Looking at the Numbers for a Duplex

[Christopher Sica]

Hey everyone!

I must be a slow learner because as I learn more and more, I find that I am more puzzled by the market here in Austin TX.

I was recently trying to use the 50% rule and the 2% rule as different ways of looking at the same duplexes here in Austin.

The average duplex here that costs around 200k only rents out for a total of 1200 for both units because they are generally in a 'worse' area and the nicer duplexes that cost around 300k only rent for about 2400 total for both units. These numbers are NO WHERE NEAR the necessary to be cash flow using the 50% rule or worthwhile investments at the 2% rule.

You the community please enlighten me as to what I may be missing. I have tried to look at the situation like the stock market. Austin is a 'growing or 'hot'' area, much like a growth stock is expected to keep growing in value. Does this mean that because of this location, I will have to pay a higher price for the same stock (read: property) than if I were buying in a less desired or popular real estate market (read: blue chip stock)?

If this is the case, it seems that I am buying more risk here than I expected unless there are people who are able to explain to me in concrete numbers that Austin will continue to grow and that my overpriced initial investment will work out in the long run.

Any advice/suggestions?

Thank you so much for hearing me out and any input will be seriously weighed and considered.

Christopher