All Forum Posts by: Mike Shaw

Finding SFH or other turnkey rental properties near Austin with a cap rate of 7.5%+

I'm defining Cap as ((rental income - insurance - property taxes) / purchase price)

Ahhh Carrie. Thank you for that. I guess it was too good to be true. 

FINAL VERDICT: MIKE WAS MISSING SOMETHING

Ok ok, I know there is no such thing as free money. Here is the deal:

I'm in Austin, Texas, looking in the 78702 area code (north of the river and close to downtown). Up and coming area. Everything I've seen in this area has been 200k+ for 1 bedroom, 325k+ for 2 bedrooms. 

Now, I'm looking at a unit in a set of 3 buildings to be built in early 2017. The buildings have a total of 44 units, 33 of which are reserved for low income families, under SMART housing. The requirements look very similar to Section 8. For a 3 bedroom, 2 bath, the price is 235k. 3k taxes, 250$ a month HOA. This seems like a great deal to me. However, I have a few questions: Am I required to rent to low-income renters? How do they decide which 33 are reserved? Is there some other risk I'm missing here?

It seems like a great chance to own property close to downtown, there seems like no way people don't pay 1800$ a month for the unit (balcony, laundry, 1200 sq feet). In a few years it should be very cash flow positive, no? 

Thanks all!!

Very helpful, thanks guys

Hey guys, I wanted to ask a couple difficult questions that have been stuck on my mind. Apologies if these have been answered somewhere already (they probably have)

1. Say I own a house outright, and then use that equity to buy another home, with financing. As both houses are renting, I'm paying down the mortgage on home #2 at 2x rate. Say the note is 1.5k a month, I'm consistently putting down 3k. After 6 months of that, suddenly both houses go vacant for a period of 2 months (worst case). If I don't make any payments during this time, are all my previous payments taken into consideration? Am I up to date or behind if I start paying 3k again 2 months later? Also, if that is my payment plan, does a 30 year fixed still make the most sense?

2. For someone who has assets but isn't very liquid, what is the best way to find homes for buy and hold in my area (Austin TX)? Realtor.com and Loopnet.com are okay, but was hoping someone has a better option. 

All markets are cycles. Where do you believe the Austin housing market cycle is? What zip codes would you recommend investing in? What cap rate should I expect on a Buy and Hold? I've heard the 78704 but would love to get more info.

Sorry for the long questions on my first post, hopefully someone has some answers!