Advice to invest in Austin, TX Townhouse

[Bill Mason]

Hi All, new to BP. I was hoping for some advice on questions below, thanks in advance!

Context:

-brother is moving to Austin to work at a company in east riverside area. His preference is to be close to work. I figured if I buy an investment property there, he can rent a room and be the "property manager" and rent the other room(s) out.

-my budget is $250k.

-I prefer newer homes / town homes because I frequently travel internationally and thus don't want to deal with frequent repairs.

-brother doesn't want to be more than 10 miles from his office.

-all the above led me to a new construction townhouse in 78747, 2 bed / 2 bath for ~$240k. I will put 20-20% down.

-the community is gated, close access to I-35, and will have at least 90 units.

-the zip code has appreciated considerably over last few years (5-13% YoY).

-HOA fees are $160/month which covers everything exterior of the home (landscaping, insurance, etc).

Goals

-I completely understand that it won't cash flow, but my brother is pretty much a 2-4 year guaranteed renter of 1 room.

-I want to rent the other room out.

-I hope to make profit off of the appreciation, holding for 6-8 years. The appreciation is pure speculation based on past performance.

Questions:

-should I stay away from investing in a town home due the common risks (smaller buyer pool, potential HOA issues, large competition etc)? What are people's thoughts on appreciation of townhouse vs SFH in south / east Austin?

-is it relatively easy to find a professional to rent a single room in that zip code (south austin)? If so, what are the best ways?

[Greg H.]

I would not do this deal for the following reasons:

-Austin has had a tremendous run and while I do not see a huge downturn, I do not see how the run can continue at this level

-Huge number of rental units coming on line that will bring down occupancy levels and rents will follow

-Your $160 per month HOA fee WILL jump once the complex is sold out. This is a typical builder ploy to keep the fee low by subsidizing the HOA.