All Forum Posts by: Bryan Noth

@Yashar Fred to be clear: the lender is requesting to add an addendum to the contract?  Specifically, a TREC appraisal addendum?

@Lilly Olabre @Tsipora Smith

Cash flow can be highly dependent on the percent down, interest rate, and amount allocated for Capex/maintenance/vacancy. This is why Cap Rate, CCR are frequently employed because it gives a broader picture on the return.

I invest in Austin and have bought 'cash flow negative' properties.  If it is losing $50 a month that is only $600 a year.  I am ok if I had to front that cost for a few years in the event the market took a nose dive.  I also expect that the market appreciation and growth will outpace that loss.  Just weigh out the risk vs reward and then determine if that fits in your comfort range. 

@Rich Czapkay few questions I would do in my due dilligence:

How many more units is the builder expecting to turn out each year?  These units will be your competition down the road and could impact vacancy.  

How is the rent compared to other comparable units as well as to the median rent for the area?  

And with new build multifamily, make sure to consider incentives.  Some builders have units marked as $1495/unit but when you dig deeper the average DOM to lease was 60 days and the builder/PM was offering first month as rent free.  That turns into an effective 90 day vacancy and approaches 25% real quick.  Plus, with newer units you typically do not have sufficient history to see if tenants are staying long term or if the turnover is high.

Southwest Austin is already home to several premium master planned communities: Circle C, Rim Rock, Parten, Belterra, Amara, and more.  A quiet but not insignificant project has been announced near Salt Lick BBQ in driftwood with a premium luxury golf course community.  

Article link:

https://communityimpact.com/au…

Developer Website:

https://discoverylandco.com/ab…

Quoted Statesman article:

https://www.statesman.com/stor...

And now, a second development has been announced.  

Article link:

https://www.bizjournals.com/au…

This also happens to sit comfortably in Hays county which has been the fastest growing county in the United States by percentage and houses cities such as: Dripping Springs, Driftwood, Austin, Buda, Wimberly, San Marcos and Kyle. This area is also the 'gateway to the hill country' and touts rolling hills and a plethora of wineries and breweries to boot.  

If you are ever in the area.. Duchman winery is a personal favorite, the neighboring Italian restaurant is a delight, and the scenery is suburb.  Anyone else interested?

Article link:

https://www.statesman.com/stor...

@Carissa Holmes that's the key distinction. It's been ordered but not picked up. I would ask your lender to double check with the AMC on what the split is and if it needs to be increased.

Secondly, are there good comparable sales?   If there is not this could be another barrier as an appraiser knows it’s more challenging. And right now appraisers have enough work to be picky.  Here again, may need more financial incentive to expedite the process. 

@Carissa Holmes are you personally ordering and paying for the appraiser or is the lender?

@Yashar Fred what type of property?

@Neal Daftary

I strongly support @Guy Gimenez on points 1 and 3.  With new builds your greatest competition is the builder(s).  If you have truly gained that much equity by the time construction wraps, the builder could very well terminate the contract and immediately list it again for a higher amount.  The builder will often be able to offer incentives that a typical seller could not best them on: price, upgrades, closing costs, etc. which puts you at a disadvantage when attempting to sell.  

It could work in theory, I would watch how quickly current inventory is moving.  First, this gives you an idea for the level of demand your unit may have.  But secondly, gives you an idea how confident the builder might feel taking it back to market.  

@Kimberly Sile very frustrating.  I had this happen on a quadplex outside Austin where the closest comparable within 15 miles was its own sale 4 years prior.  

But hopefully having more awareness of how the appraisal system works helps on future ones!  Good luck with the duplex in NC!