All Forum Posts by: Account Closed

@Account Closed. Howdy! Let's keep it SIMPLE! Depending where you are at in life will dictate what steps you should take! I get the sense that you are just starting to think about INVESTMENT real estate and would like to participate in this fast moving market. Days in Austin where you put down 3.5% to 5% and CASH FLOW positive DO NOT EXIST IN THE AUSTIN MSA. However, that does not mean you can't play in this environment. Believe it or not you still can find 1% deals in the Austin MSA. I have a family member closing on a duplex that is listed on the MLS NOW. 270k and the projected gross rents 3k per month with absolutely NO repairs needed. But that is still requiring 20% down to cash flow positive.

Forget that for a moment and let's focus on you.  If you are renting now then your focus should be what steps can I take to better my CURRENT situation.  For example if you are renting for $1500 a month, then you are a negative cash flow of $1500 per month.  I feel there are deals out there that if you were to buy a small multifamily you could house hack your eventual cash flow would/could be less than negative $1500 per month.  If that were the case YOU WOULD BE WINNING!  In an apartment you get NOTHING for your negative cash flow.  In your, lets say duplex, you might be negative, hell lets just say you are $1500 negative but what you are NOW getting is principal buy down on mortgage, appreciation potential on entire building worth, Locked in fixed cost (minus increases in taxes) and the PEACE of MIND that your landlord cannot raise your RENT!   You have to learn how to walk before you run.

Buying a duplex in Austin, MAKES more sense for a renter than a pure investor today!  Improve your current situation and then re-evaluate.  Imagine you bought a duplex two years ago for 350k and rents were 1k a side then.  Now the duplex is worth 450k (was 500k, eight months ago so what) and rents for $1500 per side.  If that were you, you would have 100k in equity you could find a way to get out and buy another duplex.  I nor anyone else knows for sure what the future is but be smart and don't let your eyes get too big!   Slow and steady wins the race, just ask the turtle.

@Account Closed the biggest challenge you are having is using an FHA loan, which means you are going to end up with a huge mortgage payment. The traditional investor would be putting 25% down to purchase a multifamily property, which would help lower the debt expenses and get the property closer to break even on cash flow. However, if this is your first property, the FHA loan is a great tool to help you purchase your first home. As others have said, you want to focus on how much of your monthly living expenses you can reduce with a house hack, and then focus on making the property a profitable rental in the future. AS @Jordan Moorhead mentioned, you could focus on creating a STR or MTR in the other unit to boost cash flow, and even have a roommate in your own unit to add even more income. Think creatively and don't stop from getting started!

If you are talking about the one on nicole, be wary. That street is notorious for foundation problems. There is usually lagging rent with many rentals that you will find. Its costly for the small landlord to have vacancy and usually will keep rents lower than market to incentivize the tenant to stay. You can always increase the rent to market rent but beware that the tenant will have less of an incentive to stay. 

Define house hacking for us. House hacking seems to mean different things.  Will you be renting per room on both sides? How about str or mtr on one side? 

@Account Closed if you wait for cashflow you may never own a home and all of the other financial returns that owning a home provide! Don't make it all about cash flow. 

House hacking is tough to cashflow in year one (with current house price run-ups and interest rates) for a couple reasons:

1. You are living in one of the rentable units

2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

Get into a house hack that will allow you to avoid throwing rent money away every month. You know this, but don't forget all the other ways real estate makes you money. Paying down your mortgage and owning an asset that will appreciate over the long term.