Seeking Help with South Austin House Hack

[John Jacobus]

Seeking help with the search for and acquisition of distressed, old, underutilized property in South Austin (between Zilker and I-35 & Riverside and Oltorf).

I intend to execute a tear down and/or implement significant additions to increase the density of an existing single family lot and/or small, old home. The goal is to create room for 2-3 families while creating a small, separate space for me to live in. I will consider re-zoning, if feasible.

I am looking to connect with others who know the zoning rules, have done similar projects in the neighborhood (Soco, Zilker, Travis Heights, Bouldin, South Lamar) and/or have access to distressed deal flow in the area.

I understand that cash returns are difficult to generate in this neighborhood. Investment returns are not my primary objective. I’m looking to subsidize my cost of living in the area while creating value through a moderate/heavy development project.

Thanks in advance for any insights, referrals, and /or lessons learned.

[Alex G.]

@John Jacobus For the type of 2-3 unit residential project you're contemplating, buying something with an idea to change zoning would mostl likely be a waste of time and resources. You're potentially looking at a year time-wise and about $80K-100K in various fees, including city fees. All zoning changes go through City Counsel meetings, neighbrohood pushbacks, etc.... and None of it is guaranteed to pass. City has no obligation to grant you a zoning change.

When a large developer is building a hotel or a shopping center the budget often allows for high level legal counsel, premium architects and PR to deal with the neighborhood and otherwise grease the wheels and get everybody pacified to some degree to push it through. And since the project will create jobs and huge property tax and sales revenue streams for the state, county and city for years to come it's in the city/county/state broad interest to go along with a large project.

On the other hand, getting a permit from the city to rehab or build a couple of units  on a lot that is already properly zoned and has right deed restrictions is quite doable. As long as the lot is in compliance with all the right ordinances for trees, Mc Mansions, etc., and not in a flood zone.

As @Aaron Gordy says it's tedious, time-consuming, nerve-wracking, it could kill your budget, etc. - especially the 1st few times you do it.  BUT the City's permitting fees are relatively low and the City can't deny you a permit if you're submitting it in full compliance with the codes, zoning and ordinances.  There are also modestly priced small architects and permit expeditors available to help you through the process. 

With regard to your choice of area. As other posters pointed out, you picked arguably one of the most expensive and competitive areas where cost of dirt is easily above $400K. As you go further away from downtown south of the river you have the next layer, area between Ben White and Stassney in 78745 that is currently experienced the same Renaissance and growth pattern as 78704 has gone through 15 years ago.

Many lots there are zoned SF-3 for 2 units. They have small single houses built n 60s and 70s sitting on them that you can get today in the low to mid- $200s, or 1/2 of the 78704 zip prices for the same type of property. That's to me a better ROI for your type of project UNLESS you're sitting on a large pile of cash and you want to live in a premier part of town near Downtown with all the perks it offers.

Another option for house hacking to investigate is just buying a duplex or 4-units in your target area. Or go couple of  blocks east of IH35 between Riverside and Oltorf, that area is also rapidly growing. It's almost as close as 78704 to DT, but still a good deal cheaper. It's got nowhere to go but up in value.