SFR in Kyle or San Marcos - same builder

[Sabuj Banerjee]

Hi All,

I recently sold an investment property in CA and am looking to do a 1031 in a landlord friendly state such as TX. My primary goal is appreciation over the next 5/6 years, cashflow positive preferred but cashflow neutral at a min.

I am considering the following options:

1- Purchasing a new duplex from Two Ten Communities in Buda. Any insight on this builder ?

2- I am also looking at Lenar homes in Plum Creek, Kyle and Whisper in San Marcos. Trying to figure out which one to pick with cashflow and future appreciation in mind?

a) Plum Creek, Kyle - 1900 SF, 4 bed 2 bath, corner lot, large backyard, great school district rating

b) Whisper, San Marcos - 2300 SF, 4 bed 3 bath + study room, moderate backyard, OK school district rating

The Whisper property is about $20K higher priced. Both are cash flow positive.

Any thoughts or comments on these above?

[Dustin Tucker]

Hello Sabuj,

I personally like the idea of purchasing duplexes, but I think you are going to see as much appreciation compared with purchasing Single Family Residences.  The problem I see is the masses have not understood the advantage of purchasing a duplex.

As far a Lennar is considered an entry level builder, I don't see that their neighborhoods in general have very good price appreciation, unless they are in a unique area where the location is exceptional.

I think that prices are falling, and that you should be able to find a deal, the I-35 Corridor from  San Antonio to Austin is a very hot area.

Here is an example of a property that was listed for $342,000, and the list price is down to $300,000, with a price drop of $20,000 on 7/29. 1261 Stone Rim Loop, Buda, Texas 78610, If you need any comps or info, just let me know, I'm a licensed Broker in Texas, and I have MLS access across the state.

Also, I'm not sure if you know, but you can split your 1031 exchange and purchase multiple properties instead of just 1 property. You can also use a DSCR loan for the remaining purchase amounts. Currently you can get DSCR loans for up to 80% of the purchase price.

For the 2 neighborhoods you looked at, I would look at price average over the last 6, 12, 24, and 36 months.

[Tyler Hodgson]

Hi Sabuj,

Congratulations on your recent sale and your decision to invest in Texas! A 1031 exchange into a landlord-friendly state like Texas can be a strategic move, especially with your focus on appreciation.

1. Two Ten Communities Duplex in Buda:

• Duplexes can provide both appreciation and rental income diversification, which can lead to more consistent cash flow. Research the specific market in Buda and the historical appreciation rates for similar properties. Buda has been experiencing growth due to its proximity to Austin, which could benefit future property values.

2. Lennar Homes: Plum Creek (Kyle) vs. Whisper (San Marcos):

a) Plum Creek, Kyle:

• The corner lot and large backyard are attractive for families, and the high school district rating can positively impact property values and rental demand. Smaller square footage compared to Whisper as a 4 bedroom, which might limit potential rental income.

b) Whisper, San Marcos:

• Larger home with an extra study room, which is a valuable feature for potential tenants looking for office space. San Marcos is known for its college town vibe, potentially offering a broader rental market and the size of this one could be a good student rental. The higher price and only moderate school district rating could impact long-term appreciation compared to Plum Creek.

1031 Exchange: As Dustin mentioned, you can diversify by acquiring multiple properties under a single 1031 exchange. There could be a strategic way to tackle a couple of these options at the same time.

[Jordan Moorhead]

@Sabuj Banerjee generally Buda is seen as more desirable than Kyle but both areas are growing like crazy. Be careful with new build communities that won't be fully built out during your hold time horizon. Trying to compete against a builder to sell your existing build is extremely difficult.

If there is new construction similar to yours around what you're selling you'll be at a disadvantage unless the market is scorching hot again and the builders have waitlists like they did in the recent past.

Let me know if you have any other questions or need help in those areas. We sell a lot in Kyle/Buda and I live on the south side of Austin close to there.

[Jordan Moorhead]

Old downtown Buda is small but really cool and we spend a lot of time there!

[Blake Anthony Carter]

Depending on your strategy I lean more towards SFH only because duplexes are harder to resell