The same philosophy is apparently being applied to real estate but the internet and real estate are not remotely comparable.

The banks will not take an income approach and if there are no like-kind properties around, it will be compared to the nearby duplexes, regardless if they are similar in year built, condition, sq. footage, etc. 

Property in Austin is also more affordable compared to other hot areas, including the Bay Area and Seattle.

If the tenants are on an 18 month lease, you run your analysis using current rents as projected income. this lowers your purchase offer, and punishes the irresponsible landlord for offering an 18 month lease at below market rents when he planned on selling. if the lowest price he is willing to accept is calculated using market rents, then you compare your risk aversion and capability to carry the property at a loss for 18 months to determine if it is worth buying still. likely not depending on how far under market rents are.

I believe the UGB will have expanded somewhat but the available land will still be limited when compared to demand causing an increase in price.

Follow up question, those of you using this niche/ strategy how does this compare to stick-built costs?

Here's my conundrum -  I have no comps to compare an ARV to.

With the low cash flow you don't have any room for error in your assumptions.How does the $3300/mo rent stack up to comparable units in the area? 

I would say the disadvantages as compared to conventional is that they usually won't be 30 year notes and you'll likely pay higher interest.

@Louis Vaughn Hey Louis, What we used to buy our first MF building was a traditional FHA 30-year amortized loan, as the 3.5% would certainly help you as this is your first time.