Rental investment in Austin (San Antonio, Anderson Mill: HOA fees, condo, crime)

[pmiranda]

A word of warning on condos... watch out for owner's associations that require you to use their contractors for work. Hopefully it's just an aberration but my MIL lived in one where the head of the condo assoc. was getting kickbacks from the required contractor, who in turn did poor work.
In general, condo associations seem like a giant PITA but they do serve a purpose.

[Komeht]

Originally Posted by pmiranda

I think 4-plexes tend to be in less desirable parts of town or rare because they have to be built in a multifamily (MF) zoning tract, whereas you can build a duplex on larger single-family (SF-3) zoning, which is plentiful. If an area is zoned MF, I think you're more likely to see apartments because to do a decent 4-plex you're into a significant amount of money and if you have that money you're more likely to want the higher income of an apartment.
All just speculation on my part from seeing these properties when I was looking for larger single-family lots for my own use, not income. I can't claim to have the same knowledge of town that some of you guys have.

Good luck finding a lot you can build a duplex on since McMansion and the new FAR, impervious cover, sidewall articulation, design envelope standards. SF3 Zoning notwithstanding, very few lots can accommodate the size structure you would need to put in a marketable duplex now. The NIMBYs even found a way to make already prohibitive zoning even worse.

[PrimusPilus]

Thanks for the inputs CoolerInTheShade, Steve and atxcio. I feel I missed the boat on affordable downtown condos. Not too long ago(2009-2010) there were some decent condos selling for $170k-$200k. The same ones are selling for $250 now. Even the older condos are currently renting for exorbitant prices.

[scarknowsbest]

I own singles family homes, duplexes, and one fourplex. Fourplexes are doable if you are an experienced landlord and know how to relate to all kinds of people, and know how to SCREEN people. I have been renting my fourplex without incident for several years now by SCREENING tenants thoroughly. I reject several applicants to make sure I get the right people in there. You have good people that mean well and pay well at all income levels even on the low end. My fourplex cashflows better than any of my other properties. I manage them myself and have done well. Also good credit scores is not the whole story all the time when screening on a fourplex. Good credit means people are going to leave your place soon to buy a house and high turnover. I look at credit scores but i look more closely at their recent payments. If they have been paying on time for the last couple of years and have bad credit that means they are on the right track despite a low credit score. If they have recent lates don't rent to them. If they have medical payments that they haven't paid but have everything else paid--applicant is worth considering even with a low credit score. I also meet them and look at their dress and demeanor. I am not advocating not renting to people with good credit and rent to people with bad credit. I am advising at looking beyond credit scores when looking at a tenant application and that a fourplex can be profitable with minimal headaches if managed well. Not being an A-hole also helps. Landlords job is to provide great service to the tenants that inhabit your property that means repair and maintain things ASAP and always be courteous with business dealings even during troubling situations. Treating people well goes a long way!

[RSITrichy]

Originally Posted by austin-steve

What you want is unrealistic in Austin.

You can't cash flow with quality rentals in Austin for less than 40% down. The homes that do cash flow (on paper), are homes you shouldn't buy (i.e. Hutto, Kyle, any "starter home" area). So it's a catch 22. Anything less than a 10 year time horizon, don't do it. If you don't have the emotional and financial capacity to weather the worst case scenario, don't do it.

That said, our investors buy in South/SW Austin, or up the Hwy 183 corridor in areas like Millwood, Anderson Mill, near Mopac/Duval, etc. If they want to buy elsewhere, I won't even help them. Single family homes only. No 4-plexes, condos, duplexes, etc.

Finally, and this always amazes me, real estate investing is not the cure for past financial missteps. So many "investors" I talk to think they can use real estate to dig out of a hole, which is absurd. They have credit card debt, car payments, no retirement savings, modest income, but have read 4 "real estate" books and watched a bunch of late night infomercials. Yes, some very rare individuals and bootstrap up from nothing, but most make a bigger mess for themselves.

