All Forum Posts by: Jacob Pereira

@Justin Thorpe and @Shannon Robnett, I'm third on that assessment of those people who say Austin will appreciate due to people fleeing higher priced markets due to work from home. That's always seemed like a silly argument to me, because why not just move to Costa Rica and live like a king on a middle-class American salary? 

The real reason I think most people are bullish on Austin is because of the diversified economy and the restrictive housing regulations. The fact that we're currently the cool new thing is just icing on the cake.

Love the question! 

So I didn't read all 54 responses you got, but out of the 15 or so I got through, only @Matt Maupin gave a serious and thought out answer. Almost everyone else took the much lower valued $1M. Yes, right now with moderate risk you can get moderately better returns than 12%, but you're talking about a risk-free 12%! Like Matt said, just sell the annuity and use the $3.5M to get those outsized returns if you're that certain that you can beat 12% risk adjusted.

My suspicion, and this is something I've brought up on BP before, is that many people do bad math on their investments and think they're making a lot more than they are; at best, they're taking risky bets without accounting for said risk.

In the last year or so I've been getting more and more clients who are doing a "by the room" model. With that you can easily still cashflow in the Austin metro area with 20% down and no other value add, although at that price point you'll probably need to look in surrounding towns like Round Rock, Cedar Park, Kyle, etc.

Agreed with @Wale Lawal about finding a good agent who is also an investor. I happen to know that both @Ryan Kelly and @Jordan Moorhead fit that category (I do too, but I don't expect anyone to believe an agent who is talking himself up). The next step after that is talk to them and identify exactly what you're looking for, get set up with a lender, and start a search. Good luck!

@Shannon Robnett, I can't disagree with that. It really is a cool place.

@Shannon Robnett, @Ryan Kelly, and @Neil Narayan, as a former days scientist, it's simply that they're not using the same data sets. Zillow estimates are notoriously bad in states that don't make sales prices public, so likely Zillow overestimated the one and underestimated the other. Also, it looks like they're using average (a somewhat useless number) for Zillow, and the ABOR number that was quoted is actually median.

Also, Zillow tries to track all home sales (not sure how good they are at that) and ABOR only issues MLS data, which excludes off-market and many new builds. I found this out recently when a former colleague of mine who is now a data scientist for Keller Williams quoted me my sales figures for the year which were about half of the actual number.

Anyway, the point is, even real estate data can be of poor quality. The trend lines are usually a more accurate indicator, and we can all agree that those are going up.

For anyone who's interested, since I get really annoyed with sloppy predictions that don't really do the math and research, I went ahead and did it for the gentleman in the video (fyi @Neil Narayan, the video works fine on mobile). He's predicting 30-40% price growth over 36 months, which comes out to 9.14-11.87% CAGR. Austin-Round Rock metro prices increased 19.7% from November 2019-November 2020 (the most recent data ABOR has released). That implies that this pessimistic gentleman is predicting an approximately 10% slowdown from our rate of increase this year.

Side note: I'm a big proponent of benchmarking your returns to the S&P 500 so that you can tell if your investment was actually good, or just good relative to stuffing your cash in a mattress, so I'll throw that in too. Looks like the S&P's 2020 CAGR was 18.38%, so if you totally broke even on costs, depreciation, tax benefits, etc. and got exactly the median appreciation on your home, then all that time and stress you spent on the property earned you a measly 1.5(ish)%.

Hi @Timothy Douglas,

The big issue that people have been bringing up is showings, but it might not be as big of a barrier as you think.

I actually work with a lot of out of state investors, and many of them have never seen the properties they've bought. Especially in the 2-4 unit and multifamily world, the seller will only allow showings with an executed contract, and after that if you have a good inspector he'll be able to fill in the details for your clients. 

Also, you'll be required to work with a broker who will have an office in town. It they're decent, they will support you and nurture you in the early part of your career, and that could potentially mean also opening doors for clients. Be careful not to abuse this, though, right now we're all super busy, and wasting time with looky-loos(sp?) is not really an option at the moment. You can also pass on leads to another agent for a split of the commission, usually between 20-50%.

There's also a pretty good local app called Showing Assist that you can use. Basically other licensed agents will unlock a door for your client for $60 (I think, it's been a while since I used it). I know it sounds like a lot now, but it's very little compared to what you'll be making in commission. 

Good luck!

@William Tillman to drive home your point about the misleading title, I will give another prediction that is almost guaranteed to come true. The Austin real estate market will increase by 100%... by 2100.

It's been said many times before, but I'll say it again: don't be stuck in analysis paralysis; if you think a deal is decent, go for it! (I hope the semicolon wasn't cheating the one sentence thing).

Basically right now in Austin it's not so much about whether you'll lose your investment money by going for a poor deal, it's whether you could've made MORE by investing it elsewhere. As a newbie you can expect to make mistakes (check out my first ever BP post for an example of making bad mistakes), but consider that tuition for your real estate education. Understand that I'm not saying that you should just blindly overpay for a fancy downtown condo or throw all your cash into a burned out building that you have no idea how to restore, but realize that this industry is very forgiving to people who are willing to put in the time to solve problems. Once you're in, I promise you that you'll have wished you got in sooner.