Finding Deals in Austin Texas

[Lexi Teifke]

I'm convinced that Austin is as competitive as it gets when it comes to being a successful real estate investor. What are you doing to find deals ?  I believe the following are helpful in finding deals. 

1. Meet every wholesaler that you can and learn about their business.
2. Make offers!
3. Find potential partners and build relationships.
   
   

[Alex G.]

In a competitive market when it's hard to buy at a big discount, you may look for ways to create add-on value. 

For example: today in my Inbox there was an email from a local wholesaler both of us know through IU forum. They were selling 3 side-by-side lots zoned SF-3 that are barely large enough for A/B condos (ADU regime). They are asking $580K for 3 of them, or $193K each.

Upon a bit of research, it looks like this used to be a good size single lot (Lot 1) in a certain subdivision on Chico St in 78721, zoned Sf-3. The owner, who happens to be a well known spec home builder (I sold them a lot or two in the past), bought the original lot 2+ years ago. It's unlikely they paid more than $200K for the lot then.  Probably less. 

Rather than building just one A/B project at that time - they probably spent time, money and effort to subdivide the lot into lots 1A, 1B and 1C. These 3 lots combined are are now marketed for about 3 X the price they paid for the original property.

Another example: a couple of years ago I bought a run-down 2plex off Riverside. I rehabbed the place, added a studio unit, took rents from $2400/month total to $5700/month - all in 12 months - and sold it for almost 4 X of what I paid for the building.

There are many ways to create add-on value, but it takes understanding of the market, honing certain skills to execute the plan and looking specifically for these kind of opportunities. 

By the way, these high margin opportunities are available predominantly in high, competitive markets like ours. You usually won't find them in a slow market. 

In slow times builders aren't eager to pay premium prices for small lots hoping to make $100K in profits on an A/B project. Rental investors are going to be a lot more cautious and conservative. You won't find them willing to pay astronomical list prices for 2-4 units like they do today.  None of today's numbers will make any sense in a slow market.

So....  Rejoyce the high competitive market we're having now!  Make it count as a seller of opportunities to aggressive  buyers who're betting on our market continuing to do well.