House Hacking in Austin

[Rodrigo Barreiro Pujol]

Hello, I am 26 years old, single, and moving to Austin TX in the next couple of months. I have set a goal to save up at least 25k in 1 year to invest in a house hack, whether that by a duplex triplex or fourplex. My 5-year goal is to own as many multifamily properties as I can, ideally each of them cash flow. I know I can probably house hack my way to 5 properties in 5 years, but I assume I'll probably learn more efficient and aggressive ways to scoop up more properties as I complete my 2nd-3rd house hack, so that I can start picking up more than 1 property per year.

I don't want properties that will take a lot to fix up, I'm fine with cosmetics and do-it-yourself type things. I am looking for feedback on this plan, tips I should know, whether or not 25k cash is a good starting point, and if there is a better way to snowball rather than just househack 1 property per year. 

[Jonathan Pflueger]

@Rodrigo Barreiro Pujol

Your plan to house hack in Austin with a $25k initial investment is a solid start. Given Austin's competitive market, ensure your savings align with down payment requirements and closing costs for multifamily properties. Consider FHA loans for lower down payments, but remember, the key is to find properties where the rental income covers your mortgage and expenses, ensuring positive cash flow (although in Austin is will be hard, but not impossible, to accomplish)

Aiming for five properties in five years is very ambitious but achievable with the right strategy. As you gain experience and build equity, explore leveraging your existing properties to finance additional purchases. This might mean refinancing or using a HELOC (Home Equity Line of Credit) to access capital for your next investment. You may also want to really consider trying to find an experienced partner after you have done a deal or two - this may be key to helping you reach your five year goal.

Lastly, always keep a close eye on your numbers. Factor in all costs, including maintenance, vacancy rates, and property management (if you choose not to self-manage). Each property should not only be as self-sustaining as possible but also, ideally, contribute to your income. As you grow your portfolio, consider diversifying your investment locations and property types to mitigate risks.

[Wale Lawal]

@Rodrigo Barreiro Pujol

It's great that you're setting ambitious goals for real estate investing at a young age. Your plan to save $25k in a year for a house hack in Austin, TX, is a solid starting point. Here are some tips and considerations to help you along the way:

The real estate market in Austin is renowned for its vibrancy. Look at market trends, neighborhood values, and property values to find homes that meet your needs and areas that have room to expand.

For someone just starting out, house hacking is a great tactic. You may drastically lower your living expenditures and increase your capacity to save for future investments by renting out some of your units while you live in others.

Starting with a duplex or triplex is a sensible choice, given your aims and money. It maximizes your potential for income flow while letting you dabble in real estate.

It is a great benefit that you are prepared to work on do-it-yourself projects and concentrate on little improvements. Using this strategy can help you save money on improvements and eventually raise the value of the house.

Make connections with nearby real estate agents, go to gatherings, and make use of BiggerPockets and other educational materials. Gaining knowledge from seasoned investors and expanding your network might lead to insightful possibilities.

A reasonable starting point is to have $25k in cash, but keep in mind that there may be other charges to consider, such closing fees, property management, and unforeseen maintenance. The secret to successfully managing real estate investments is to keep your finances flexible.

It's a great beginning step that you want to house hack in Austin, Texas. Keep your eyes on the prize, never stop learning, and be willing to modify your plan of action as you get more experience. You may create a profitable real estate portfolio over the next five years by being diligent and making wise decisions.

Good luck!

[James Carlson]

@Rodrigo Barreiro Pujol

First off, congrats on taking a big step. More than any advice on specific strategy, I'd say buy soon and don't overthink it. 

I see young potential house-hackers here in Colorado Springs and Denver that are all excited and then get wrapped up in a gf/bf, in their job, in going out. All of that's great, but at your age, the biggest benefit more than any specific strategy is simply ... time. Time in market. Sooner you buy one, the sooner you can buy two. 

Good luck!

[James Carlson]

@Rodrigo Barreiro Pujol

Also, it seems like Austin and Denver, where we work, are pretty similar in prices. If it's like here, multi-units are harder to come by and the numbers don't work as well. I'll just throw out the idea of rent-by-the-room house hacking. 

At least in Colorado, you can get $800-$1000/room. If you find a 4-5br home, you're getting $2400-$3200 to offset your mortgage each month. That's a hell of a start. Just sayin'.

Cheers!

[Thomas Talbert]

I would point you towards acquiring in the suburbs of Austin. I would look at Bastrop, Taylor, Liberty Hill, Georgetown, or Dripping Springs. These suburbs are being developed rapidly and 4 plex's in those areas are much cheaper than if you were to look towards Central Austin. You can expect much better appreciate on your capital in those markets in my opinion. 

[Aaron Gordy]

Buy a duplex with fha money. It's 3.5% down. As long as you have a decent job you should be able to qualify to buy a duplex. 

[Rodrigo Barreiro Pujol]

Quote from @Thomas Talbert:

I would point you towards acquiring in the suburbs of Austin. I would look at Bastrop, Taylor, Liberty Hill, Georgetown, or Dripping Springs. These suburbs are being developed rapidly and 4 plex's in those areas are much cheaper than if you were to look towards Central Austin. You can expect much better appreciate on your capital in those markets in my opinion. 

This is great, my job is right in the middle of Round Rock, what are some good areas around there to consider as well?

[Thomas Talbert]

Quote from @Rodrigo Barreiro Pujol:

Quote from @Thomas Talbert:

I would point you towards acquiring in the suburbs of Austin. I would look at Bastrop, Taylor, Liberty Hill, Georgetown, or Dripping Springs. These suburbs are being developed rapidly and 4 plex's in those areas are much cheaper than if you were to look towards Central Austin. You can expect much better appreciate on your capital in those markets in my opinion. 

This is great, my job is right in the middle of Round Rock, what are some good areas around there to consider as well?

Taylor, Elgin, Georgetown would be where I would start! 

[V.G Jason]

Let's be realistic, scaling in a house hack fashion doesn't happen in today's world like the pre-Covid era. 5 MFs in 5yrs with just $25k to work with is a false reality. You have to pick up your income or get incredibly lucky on deals, I hope the both for you.

With that said, to echo some comments on here go get your 1st one done then assess. Really prioritize location over anything else, MF is hard in Austin. Have you even checked the area to see where you'd like to live?

[Ryan Kelly]

@Rodrigo Barreiro Pujol if your job is in Round Rock, you have lots of locations to choose from . Round Rock itself could be a good target with older homes (for the suburbs) and multifamily options. If you want to house hack, I also like Pflugerville, Georgetown, and Leander. If you choose to go farther out like Hutto, Taylor, Bastrop, Manor and others, just make sure the roommates you want to rent from you also want to live in those areas. Happy to connect if you want to discuss options.

[Ryan Leake]

@Rodrigo Barreiro Pujol

Just stabilized my first house hack in Austin and it's going great. I'm renting by the room and it's covering 95% of my expenses. Best way to get started in real estate investing IMO.

Find yourself a great agent and they'll get you in the right deal. I teamed up with @Ryan Kelly and his team was super helpful. Plan to get my second one in the books this year.

[Jordan Moorhead]

Quote from @Aaron Gordy:

Buy a duplex with fha money. It's 3.5% down. As long as you have a decent job you should be able to qualify to buy a duplex. 

 I second this and did it 4 times myself!