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Updated over 7 years ago,
Newbie investor - should I go for this?
hi everyone, I'm new to real estate investing and plan to invest in buy-and-hold options in Austin, TX. Since it is difficult to cash flow in Austin right now (unless you put a lot of cash down), I should consider an owner-occupied new build.
Hence the option below and I'd like to get some advice to see if it makes sense for a first-time investor:
- new build (complete in Aug 2017)
- fixed price ($223K); 3 BR/2.5 Baths, 1,350 sf
- part of a new estate area (Phase 1 has ~70 units) = higher property taxes @ 2.55% (versus average ~2.23% in Austin, TX)
- current SFR prices in the area for a 3 BR / 2 Bath ~$249K (source: Zillow estimates); this can fall as the new estate builds up (tentatively planned for 70 new builds for Phase 1)
- negative cash flow for 1st 7 years; primarily because of higher property taxes (can be offset as I plan to move in)
- using revenue and opex growth estimates (2-3%) over 10 years; cap rate = 3.5, Year 1 cash ROI= -5.5%, Year 1 Total ROI= 16%
Thanks in advance!