Investing in "officially" overvalued markets: Austin/San Antonio

[Richard Potts]

I'm new to property investing, but have been reading this gold mine of info at BP for a while now. I'm anxious to jump into a deal. 

I'm sure about my plan and niche: want to buy and hold small MFH (duplexes to start) by house hacking and self-managing up to about 16-20 units over the next couple years.  I have the appetite to start with something that needs *some* work, but I have to house my young family with me. So I can't take on something unlivable. 

But l am also really spooked living in Austin where we've been officially labeled the second most overvalued city in Texas by Forbes, et al.  I've held off for a couple years on purchasing, waiting for the market to turn...so I clearly have bad judgment there. 

Anybody here still killing it in Austin? Not concerned about buying near the peak? Advice for where to be looking for a first deal? 

Do I just need to get over myself? A kick in the pants? Work harder to find a discounted deal? 

[Jacob Pereira]

Let me start by saying that you can make money in any market if you do it right, but gone are the days where you could buy a property in Austin, run it down while collecting rents, and then sell it for a massive profit a few years later. You at least need to do some basic value-add to make money now, but still not really that much. You'd be surprised how cheap and easy fresh paint, new flooring and countertops, and a few improved fixtures cost, and how much they increase the value of your property.

Also, I personally love the duplex strategy, so much so that some of my clients recently designed a coffee mug for me that says "SFRs are nice, but have you considered a duplex?" When I first started investing I bought exclusively duplexes and fourplexes and it has worked very well for me. Even now, I'd say a good 30% of my clients are only in the 2-4 unit market. That said, that particular niche is SUPER competitive right now. it's not uncommon to see 20+ offers on a duplex that is properly renovated and in a decent area. As of this writing, the entire ABOR MLS shows only 74 2-4 unit residences that are active. Additionally, they're all owned by investors, so you're less likely to find a seller who is willing to part with it below market and not have it listed publicly.

I'll end by saying this; Since I first discovered Bigger Pockets many years ago, people have been posting that the next market crash was going to happen and that they were hoarding cash so they could pick up sweet deals afterward. Those people are speculators, and will never beat the returns of true investors who identify where and how they can add value and make solid plans for their investments.