@Account Closed, hi. In order to give you better advice, it would be nice to know a little bit more about you. What is your goal or purpose to invest in Austin real estate? Are you primarily interested in cash flow or appreciation? It is obvious that you don't live in Austin, but are you out of state? What is your experience with investment real estate?
If we use 300k as your price point. You put 20% down (realize some lenders are now requiring 25% down), then you are going to mortgage 240k. 30 yr mortgage @ 4.25% (investor rate maybe?), property tax at 2.5%, Insurance $1500, NO HOA and your payment would be $1930 monthly. If this is a SFH your rent might be $2000.00 monthly, a duplex $1200/per side ($2400 total). Add in 5% vacancy, 5% maintenance, 5% Cap ex and 10% property management and you total cost each month on $2000 income is additional $500 and duplex income $2400 would be $600. So now we are mortgage payment of $1930 plus either $500 ($2430 SFH) or $600 ($2530 duplex). SFH Income - Expenses looks like this $2000 - 2430 = -$430 each month. Duplex looks like this $2400-$2530 = -$130
Which negative do you like better? I assume no house hacking as I have no indication you will be moving to the area. If you're from California you're probably ok with negative cash flow and hope that appreciation and or rent growth will make this a good investment. I am from Texas so I would not invest in this negative cash flow deal.
If I could house hack the duplex then it would be a consideration for a possible investment. Roughly 5 years earlier, you could find 1% deals in Austin area but very difficult to do today. If your renting units for $1200 monthly in the Austin area then it matters not the time of year to look for renters. If your renting a duplex, you have little concern for school districts or even location for that matter as rental demand is high. SFH may have an HOA associated with your property making your negative cash flow even greater.
How do you go about tightening up these numbers. Do your own property management, get to know local repairmen that won't charge you an are and a leg, have the resources to fix up your properties to help eliminate vacancies.
I have a total of 19 duplex units and 10 of them are in the Austin MSA which includes those suburbs you mentioned in your post. Out of those 10 units, my empty units for the last five years averages one week empty per unit per five years. Yes, for the last 5 years, I may have had one week empty per unit on a 5yr basis (not annual). I say this to show you the high demand. If I am given a 30 day notice from my tenants, I will have a new tenant moving in the day after the old tenant is moving out most of the time. If I have a tenant up and move with no notice, then I will have a new tenant occupying in two weeks. I do my own property management and I am hands on. My tenants stay an average of 5 years per unit. In good conscience, I can't keep up with rent growth. I generally leave my rents stable for two years on my existing tenants and then slowly raise from there. Generally, when a tenant moves out, it means a $100 or more rent increase for me per unit to get back to somewhere close to market rent.
Yes all I own is duplexes in the Austin area. I bought my properties when 1% was very easy to obtain. I will say that if you can minimize expenses, and with housing projections in Austin, then even a small negative cash flow could be positive in a few years. I like duplexes because the units are small; easy to maintain. It is extremely easy to find two $1200 renters (duplex) vs one $2000 renter (SFH).
The further you get away from Austin, the betters the numbers become. So good that it is possible to get 400-600 positive cashflow per duplex. Good luck, Cheers.
