All Forum Posts by: Dan Burstain

There are property managers here who handle rent by the room as well as AirBnB.  If you are looking to positive cash flow with 20% or less down then you will need to do it that way.  Austin is not going to compete on cash flow with many cities but it will compete on making you the most money and also be the safest investment.  

I agree with @Ken Naim. It depends where you are financially and what your comfortable with as a way of investing. You will here both sides of this on BP and anyone who says one is definitely the way to go vs. the other just doesn't understand the other. I personally like maximizing returns on investment vs. cash flow. I feel I make more money this way and I am not worried about not being able to afford a new roof or AC unexpectedly. I still look for a balance though where I definitely cover PITI but maybe not fully cover CapEx, Vacancy, PM, and repairs estimates. If your finances are thin then maximizing cash flow is a better option for you.

If you have a tenant that is behind on rent or struggling to get by during this Covid economy take a look at https://texasrentrelief.com/.  The federal government has given Texas a few billion dollars to hand out to landlords who are having these types of tenant issues.  

@Di Lyu  I did exactly that selling my duplex on Naples Island in Long Beach via 1031 exchange and buying 4 places including a duplex here in Austin. Your answers 1) yes  2) could do either but the strategy I took was to commit to a consistently appreciating city like Austin  3) yes it can be done pretty easily.   I will DM you.  

There are higher than usual property taxes in Texas because we don't have a state income tax. There has been talk of putting in a state income tax and dropping property taxes but I don't see that happening. That all being said, when we run cash flow numbers and when we look at total ROI, we are taking into consideration the higher property taxes. There are still some places around here that have low tax rates in the 1% but most are around 2 to 2.5%. Now don't multiply that to the price of the house. It is multiplied to the assessed value which is much much lower than market price. Austin is not for everyone. BP is a fantastic site and community but the one big problem with BP is that you have investors who will tell you that you shouldn't invest in say Austin because it doesn't fit the model they use in say Cleveland. I know people on BP who would never invest in Austin because it doesn't meet the 1% rule. That is fine, but just understand a model that works in the Midwest doesn't always fit in other areas. If you didn't listen to these people and invested in Austin in any year of the last 40, you made very good money. I will take 40 years of consistent appreciation with a little less cash flow every day but that is the model that works for me.

I could be bias but I also am about to buy my 7th property here in Austin.  If you don't need a ton of cash flow and just want to maximize your return on investment then it is hard to find a better city to invest than Austin.  It is not too late.  People been saying that for 40 years and 40 years of data shows just a continuous steady climb up.  You can still buy a great 3 bedroom house 20 minutes from downtown for $300K.  I am guessing in a 3-5 years that number will start with a 4.  

Great advice from @Ronald Allen Barney. Communication will be key. 1) You need to communicate with a good lender to maximize your investment power. Money is cheap these days and if you are investing in Austin you are doing it to maximize ROI so understand what your payment will be, make sure you are comfortable with it, have some reserves, but leverage is the way to go big. 2) You need to communicate with an investment savvy Realtor who can help you reach your goals. There is a big difference between a Realtor and an investor focused Realtor. 14000 Realtors here in Austin and maybe 500 at most know what your CapEx should be. 3) But most importantly you need to communicate with each other to always make sure you are on the same page and make sure no one is feeling slighted. Also come up with some scenarios that could happen and what you both might want to do. i.e. Winter storm kills all the landscaping, how much should you spend to get it going again? Tenants have a felony conviction from 10 years back for grand theft auto but say they have turned their life around and make good income, do you consider them? etc. But you are in the right city to go big!

Yes.  Samsung expanding its presence there, Amazon as well.  Easy access into Austin.  Less than 30 minutes to downtown, Tesla, Apple Campus, Dell, Domain, and so much more.  

Top 5 city to live in 5 years running (#1 3 of those years). Apple, Tesla, Amazon, Google, Oracle, Facebook, and about 1500 other companies moving here or expanding existing operations here. From an ROI point of view, there is not too many better options and Austin is also one of the safest places to invest having its largest drop in price in the last 40 years being 2.9%. The huge government and university job base helps prevent the slides down while the tech, medical, and other industries provide the ride up.

Not all rentals are listed in the MLS but it is the best place to get rental comps. I can tell you in the last 30 days we have seen Zipcode 78644 homes between 2600 and 2800 square feet go for $2200-$2900 depending on home condition and features. Getting a Realtor to give you accurate rental/lease comps would be the best way to know what a place would rent for. Not only do you want to see rental value but how quickly those places are renting as well.