All Forum Posts by: Kris Wong

Moody's ranked Austin #1, Atlanta #2, based on their analysis. I saw another "quick & dirty" analysis that put Denver #1. Opinions are like... well, you know the rest. :)

The city of Austin is NOT friendly for STR. Surrounding areas may be. Austin has outlawed "type 1" STR, which is non-owner occupied. This hasn't taken effect yet for existing permitted properties, but I am not sure you would be able to get a new permit. Eventually they will all be illegal, unless this gets overridden at the state level.

When investing out of state, suggest you find a very reliable/trustworthy property manager, prior to putting something under contract. In addition to an investment minded realtor, they can offer an insightful opinion on any property you are looking to submit an offer on.

Duplexes are residential, and residential RE is valued based on comps. That being said, BP has an excellent "calculator" for doing your analysis on this type of property. Out of the expenses you mention, property management typically runs 8% in this area, you shouldn't have to worry much about pest control, unless you're expecting less than awesome tenants, and utilities (including trash, water, etc...) are generally handled by the tenants, though that does vary property to property.

"As someone who grew up in the area (and moved away to pursue better job opportunities) I am confident that this hot market is temporary and very, very inflated."

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If that's the case, I'd say you need to wait it out. You could use a more direct approach by marketing to motivated sellers, but that's not going to work for you unless you have someone local. I feel the local market in Austin is also very inflated right now, so I have started pursuing other areas of the country based on relationships I have in those areas. As many people have said before me, you make (or lose) your money on the buy. Don't overpay just because everyone else is overpaying.

Most of the half duplexes I see in Austin are teardown & rebuild projects selling each side for $500K+. They are top of the line properties and worth much more as each side owner-occupied. I haven't really seen this for investment multifamily, and I wouldn't recommend purchasing one. At least in Austin you can find plenty of investment multifamily for sale, unfortunately 99% of it is wildly overpriced.

If you get a YES and don't know how to proceed, reach out to a local investor who seems to be successful, and ask to partner with them on the deal. Then, you will be able to learn from them, and they will likely be happy to have a deal fall in their lap. You'll get the additional benefit of your deal being vetted by someone who know's what they're doing.

To offer an alternative viewpoint - paying off your mortgage isn't a bad thing necessarily, but I see it as a recipe for average results. Consider the APR on your mortgage is 3, 4, maybe even 6%. I know I can beat 6% all day every day. By giving that cash back to the bank (de-leveraging), you no longer have it available to you. Now if you want to access it, you either have to refi, or open a HELOC, neither of which is as efficient as keeping the original debt would have been. Ultimately it's up to you to take the actions that move you closer to achieving your goals. Personally, I wouldn't pay down my mortgage early. My $.02.

That's because finding deals in Austin with enough meat on the bone to wholesale is super difficult. There's "the NW's", but they're "wholesaling" near retail or sometimes even above retail. The good wholesalers out there probably have several buyers who they can go to every time that are always looking for new deals.

That's really all speculation based on my observations of the market here right now.

@Garrett Brown it's great that you're looking at investments and growing your money so early in life. My advice to you is to stay humble and learn everything you can from everyone you can. I remember myself at 18. Humble isn't a word I would use to describe myself at that point in my life. =)