I'm going to hit the 1% rule in Austin!

[Conner Olsen]

I bought a duplex house hack in North Austin and am renting out the other side as a monthly rental on AirBnb. We live in a 3bed/2bath, and are renting a 2bed/1bath. We've had great success finding renters, and have successfully increased rent by 12% since we first listed in June. Once we move out of the property we will hit the 1% rule!

Price - 435k

2/1 rent - $2,450/month
3/2 rent - $2,700/month

Total rent: $5,150

5,150/435,000 = 1.18%

[Joe Scaparra]

I get it guys the more in-depth analysis you do the more confidence you will have with your purchase.   If you are purchasing in the Austin MSA and understand the dynamics then the 1% deal is usually going to be a GREAT investment.  Yeah, I know someone is going to throw out you have to throw in vacancy, repairs, capX, property management  ect , ect, etc.  And to be totally correct yes they should be considered too.  But a 1% deal with applied logic is normally the making of a GREAT investment in Austin.  

I am a duplex buyer.  I analyze the deal before I even physically look at the property.  I usually know before I look at the property that I am going to submit an offer.  A huge consideration to begin with is does it come close to the 1% rule.   If on the other hand you are comparing different investments to different markets then absolutely the total analysis will provide you a better picture of what investment might be more financially sound.  EDIT:  Let me add that I also look at the age of the property, trying to stay with properties built in the late 70s or later to avoid issues with lead base paint and cast iron plumbing.  

Most people I deal with are looking in the Austin MSA for a reason and are not trying to decide should I invest in DFW, HOUSTON or Austin.  When I look to buy, I look at the structural integrity of the property (repair concern); I am interested in three things:  Age and condition of roof, AC units and the condition of Slab/floors.  The rest of the stuff scares away newbies but the seasoned investor could give a crap.  1% gives you a lot of leeway to miss an item or two.  In Austin, vacancy rate is absolutely not a factor.  I do my own property management and advise newbies to do the same.  I am not a flipper, but if I was then I can understand where the 1% rule is not the be all tool used for the purchase.  

People who want to use STR income as a basis of income are taking a higher risk in projecting long term what that will be. However, if they are comfortable with that assessment then I say go for it. 1% is damm hard to find in the Austin MSA, but not impossible. If you do find it, better be ready to lock it up as there will be someone minutes away ready to grab it. Keep it simple. Cheers!