House hacking a duplex in Austin

[Juan Cordero]

Hi,
I've been considering and am actively looking for a duplex where I can live on one side and rent the other. The Austin market seems to be continually growing and house prices keep gowing up. For this reason I think the 1% rule is quite difficult to achieve. 

It would be ideal that the rent of the other side be enough to pay the mortgage where I can basically live for free. If this isn't possible, what would you consider be the threshold to make this a good deal?  Let's suppose total mortgage is $2500 and I can rent the better side of the duplex for $1500. Would you still live on the other side paying the remainder $1000 to cover mortgage? If I eventually move out, I could rent this other side at $1300 and have some cash flow coming in. 

Any inputs and opinions are welcome.

Thanks,

[Dan Burstain]

I think house hacking a duplex in Austin is one of the best possible ways to get started building a real estate portfolio. First, yes, forget about the idea of buying a duplex in Austin where you would actually want to live and have it hit 1% or cover the mortgage with just one side. But, buying a duplex in Austin in a good area with strong appreciation potential in between $300-$400K is a great move. Your assessment on the numbers is pretty accurate if the duplex is not identical units. I would say it typically looks more like $2500 PITI with you putting 5% down on a 3/2 on each side and renting out one side for $1300. When you leave in a year or so you can rent each side out for $1400. Not much cash flow but $20K-$40K in appreciation. Most will tell you not to bank on appreciation but Austin has 30 years of pretty much a constant stead flow of appreciation with no roller coaster rides or dips lasting more than 18 months or so....in 30 YEARS. With more and more companies moving here creating more and more jobs, I don't see a dip anytime soon.