Barry

I'm not a realtor, just a long time resident of Austin. Be careful, the rules in Texas are different. A million dollar house will cost you $30K in property taxes per year. While we would appreciate your donation to Texas schools, do yourself a favor and get a nice 400-500K house (which would be 1M in California) and invest the rest elsewhere (maybe a nice 100 acre ranch a couple hours out of town, you don;t pay tax on those). There are plenty to choose from here since houses over 400K are not moving all that well these days. - Sun Mar 30 2008, 16:46

Thanks to Stephen and the others who answered. It seems like a seller's agent would be more motivated by selling a property to someone who does not have a buyer's agent as their commission would double. In this case, the Realtor would make more money selling a property at a lower price to a buyer without an agent than at a higher price to a buyer with an agent. A 6% commission on a $300,000 is more than a 3% commission on a $400,000 sale. - Sun Nov 25 2007, 07:58

Before you judge home prices in Austin, remember that Texas home prices will never be equal to California. Our Sate government is funded mainly by property tax and that is generally between 2-3% of the home's value due every year. Think of it as an extra 2.5% interest on a loan, or an extra $210 per month added to your payment for each $100,000 in valuation. The longer you hold a property and the more it appreciates the larger the tax payment becomes. Homeowners have a ten percent cap on appraised value increase and a home owners exemption (discount). Investors do not. Buying a two hundred thousand dollar house and selling it for 300,000 after 5 years will hit you with a $30,000 property tax bill over the course of ownership. Add that to a six percent (or more) cost of capital over 5 years, and the carrying cost of the home is $90,000 over five years. Paying a six percent commission upon the sale puts the total cost of ownership at $108,000. To keep your appreciation and not let carrying costs eat you alive you need to be able to rent a 200,000 property for at least $1800 per month. Keep in mind that any property management fees, tenant free months, home maintenance, and remodeling costs will come out of that $100,000 profit margin. Most of the investors I know that have made good money buy undeveloped tracts of land near cities, plant trees and run livestock on them until they appreciate enough to be developed or sold. While the "rent" for pasture leases will not support the note, it avoids around %95 of property tax due to agricultural exemption, needs far less capital for maintenance or improvement, and can be divided and sold as soon as a portion of it is worth more than the original note. - Thu Nov 22 2007, 19:52

I would go with Great Hills. I think the neighborhood is better and since its older, most people have greater equity in their homes so the foreclosure hit for the 0 down ARMs will be a lot lower there. - Thu Nov 22 2007, 09:22