search - feel free to DM me if you'd like!

    0Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    2y

    @Account Closed both duplex or single family can work well. It really depends what type of living arrangement you like best. I didn't want a ton of roommates so I always did duplexes and liked the lifestyle quite a bit. Now my former househacks that I still hold in Austin pay my mortgage.

    With your salary assuming you don't have a lot of debt I don't see any issue qualifying for a duplex in the $550k range since they use the rent from the other side to help you qualify. Personally I don't like being more than 20-25 minutes from my weekly activities like work, gym, etc so I think that will help you pick what side of town to live in too.

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
    0Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    2y
    Quote from @Account Closed:

    If your goal is truly appreciation then I would stick with SFH. They appreciate faster than duplexes. If you want to keep your housing costs low I would get a 3 bedroom duplex, rent out the other unit, and rent out your unit. If your goal is to househack multiple times, I would start with a duplex because it'll set you up better for a future purchase of a SFH.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free