is this a good deal in Leander,tx for rental?

Question

Brand 4 bedroom/3 bath single story home in summerlyn neighborhood in Leander for 215k. 1746 sq. ft. is this a good deal for rental or I should look for something else? I am looking to invest in austin area for long term.

Jeremy VanDelinder · Answer

I concur with Jacob. It's hard to say based on what's here, but in general terms I expect a good deal in Leander to be near the $100 s/f mark. That one is around $123 s/f. Of course, it greatly depends on the area--that sounds like a nicer house that what I'm typically looking at, but I would be surprised if you could make cash flow on it.

Aaron Gordy · Answer

Account ClosedSFR's are tough to find that cash flow. No doubt. I have spent hours upon hours running numbers for hundreds of properties for cash flowing possibilities. Every once in awhile I find a diamond in the rough but its hard to find. What kills most deals are the taxes! The taxes are high. If the taxes do not kill the deal then the hoa will sometimes kill the deal. The cash flowing deals are out there for sfr's but its tough to find. Duplexes and 4plexes are easier to cash flow. That is the job of your realtor to find those deals, btw. If you do not have realtor helping you then my hand is up, hahaSan Jose is impossible to cash flow from, no doubt. The entire bay area is super tough to cash flow. My clients from the bay area are investing in the Austin metro area for that reason.

Jacob Pereira · Answer

@Aaron Gordy said it exactly right. No investor worth his salt would sell an SFR that already cash flows. It's not too hard to make one do so after a while if you find an off-market deal that has the potential for a lot of value-add, but you certainly won't find it turnkey on MLS, at least not without hoping for a few years of high appreciation first.If you're looking at multifamilies, though, there is still plenty of meat to pick off the bone. I bought a fourplex in April for 274k which was renting each unit at $700 a piece. As each lease expired I raised the rents to $900, and everyone STILL stayed. Had anyone left, I would've done the full rehab treatment and looked for about $1000 per new tenant.Obviously these are low-income tenants, and I know a lot of BP scoffs at that, but it works.

Jacob Pereira · Answer

There's not enough info here to really say whether it is or not, but based on the rudimentary info here I doubt you'd cashflow without at least a few years of solid appreciation. Also, Leander is somewhat close to Austin, but why go there rather than Austin itself? Or even closer cities such as Pflugerville, Round Rock, or Cedar Park?

Jeremy VanDelinder · Answer

It's up to you. The appreciation in this area is good and has been consistent for some time, but personally I don't purchase anything that isn't cash positive--or at least even. I'm starting demo on one today in Hutto that will cash flow a little, but I got it at 10-15% below market value. That's pretty much the only way to get a cash flowing property. Further north (near Ft. Hood) the cash flow numbers work a little better because it's a slower growth market. I'm looking to get something up there for my next hold.

Jeremy VanDelinder · Answer

Yes, I know that the transit station draws people who work in Austin and want to be out where there is a little more space. It looks like a nice neighborhood. How much is the HOA? If you can cash flow it, that's all that matters.

David Shapiro · Answer

Account Closed I agree with Aaron and Jacob. In addition, renovated duplexes are going for around 124 GRM in Austin. With 25% down, even with high taxes they cash flow. After taking into account all future expenses (vacancy, maintenance, capex) the numbers are tight but if you forecast out some modest appreciation your IRR is above 10%. I just submitted an offer for a client that with very conservative estimates has an IRR of 12.5%.If you have cash above the 25% down payment and can buy one that needs work you have the added benefit of some forced appreciation.

David Shapiro · Answer

Account Closed Are you investing out of state because you're trying to get higher returns than locally? Diversifying? Amount of startup capital you have fits better with price points in Leander?If it's higher returns, then what types of returns are you projecting locally?

Account Closed · Answer

@David Shapiro my goal is higher returns. I cannot afford to invest in san francisco bay area and that is the reason I am looking for out of state properties.I am looking for properties that are around 200k price range.

Account Closed · Answer

@Sal Zafar How do I find good properties in that range remotely from California. I am new to out of state investing.