First time rental property investor from CA

[NaniKan Deravo]

Hi all,

I'm from California and thinking of buying a rental property in/nearby Austin. I've talked to a few real estate agents to get an idea of the landscape in Austin. I'm mostly interested in places like Leander and Cedar Park. Based on my research, it seems I should be expecting negative cash flow here. I'm still thinking if this is the right move for me given the high property taxes there, hassles of out-of-state management, additional CA taxes, as opposed to simply investing in index funds (which might have more returns). I'm looking for that one strong reason for why I should move forward with it. I hear the terms like leverage, future growth opportunities here, diversification but not fully convinced. Can anyone help me bring me out of this limbo? Thanks a lot!

TLDR; Why should an out-of-state investor buy a rental property in Austin instead of investing in stocks/index funds?

Also, I'd like to connect with fellow out-of-state investors in Austin. Anyone here?

[Jason Wray]

Nanikan,

You should absolutely look outside of California right now in order to get into some great cash flowing properties. California has some unrealistic home values right now on top of extremely high taxes and HOA if your in certain areas or property types. Multiple states offer much lower prices with cash flow opportunities. Take Indiana for example you can still buy a Multifamily 2-4 units from $90K up to $350K all depending on turn key or need renovations.

You also have states like Tennessee, Alabama, Florida, Ohio and others that offer great LTR and STR opportunities. If you know the right people you can buy in these states and set up a trustworthy management or mobile manager to help with the up keep and maintenance. Feel free to message me if you want to Network.

[Jacob LeBar]

Hi NaniKan, I work in Austin for the nation's largest investment real estate brokerage. We see a lot of investors take negative cash flow in the beginning but the value in the properties is the remarkable appreciation we see in Austin and the tax benefits landlords enjoy. Realistically, I believe that the tax deductions are the most valuable asset when it comes to buy and holds. On the other side many major companies are investing in Austin so growth looks strong in many aspects. But I also don't agree that Leander and Cedar park are the best for instant cash flow, you should look in Killeen where the price point is low, and has a constant influx of renters coming because of Fort Hood. 

[Allan Bishop Jr.]

@NaniKan Deravo - Good morning! I agree with @Jacob LeBar in reference to the area around Killeen. This is the fourth time I have lived in this area. Fort Hood (so to be Fort Cavazos as of tomorrow) is a large installation. This equals a large pool of Soldiers coming in and a growing number of retirees staying in the area. If you have specific questions about the various cities and neighborhoods, I’d be glad to help out. I can connect you with local real estate professionals, contractors, etc and/or help with “boots on ground” activities if needed. 

[Tyrell Proby]

Here are a few reasons to Invest In Austin rather than Stocks/Index Funds.

Appreciation: Although stocks and index funds can appreciate in value, they do not provide the same level of appreciation as real estate. Property values in Austin have risen steadily over the past decade, and the city's employment growth and low housing supply continue to drive up prices. I'd check out Killeen/Harker Heights area. 

Tax Benefits: Real estate investments offer a variety of tax benefits, including depreciation deductions and the ability to defer capital gains through 1031 exchanges. These benefits can help offset the cost of owning a rental property and provide a significant advantage over stocks and index funds.

Diversification: Owning rental property in Austin can provide diversification for an investor's portfolio. Real estate investments can be less correlated to market fluctuations than stocks or index funds, which can help reduce overall portfolio risk.

Now if you really want to make Gainz you should get into $PEPE.

[Jordan Moorhead]

@NaniKan Deravo don't buy something with negative cashflow. You may need to broaden your search but you can find cashflow in Central Texas!

[NaniKan Deravo]

>@NaniKan Deravo don't buy something with negative cashflow. You may need to broaden your search but you can find cashflow in Central Texas!

@Jordan Moorhead Is that a strong no? Maybe appreciation could make up for it like Jacob mentioned?

[Jordan Moorhead]

@NaniKan Deravo you can do whatever you want. I don't buy something that won't cashflow and never recommend anyone do that. What are you going to do if you lose your primary income for some reason and the property is losing money every month plus you have a large capital expense come up?

[Rahul Samskruthyayan]

Hi. Did you closed any property?