All Forum Posts by: Joe Scaparra

@Michael Foley, a couple thoughts here.  First update your profile.  If you are going to ask for advice on this INVESTMENT website, it would be nice to know more about you, your goals and more important YOUR WHY!    With that info you will get better advice from people.  Take a look at my profile to see what i mean.  

Now a little about me........we all have opinions, you know like everyone has an a@@hole.  Some good, some bad take them with a gain of salt.  However, I am 68yr old, and have Nothing to gain for giving you my advice as i am not a realtor or lender.  I am just an old fart that likes to mentor young people for the cost of a cup of coffee.

I saw that a duplex was brought up but you quickly said that is not what you are wanting.......did I get that right? Now because I am an investor and when we talk about investment property I like to keep focused on that what is best to meet your GOAL and WHY! Now from the outside looking in and not knowing much about you since your profile is blank, i would conclude you are making a huge mistake pursuing a SFH over a duplex in Austin TX especially if you plan on vacating in 2 years and will be renting out said property. But hey, what does this 68yr old fart know, he only has 20 years experience with INVESTMENT REAL ESTATE. Don't get me wrong, you could succeed buying a SFH but your greater chance of success starting out would be a small multi-family property.

Since you seem focused on the 78745 zip code let's take a gander..... You can buy a SFH for 450ish which will get you a 3 bed 2bath 1200-1500 home that you could rent out maybe for $2100=2300 a month. Your monthly payment on a 30 yr mortgage will be around $3300. So when you decide to get up a leave you will ONLY have $1000 negative cash flow. Most of the investors I run a round with would think this deal stinks!

Or

You could buy a duplex.  Maybe like this one in the 78745 zip.  https://www.realtor.com/reales...

I only use this as an example and do not necessary recommend you buy this exact property. But I suspect you would have roughly the same mortgage payment of around $3300 but you could rent each side out for about $1500 side for a total of $3000 monthly. Now my friend you are still $300 negative but a WHOLE LOT BETTER than $1000 negative. I think I could fill that gap better with a duplex than a SFH. Did I mention with a WHOLE LOT LESS RISK! What is your cash flow when your SFH is empty between renter...........Zero! Duplex goes empty one side you still have $1500 coming in. Ok, the economy starts to take a dump your SFH tenant gets laid off and moves. You might have to lower your rent to $1800 what does that do for you. Same situation with one of your duplex units and YOU KEEP THE RENT at $1500 because all of a sudden you have a larger rent pool from those renting $2000 and above that can't afford those rents or mortgage payments. Get my drift.

Before you make a decision on what to buy, bounce it off your well thought out GOAL and WHY (which you don't have yet). Then ask yourself what property type BEST MEET MY GOALS/WHY. I suspect you want a SFH because you would enjoy living in one vs a duplex unit. If that is the case throw all my advice out the window. I like helping people build wealth, maximize living today is not a formula for success if you are trying to become financially independent.

Now this advice may not be appropriate for you.  Why?  Because again I don't know you.  If you are married with 3 kids this probably won't work for you.  If you're single now and renting a $2000 and up condo, you probably don't possess the discipline needed to move to a duplex.  If you have a $500-$600 car payment you probably are not a candidate for moving into a duplex unit. If you are carrying $5000 or more in credit card debt you probably are not going to be receptive to living in a duplex unit.  Again I don't know you, but someone who is determined, discipline, goal focused and has a decent paying job can absolutely acquire financial independence in 15 years or less but again I don't even know that is a goal of yours. The young people I mentor have that mentality, to do whatever it takes, forgo self-gratification today for a better tomorrow.  Is that you?  Cheers.

@Jay Dotson A couple things to think about.  Give more in-depth thought about your goal and Why.  The Why is important and will keep you focused on your goal of financial independence.  The Goal and Why will also lead you in your decision making.

Now:  Pros and cons look at your current situation.

Pros

160k equity in current property!!!!

3% loan!!!!!!

Property is turnkey and rented!

Cash flowing $700 monthly 

Your comfortable with property and is keenly aware of property and tenant issues.

Now before i go into the Cons about this property, I want to interject a thought.

Let's say you did not have this current property but you had 160 cash to invest in property.  If that was the case would you buy the current property for an investment.  You see, since it was your primary residence you probably had a different goal in mind when you bought it.  Although an easy transition from primary residence to investment property conversion, it usually is not the most effective pathway to financial independence.  However, it usually is the easiest pathway.

Cons: These are more items for thoughts because I personally don't know thoroughly know your situation. 

SFH usually is less profitable than a small multi-family property (duplex, triplex, four plex)

Re-deploying 160k could net you multiple properties vs your one SFH.

So here is the bottom line, Yes selling could very well move you faster on the timeline to becoming financially independent, but will mean more work and possibly stepping further out of your comfort zone compared to where you are now. If you have the time and energy to make that move then I would do it.  Your tax free gain will compensate for having to acquire a new loan at a higher interest rate.  

I am 68  and financially independent.  I don't have the interest to increase my portfolio.  I would stay put or sell and put the money in assets that don't have as many moving parts as rental real estate.  However, if I was younger and not financially independent, then yes I would seriously consider selling and re-deploying the equity and i would change property type to small multi-family.  But again, I don't know your desires, energy effort, goal or why.  Good luck and cheers!

A couple of thoughts.  We are talking about INVESTMENT property............right, RIGHT!

Your quote:  We strongly believe in "Austin's" appreciation potential.  Please understand Austin's appreciation POTENTIAL has taken a severe hit over the last 18 months.  Not because of the price decline that much but because the previous run-up has been so HUGE!  We have only had a small pull back compared to the appreciation over the previous appreciation run-up. 

