Hello from Mountain View, CA

[Ethan Anderson]

Hi BP!

I live in Mountain View, and have been in tech for the last 4 years. I love my job, and would prefer to invest part-time, while leveraging my W-2 income to make financing on larger deals a bit easier. 

Since the Bay Area can be an expensive market, and I would prefer to move some of my eggs out of the tech basket, I am looking for multifamily deals in Austin, TX -- where much of my family reside. 

I picked up some cash flowing rentals in Taiwan about 10 years ago, which gave me an opportunity to make a lot of mistakes fairly cheaply! But I still consider myself a novice, and am excited to learn as much as I can from the BP community! 

Cheers,

Ethan

[David Ivy]

@Ethan Anderson

Hello! I am an investor and Realtor in Austin. I have single family and residential multifamily property in Austin and elsewhere in Central Texas.

The Austin market is very tough right now for cash-flow seeking investors. Over the past 12 months, the median single family home in Austin sold for $181/sqft. at a price of $359,000 and rented for $1,850/mo. That's a paltry 0.52% rent-to-value. Don't expect to find a single family home on the MLS or from a wholesaler in Austin that cash flows, unless you're paying all cash or otherwise putting down a hefty down payment. If you do happen to find something initially attractive, it's guaranteed to have multiple offers or bidders. 

Most cash-flow seeking SFR investors in Austin are on the sidelines or working in other Texas markets for the time being. Of course, people still find unicorns, but those people are generally doing their own marketing and sourcing for properties. Even then, nearly all "distressed" homeowners are so above water with their equity that they can get out of any trouble by retailing their property on the MLS and getting it sold quickly with multiple offers.

The residential multi-family market in Austin is better with respect to cash flow. However, the tremendous appreciation here has affected the multi-family market as well. The median duplex in Austin sells for around $160/sqft. at a price of $304,500 and rents for $1,337/mo. per side ($2,674 gross). That's a 0.88% rent-to-value, which is great compared to the Austin SFR market. It's still far from exciting. Nevertheless, there is more opportunity here for a wholesaler to snag you something worthwhile or for you to find something decent on the MLS.

As an out-of-state investor, having family in Austin will be an advantage. However, it's important to have someone in the local market who can help you examine potential deals and represent you when it comes time to submit and negotiate offers. In particular, never take a wholesaler's word for it when it comes to whether a deal makes financial sense. You have to be able to perform your own due diligence, or have someone else on the ground to do the work.

Please reach out if there's anything I can do for you!