Suggestions from Experienced Austin Investors

[Cayton Green]

Hello All,

I'm struggling with deciding on how to start my RE investing path. I've got a couple scenario's that I'm contemplating and just wanted to run it by the Biggerpockets community to see if yall have any insights, suggestions on how to proceed. 

Option A: Find an investment property in Temple/Killeen area with an emphasis on cash flow: I liked this idea at the beginning because of the lower cost of housing (seeing houses 70-120K that fit my buying criteria) and the greater potential for cash flow. The drawback is that I'm an hour away from that area (i live in Hutto) and I'm not too familiar with that market.

Option B: Turn my current primary home into a rental and buy my new home in the appreciating Austin market: Now this is the idea I've recently been giving much more thought. With all the news of new companies setting up shop in Austin and all the growth we're seeing, I just feel maybe, long-term, this option could better. My plan is to buy a new primary property that hopefully I can get under market value that needs minimal rehab and I can build some sweat equity into it. Only drawback I can think of is that my current home in Hutto, once turned into a rental, would most likely be negative cash flow when you consider all expenses including vacancy, CapEx, maintenance, PM (about $50-100 a month) but Hutto has been appreciating fast as well and I really want to keep this property due to that.

Side note: I do house hack at the moment. I've been renting out 2 spare bedrooms for about a year now, and plan to do the same if I buy a new primary property in Austin MSA. 

My ultimate goal in RE is to have a portfolio of buy and hold properties that I can eventually live off of with the cash flow. Cash flow always appealed to me more, however I'm starting to think the Austin appreciation potential is almost too good to pass up. Any thoughts, guidance, or insights would be greatly appreciated! 

Thank you all!

[Ryan Kelly]

@Cayton Green I absolutely would vote for your Option B versus A. Pick up a second Austin-area property that makes sense as your primary residence now and could be a second rental property in the future. And you can add roommates in the new property as well. I have a number of clients doing this exact same strategy. I know the Temple and Killeen areas fairly well and I don't have an issue with Temple. It is a solid, smaller town with some decent employers. I would personally avoid Killeen which is flooded with C-class and below rentals. Like you, we all love cash flow AND appreciation too.