All Forum Posts by: Chris Schorre

Arsh, I would be very careful with this. First most property owners are not going to let you sublease for an STR. You have a moral obligation to disclose this up front. Second, there are 10,000+ STRs in ATX, 80-85% of which are unlicensed. Use Airdna.co to do your homework on specific submarkets in Austin that might make sense. Also, will you be able to cover the payments if occupancy is 20% lower than expected? If you are considering arbitrage at all, perhaps think about the Medium Term Rental (MTR) market instead. Pick a property within a mile of a hospital, for example, and rent it as an MTR to traveling nurses using FurnishedFinder.com. Just make sure your numbers work in your worst case occupancy scenario. FYI, MTRs do not require a City of Austin STR license.

 That's exactly right. Once you truly calculate real estate taxes (roughly $2,200 annually per $100,000 of value) and then add on cap ex and maintenance, it is very difficult to cash flow SF, duplex or even fourplex financed properties in Austin. But I'd love to see someone put forth some concrete examples (financing costs, taxes, insurance, capex, maintenance, etc) of how that is possible in Austin. 

"Council on Dec. 8 approved the drafting of a resolution that would make it unlawful to collect or receive a fee, directly or indirectly, from unlicensed short-term rental operators"

My take on this language is that it will be illegal for Airbnb or VRBO to accept fees from unlicensed hosts. If that's accurate, Airbnb and VRBO would start requiring City of Austin STR license numbers to list or risk the legal wrath of the City. It would also vaporize 80% of the STRs in the city. @Aaron Gordy and

@Tyler Solomon is that your take on the intent of this policy? 

@Ryan MacDonald Nicely done! I am curious how you conducted research on all liens associated with the property. One of my neighbors was approached by a developer to buy her "tear down" house but it turned our she had $100,000 in County property tax liens (easy to find) AND $900,000 in IRS liens (it's an investment property she owns) that together exceeded the contract sale price of the property. She would have needed to bring $200K to the closing table. In the end, she was unable close on the property and the developer is now suing for breach of contract.  I have not done lien research before so I am curious which due diligence sources you used on your deal to uncover all liens because this developer obviously missed the IRS liens. @Jordan Moorhead curious to hear your take on this as well. 

James, the wait time for an STR inspection is months so as Jordan said, get in line early. Are you planning to live in the house and then rent is as an STR when you are not there? If you do not plan to live there, that's not a Type 1 license. Cost is $650 for a license from the City. Also, make sure your house is up to code as they will send an inspector.

With regard to homestead and taxes, yes you would lose this if not your primary residence. Also, keep in mind that your property taxes will jump to the county assessed value each year. If the assessed value jumps by 25% in 2 years, you pay the full amount - no 10% annual cap. 

As for revenue, be conservative. Airdna will tell you that average occupancy is 63% in Austin but make sure your finances work at 50% or less. There are more than 9,000 STRs in Austin, of which less than 2,000 are licensed STRs. Read this article for more info on STR investing in Austin. https://www.atxnext.com/post/a...  

I received the same notice and agree it is hard to find on their website. But here is what my letter says at the bottom:

"Formal hearings will begin June 21, 2022 and will be held via Remote Telephonic Hearings with Video Component or at 850 E Anderson Lane, Austin, TX 78752"

My hearing is remote so I'm guessing they will email a link closer to the protest date. 

@Olivier S. I think your question is about value added and not zoning. Personally, I do not see the square footage of an ADU added to the square footage or bed/bath count of the main structure because this is not part of the main living structure. So let's say the main house is 1,550 sf 3/2 and you added the 450 sf 1/1 ADU. Does that mean the property should be valued at the same psf price as a house with 2,000 sf with 4 bedrooms and 3 bathrooms? Not necessarily. The ADU will appeal to a certain subset of buyers who:

- Don't mind having an ADU in their backyard

- Are interested in the extra rental income (long term or Airbnb) it could provide

- Find it appealing as an office or guest house

Are there other ADUs being built in your section of 78759? It's a big zip code. 

Also, this recently published article on ADUs in Austin may be helpful: https://www.atxnext.com/post/a...

"The study notes that Austin-area home prices soared 368 percent from 1997 through the end of 2021. That was the biggest spike among all of the metro areas examined in the study. Meanwhile, it estimates there’s a zero percent chance that an Austin-area home would suffer a 5 percent drop in value within 10 years of being purchased."

Well, more good news for ATX which is great but ZERO percent? If interest rates go to 8% will prices keep going up? Hmmmm....