Steve

Hi Steve, Thanks for your input. I'm very interested in investing in real estate in Texas (any big city in Texas), where there are indications of job growth. I've some investment properties in CA right now, but I'm betting that appreciation in Texas will be pretty good (decent, if not extremely high) in future, because of steady economic, jobs and population growth. I've heard that property taxes are high etc. But if I buy multi-family properties or condos in Texas, do you think, the returns won't be good at all ? I can't spend time on managing myself, but will rely on property managers only. And I can put more down payment (even 40-50%), but need at least 6-7% rental returns. Such returns are currently easy to get in CA, in some areas. Please advise based on your knowledge of the area. Thanks

[RSITrichy]

[quote=mark311;27806425]How long ago was this that it was cheap? I imagine that a 4-plex off of Enfield in one of the nicer areas would cost between $800k to $1.2 million today depending on what exact area that we're talking about. These people wanting to invest with no money down are not talking about buying a million dollar 4-plex in-between Enfield and Windsor. It's the 4-plex that is under $500k that is the problem today in 2013 which was built in 1982.

I've looked into these type of investments, but I get to hear the day to day business of people that actually do it in Houston and it's pretty ridiculous the stories that they tell. It's both financially and emotionally draining to own multi-family buildings. When you have to evict a family with a kid from that 4-plex because the father got a DUI so he is in jail for 30 days and they can't pay their rent, it's a wake up call. Being a low-end landlord is not a fun job. Now you can pay a property manager to do all this dirty work, but then you lose any positive cash flow (or breaking even) because you have to pay them a percentage.

I don't agree with Austin-Steve that people who take on this type of situation as being idiots from California, but it definitely takes a certain type of person who has the time to do it. My friend that does this in Houston is doing well, but he did have to quit his regular job to maintain these properties.


Hi . I'm very interested in investing in real estate in Texas (any big city in Texas), where there are indications of job growth. I've some investment properties in CA right now, but I'm betting that appreciation in Texas will be pretty good (decent, if not extremely high) in future, because of steady economic, jobs and population growth. I've heard that property taxes are high etc. But if I buy multi-family properties or condos in Texas, do you think, the returns won't be good at all ? I can't spend time on managing myself, but will rely on property managers only. And I can put more down payment (even 40-50%), but need at least 6-7% rental returns. Else it won't be worth the effort. Such returns are currently easy to get in CA, in some areas. Please advise based on your knowledge of the area. Thanks

[varanj_16]

Trying to resurrect this thread, so here we are in 2017

Any possibilities to buy a cash flow positive or even a break even condo or townhouse or rental in Texas with a 325k budget ?

I am an out of state investor and will be using property management company and only interested in renting out to stable families (no college kids / no gang bangers)

Need good schools - recent builds - easily rentable - low crime neighborhoods

I have been looking at Austin and round rock so far

Please advice

[Bp25]

Originally Posted by varanj_16

Trying to resurrect this thread, so here we are in 2017

Any possibilities to buy a cash flow positive or even a break even condo or townhouse or rental in Texas with a 325k budget ?

I am an out of state investor and will be using property management company and only interested in renting out to stable families (no college kids / no gang bangers)

Need good schools - recent builds - easily rentable - low crime neighborhoods

I have been looking at Austin and round rock so far

Please advice

Prices and property taxes are so high compared to rent, it's hard to break even unless you put 50% down.

[pop251808]

Originally Posted by varanj_16

...only interested in renting out to stable families (no college kids / no gang bangers)

Need good schools - recent builds - easily rentable - low crime neighborhoods...

The Austin pipedream, middle class edition.

[varanj_16]

Originally Posted by Bp25

Prices and property taxes are so high compared to rent, it's hard to break even unless you put 50% down.

That’s really sad 😞 I guess max rents I could see in Austin area are around $1600-$1800 for a single family home but the problem is after adding taxes and everything my monthly is going to shoot upto $2600 even with 25% down payment on a 325k home

It seems I missed the bus in Texas market too of 2011 similar to California