All Forum Posts by: Jacob Pereira

@Paul Kubin it would help if you added what state you're in. There are lots of contingencies (and honestly the contract is hard to enforce from the buy side), but most states do it differently from one another.

Hey Del, I moved here from DC about 15 years ago, and while I love going back there, it's no Austin! Why not visit one more time and make it permanent?

I have to say that I love all the growth our city has been experiencing, but it'll never be like the Bay area because we don't have the geographic limits they have. As you alluded to, we still have a lot of outward build space. Yes, Austin proper is pretty much out of land so most development are infill projects, but North, South, and East still have a LOT of fallow land to be built upon.

Plenty of suburbs to look at for a better balance of cashflow and appreciation. I really like Round Rock and Cedar Park for single family, although I'm primarily a 2-4 unit investor. That market is VERY competitive right now, though, so be aware. I just checked this morning on the MLS and if I remember correctly there were 57 2-4 unit properties on the market, and that includes the entire ABOR MLS, going to North San Antonio, past Georgetown, Dripping Springs, Elgin, etc.

My advice is to have your Realtor set you up with a few searches for the types of properties you're interested in and be ready to jump once you find something that meets your criteria.

Good luck!

Hey Brad! Both great places; Austin is much bigger and more diversified, and San Marcos is a university town, but they're so close to each other that you can enjoy both on any given day.

I'm sure you already know this, but the market is quite lopsided right now. At last check, Austin had less than one month of housing inventory (a healthy balanced market is supposed to be closer to six months). That does mean that there are good margins in flipping, but it also means that everybody and their dog are doing it, and sometimes throwing dumb money at anything that someone calls "off market". Tons of wholesalers here too, but lately a lot of the deals they send to me are actually higher than they would be if just on the MLS.

I have yet to find a really good investor meetup; most are just pitch sessions. Let me know if you find a good one.

@Dakota Duban, it's REALLY difficult to put a tiny home on property in Austin, although I don't know as much about San Marcos specifically. It can definitely be done, but be aware that it will generally cost much more than simply building a conforming home on the lot. Can I ask why specifically a tiny home?

You may also want to consider looking into one of the ETJs out there, and it sounds like @Joseph Cacciapaglia has experience getting around the restrictions, so maybe hire him as your agent?

Agreed with everything @Ryan Kelly said, but ill add to it. In my experience 7% is more common for property management on SFRs and I've only ever seen landlords pay for water, cable, sewer etc. if it's a multifamily or condo situation and it's not individually metered out. A vacancy of 1 month per year is waaaay too high; if you're such a bad landlord that you lose your tenant every year, hopefully you're at least competent enough to get a new one in in our hot rental market in less than a month (I do understand that that depends on the state of unit upon move-out). HOA fees for a single-family are also a little high, but still within range. I do think your maintenance expense is low, unless you're not including CAPEX, in which case you need a separate category for that.

As has been alluded to above this comment, this is not just a market where you can throw dumb money at an object and just wait for the money to roll in. If you don't want to be reliant on appreciation you need to find your value-add. It could be as simple as being willing to hire painters and flooring guys, or it could be as complex as a scrape and build, but right now if you just want passive returns without any front end work you're better off in stocks. All that said, based on our lack of inventory it seems like a fairly safe bet to just assume appreciation will dig you out of whatever hole you get yourself into.

I used to think that new builds are always bad investments, but I've come around. One of the great immediate appreciation factors you can get out of a new build is that as soon as the last house has been built there's an instantaneous jump in value, since all those buyers who balked at living in a construction zone join the market.

That said, right now in Austin new builds are being sold before the slab is even poured, and the waitlist is longer than the 1031 timeline. Maybe look at buying land with a few run-down structures to avoid the depreciation penalty of buying just land and then building your own?

So this one is pretty embarrassing knowing what I know now, but it's kind of funny and maybe someone else can learn from my mistake. My very first post ever addressed my mistake, so I'll start by quoting that:

Many, many lessons were learned after that, but I think the biggest takeaway that I got was that acquiring on a property is only the very start of the work, and until you've stabilized the property and have the systems in place to tackle a wide variety of contingencies, it's a very bad idea to leave town (let alone the country). That property ended up becoming a massive cash cow after I came back and put in the time and money necessary, but I could've saved myself a lot of stress and thousands of dollars had I just done the work immediately after acquisition. 

I don't really have time to be true mentor to someone these days, but I'm happy to be a free sounding board for your deals and ideas from time to time. No strings or anything; I just legitimately enjoy talking real estate and like to help out young passionate people.

For a very long time I thought exactly like you did, but these days I have a lot of out of state clients, and I recently had an issue with one that would've never happened with a local lender:

In the Austin market, appraisers are so swamped that it's not unheard of to have a 20-25 day lead time for appraisers. For this reason I've moved to a 45-day closing on most properties where my buyers require financing, vs the traditional 30 day close. I always let the lender know when option is over so they can order the appraisal ASAP, but one particular client's lender ignored that and waited because in their market that wasn't necessary. We didn't end up losing the deal, but we had to adjust the closing date twice before we could get it done, and if the seller had wanted to, they could've gotten out.

That's one specific example, but familiarity with local markets can help in a number of ways. If you have a lender you absolutely love, by all means stick with them, but make sure your Realtor is well-versed in lender issues so they can educate your lender. 

@Wendell Butler, as a veteran who used his VA on a duplex, I wish I'd started with a fourplex and leveraged to the hilt. My advice is figure out the max you can borrow, and get a property that's close to that.