3103 Fontana - new residential construction in Austin, TX

[Tim H.]

Investment Info:

Small multi-family (2-4 units) hard money loan investment in Austin.

Purchase price: $480,000
Cash invested: $54,000
Sale price: $1,730,000

3103 Fontana is a new residential construction project in South Central Austin, TX. The project was acquired and built during 2019. It's a high-end duplex with 3 Beds and 3 Baths on each side, EV charging standard, sprinkler systems, sealed concrete floors and much more. The project returned over 50% ROI to investors. This was despite a 4 month delay at the city and going on the market in low-season (November). The same builder is looking for investors right now for other projects int he area. See photos of the build here: https://3103fontana.com/

What made you interested in investing in this type of deal?

The builder is an absolute rock star. He's been doing high-end construction work for several clients in Austin included a major hard money lender. I've lived in this zip code, and being a real-estate agent, I know the SF rates. Considering his build costs and what we could expect on the back-end, it was a no-brainer. The units sold shockingly quickly despite it being an awful time of year.

How did you find this deal and how did you negotiate it?

Through our rugby club. All the best deals get done when you have a high level of trust in the parties.

How did you finance this deal?

Cash and hard money.

How did you add value to the deal?

I was the real estate agent on the deal. I used a unique pre-launch marketing strategy that helped us price the units correctly. We ended up with > $150K more profit than expected thanks to this strategy.

What was the outcome?

Everyone was thrilled. We're looking for more opportunities right now.

Lessons learned? Challenges?

1. Buyers for residential products over $800K expect sprinkler systems to come with the property as a standard.
2. Having a plan for installing Google Fiber is essential if available.
3. Creating condo docs is something you have to do well before going under contract on a unit.
4. Barn style doors are great, but not on bathrooms or bedrooms - they're better as partitions

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, myself. It's unlikely that I'd use another agent given that they won't understand our pre-marketing strategy.