How to enter an expensive market? - Austin TX

[Brandon R Klassen]

Hi Group - 

I am new to real estate investing but purchased my first unit last year. Its a single family home currently being rented out. I live in Austin TX and the real estate here is pretty expensive.  For example, I paid $245k for the property and it is currently being rented out for $1700. The house has appreciated on average 15% year over year for the last several years. This was the best deal I could find at the time. I want to purchase more, but the cost of property here is so expensive. I put down 60k+closing costs which came out to around $70k total. I also have a full time job that allows me to save around $40k per year, but even then it takes me two years to purchase a new property. I read on the forums about other folks purchasing properties for much cheaper and making them cash flow positive. I do not have time to put in a lot of work into the houses which I think I am at a disadvantage from. 

Do you think my first house is a good decision for me? What would your advice be? Should I look at other markets outside of Austin? Should I just save my money and purchase a property every two years?

[Frank Wong]

Brandon,

It is correct that you do need to find properties that need some remodeling work to create the equity for yourself.  That is the best way to invest in my opinion.  But it sounds like you have time restraints so there is not much you can do about that.

I think you are in a very good market which has a lot of upside down the road.  My suggestion is to continue to build and invest in your local market.  There is a huge advantage in that.  Don't worry about what everyone else is doing in different markets.  Each person situation is different.  Buying a property every 2yrs is a solid plan. Real estate is not getting rich fast its get rich slowly.