Newbie seeking advice for 1st investment prop - new build (ATX)

[Eugene Peh]

hi everyone, I'm new to real estate investing and plan to invest in buy-and-hold options in Austin, TX. My real estate agent said that it is difficult to cash flow in Austin right now (unless you put 40+% cash down) and I should consider an owner-occupied new build.

Hence the option below and I'd like to get some sage advice here to see if it makes sense for a first-time investor:

- new build (complete in Aug 2017)

- fixed price ($223K); 3 BR/2.5 Baths, 1350 sf

- part of a new estate area (Phase 1 has ~70 units) = higher property taxes @ 2.55% (versus average ~2.23% in Austin, TX) 

- current SFR prices in the area for a 3 BR / 2 Bath ~$249K (source: Zillow estimates); this can fall as the new estate builds up (tentatively planned for 70 new builds for Phase 1)

- negative cash flow for 1st 7 years; primarily because of higher property taxes (can be offset as I plan to move in)

- using revenue and opex growth estimates (2-3%) over 10 years; cap rate = 3.5, Year 1 cash ROI= -5.5%, Year 1 Total ROI= 16%

Well, there it is, not sure if this is worth the trouble of moving into and wanted to hear your thoughts, thanks in advance!