You are not local.......compounds negatively your ability to be successful in this VERY difficult market!  You have considered str, mtr and rent by the room which makes it more difficult not being local.  

What is your actual goal??????   Your pursuit to buy in Austin makes NO SENSE, especially if your are out of country.  I stand corrected if your Primary Goal is to buy in Austin TX regardless of profit potential.  Don't misunderstand what I am saying..............for some Austin is still an investment possibility but not for you  Yes the young couple trying to buy their first property and are currently renting in Austin, yes it may make sense for them to buy maybe a duplex and cut their living expenses.  Of the local developer who has a crew and experience, or the rehabber who has a team to acquire below market properties that have a forced appreciation opportunity.  But not being local and/or experienced puts you at a huge disadvantage.  

My advice is at least change your property type from SFH to some form of Multi-family to give yourself a fighting chance to be successful. Cheers.

I'm in the Rehab / Rent Phase but a better description would  be Maintaining Phase.  

I have my portfolio of 19 units, semi-retired, living the dream with my passive income.  Cheers.

20% Down as it was not owner occupied.

 Hold up for a second.  Looking at this at face value, you might be right but with a little home cooking it might be feasible.  Owner occupied duplex you can put down as little as 3%.  A 450k duplex would require $13,500 down payment at 3%. Yes some closing cost and you're still inside of 30k.  Down payment with in 30k.......Check.  450k purchase with $436,500 loan at 30yrs 6.25%  9k taxes and $1800 Insurance equals  total payment of $3588 monthly.   Now, if  you can get 1500 rent on one side you are down to $2088 monthly payments.  

Now you still have to qualify for the loan but at first glance it looks like no way but yes if there is a WILL there may be way.

Listen UP and listen GOOD!  Anything@@!!!! Anything!!!!  Anything on the HYW 35 corridor from Dallas to San Antonio is good if it meets your cash flow numbers.  Concentrate on the numbers over the location if you are on the HWY 35 corridor.  

HWY 35 is like a main artery in your body pumping blood to keep you alive.  HWY 35 is the artery pumping  INCREASING POPULATION INTO TEXAS!  As population increases so goes property values!!!!!  Those people are stopping along the way from Dallas to San Antonio!  Get your share NOW!  Good luck and as always Cheers!

Yes you can still find deals but it is WORK!  I found a duplex gem 2 months ago in the Austin MSA. Listed for 277k, sold for 270k. 2 Bedrooms 1 Bath 1 Car Garage each side.  Market rents $1500 each side and was turnkey, no REQUIRED maintenance needed.  We are painting the outside and touching up some wood rot siding at a cost of 6k.  Summary 270k.  Occupied side  lease in Jan at $1050 the other side was empty (before we closed).  We advertised empty side before closing, had new tenant move in at $1500 day one!  The other side that was rented is in better shape than the one just rented at $1500.  

Lastly, if you're impatient and need something TODAY, look at Bryan/College Station still good buys there.  Cheers!

@Joseph Weisenbloom, what you are describing are issues arising from renting out rooms instead of units.  Assigning responsibility to individuals in a house is far more difficult than to a lone tenant.   Be VERY careful not to violate right to privacy laws that vary state to state regarding camera surveillance .  I think you are risking a lawsuit as most people would assume some level of privacy inside a dwelling even if renting just one room.  

Here are a couple actions to consider.

1.  Find a smart lock on the front door that auto locks after a time limit to ensure security to the home.  Yes you need some kind of security, if not you again could be liable if say an intruder comes inside the home that wasn't even locked.  You may need to have a lock box some where outside with a key in because eventually a tenant will be outside with out key or phone and the auto lock will lock them out.  

2.  Humans are not robots and they eventually will do want they want.  Washing dishes , taking out trash or picking up after themselves mean different things to different people.  However, there is one thing that usually motivates people and that is money or incentives.  You could do this in two ways.  Get everyone together and tell them you will have to charge an extra $25 in rent to have someone come and clean the common areas unless they do it themselves.  (I don't think you will have much success with this but it is an option).  A better solutions is to increase rent by some amount and go to your best most responsible renter and ask them if they would be willing to clean up the common areas for the additional rent money collected.  If this solution is taken don't tell the other tenants who you are going to pay to clean up.   This may cause more messes if they think their additional rent is paying someone else to clean up.   This might eventually just become a deal in private with another tenant to clean up peoples' messes.  However I would emphasize to your tenants that if they cannot clean up after themselves that it may mean non-renewal.  

Ok, I will chime in.   First understand that the rental market is hot in Austin.  Maybe not as hot as 9 months ago but still very HOT!  With that as a background.  

Yes, I absolutely get an application before they get the PRIVILEGE of viewing my property.  You see my properties are duplexes and I keep my units in VERY above -average compared to the other duplexes.  As such, it is my experience that if I have a good match before showing they are going to take my unit.  I don't want to waste their time or MINE!   Because my units rent out between 1600-1900 I have plenty of prospects.  Asking for an application also eliminates the tire kickers!

Here is my kicker.........I charge $40 per applicant over 18yrs old, BUT I don't collect the fee unless I accept them and they take the property.  So those who don't want to "waste" an application fee is not discouraged to apply.  I also go through many questions mentioned above should I actually talk with them as they inquire.  I don't take application fees and then decline the prospect!  I usually show the property to one prospect because of this process and I like it very much.   I enjoy showing my property ONCE!  I take lots of pride in my properties but I only want to show it once!  My rule is that if I don't show a property within 24 hours of first inquiry you will not get that tenant.  If you don't get a committment on the showing they are usually not going to become a tenant.  Cheers!