All Forum Posts by: Beau Fannon

The SBA has drastically reduced their requirements for acquiring a small business disaster relief loan.

https://www.sba.gov/disaster-assistance/coronavirus-covid-19

I know there are a lot of locals here on the Austin forum that make their living in the industry.  While the SBA doesn't currently have a mechanism to help independent contractors like myself, they are far more open to helping plumbers, appraisers, and anyone else that has organized themselves as business. That link will take you to an overview of their operations and there's an apply now button about half way down.  If you are not a real estate agent and your real estate related business is hurting, apply for help. 

https://beaufannon.exprealty.com/blog.php

I'm not sure if they do what you need, but my favorite title office is Texas National in Round Rock. They're worth a call. 

Apples to Oranges. 78745 has 5x as many homes as 78724. Most of 78745 was built out in the 1970s. 78724 is just now getting built out. 

@Joe Scaparra if memory serves, you've mentioned that you bought several of your properties way back 2013. To generate positive cash flow on a new purchase, commanding top dollar is a must.

Sounds like a little TLC could really boost the income your property generates. You ready to sell your duplexes to me?

Recently, my family added a duplex to our investment portfolio. I was super excited about it because it's only 10 minutes from my house! I ran the comps for the neighborhood and saw that there wasn't a lot turnover during the past 3 years. Maybe 5 comparable units within 1 mile. It looked like, worst case scenario, each unit would take about 27 days to rent.

By day 15 I had already pulled out every marketing tactic in my arsenal. By day 60 I was hyperventilating because I had not forecasted the need for 3 months carrying cost into my numbers. In the end they took 64 days. I was flummoxed. I'd never been so wrong before on rental forecasts. Why?

So like any good wonk, I started pulling hard numbers from the MLS for Williamson, Travis, and Hays (WTH) counties. Below are my WTH graphs that give a far better idea as to the nature of the Austin area rental market than anything I've seen before.

Comparing the total number of leases signed during any given month clues us into the drastic seasonal market shifts that take place in the Austin Area. Lease volume almost doubles between the peaks and troughs of the pink line. So does the average cumulative days on market (CDOM). The effect gives the appearance of a fairly well balanced phased wave. I don't have anything else to compare this type of analysis to but my gut says this is a good healthy market devoid of any systemic anomalies.

If you'll note the trend lines above, you'll see more and more leases are signed every year and that average CDOM is on the decline.

Now let's break things down further by examining the effect property size has on CDOM. My duplex is a 2/2 mix. Based on this WTH I should have forecasted an average lease time of 58 days instead of the 27 I guessed because we went to market during the slowest time of year. As you can see by the pink line, 2 bedroom properties take the longest to rent on average and don't benefit as much from Austin's extreme real estate seasonality.

3 bedroom rentals (green line) are by far the most consistent property leased in Austin. But the demand for 4 bedroom properties is increasing faster than any other property type. Based on the trend lines, it appears that demand for 4 bedroom leases will surpass 3 bedrooms in 2023. I'm forecasting accelerated appreciation for 4 bedroom houses in the Austin area as a result simply because there are there are half as many 4 bedrooms available in our rental market as 3 bedrooms. This will drive up the rent that can be charged for 4 bedrooms.

In summary, assuming Austin's appreciation game survives the COVID-19 virus, my next property will be a 4 bedroom rental. How do y'all interpret this data?

Which property sizes do you think rent the quickest?

That's what I've been saying! 

Have you ever heard the phrase, "Biting off more than you can chew?"

Geography is fate. Your got job flip won't pull $600k in a neighborhood that tops out at $475k. 

@Emilio Ramirez

Why don't you come visit? We manage an STR and can give you a steep discount. I'll even give you a tour of the town.

@Nina Hayden Denver's economy can be rather mercurial. It'll be hot for a decade then dead for a decade. It was in the doldrums when I was there in 2002. Because of the excellent outdoor lifestyle opportunity, there's a sizable portion of the population (10%ish) that actively chooses to scrape by on as little income as possible so they can be one with nature. 

Denver's job market is also very scattered. Where Austin has 5 to 6 industries that account for at least 10%ish of our jobs each, Denver only has 3 or 4 industries that account for 10%ish of their job market. Denver just isn't a top tier or second tier destination for any non-outdoors industry. 

Denver schools as also inferior to Austin.

Ride the boomtown wave if you can but be prepared to jump ship when the leaks start.  

February saw Austin's attraction strength for new residents hold steady against San Francisco, New York, and Dallas. Nashville still has a slightly stronger trend for attracting new residents than Austin does.  

Chicago, Denver, and Houston all gained ground against Austin.  Chicago had the biggest ground swell in truck inventory.  My brother-in-law up there says it is rather peculiar for so many people to be moving in the winter but they are.  I don't track Chicago area economics so I don't know what the driving force behind this sudden increase in migration is.  

Denver saw a big increase in 10' trucks which indicates a swell of young college grads without much furniture prefering to move there.  Having lived in Boulder, I can tell you that superior weather and outdoor opportunities are a big draw for that age range.  

Miami and Washington DC both lost ground in relation to Austin.