Were in Austin, TX. is a good area to buy an investment property for around $125K? Is this price realistic?

Asked by Miguel A Barreras Jr, San Jose, CA Wed Jan 7, 2009

I have about $9K for investment money. I'm looking to keep the property for long term. Maybe looking for an establish neigborhood, good schools, access to freeways and shopping, etc.. I don't know the city buy I hear a lot of good things about it. Also, if anyone already has an investment property there what advice can you give me. Is it a good idea?

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Voices Member, , Benton County, OR
Thu Jan 8, 2009
Rockinblu, Thought you might like this.......http://www.trulia.com/voices/Home_Selling/I_wam_looking_to_s…

Miguel, I concede the start to Rockinblu....

Rockinblu, we shall meet again!!!!!
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Voices Member, , Benton County, OR
Thu Jan 8, 2009
Miguel, It may be that you can find a good investment. First you need to be sure you have all your bases covered. Have you considered how you will manage the property, repairs, mantenance, insurance, if it's empty for a few months can you still afford the payments, your job security ect..
Lastly do you really want to invest a large sum of money without personally becoming informed about the Market area. Wouldn't this be the best process for being able to select the agent who will best work for your interests.
Heard something somewhere once about Investing Wisely...Dunes
1 vote
Rebekah Owen,…, Agent, San Jose, CA
Thu Jan 8, 2009
Hey Miguel,

That's so great that you're from San Jose. I grew up in San Jose and have an office in Campbell and in Dallas. One segment of my business is cash flow houses in Dallas.

My clients have done really well in Dallas. We have typical returns in the 12-14% range - and that's just on cash flow. We aren't hoping that the properties double in value - because they don't here.

Austin has been a good market, their cap rates are a bit lower because they are betting on appreciation, but the key for an out of state investor is your property manager. I just had a client the other day that had paid their property manager $8,000 to rehab a rental and he couldn't figure out why the property was sitting vacant. Turns out the work was never done.

I also have an acquaintance from the gym that bought new duplexes in Forth Worth. It was cheap - $250K - and the projections looked really pretty. Turns out they bought in a sea of new duplexes. Remember vacant rental property is NOT an asset, it's a LIABILITY. In the end the property sat vacant for EVER, they finally rented it well below their payments and they are stuck in it. Last time I talked to her she was considering walking away.

I have a million stories like this - unfortunately.

So, Miguel, three things. 1) You need 25%+ down for non owner occupied money; ie; income property. 2) Crunch the numbers. As a rule of thumb, your $125K rental should rent for $1250 in order to cover your payments, taxes, property management and return. You may still have repairs to do on top of that. 3) You have to manage your property manager. They are your employee which means that you'll need to "stop in" every once in a while.

Investing in real estate is not PASSIVE income. It's work and it's your money.

Ok, off my professor box! Good luck to you.

Lastly, if you want professional representation and management in Dallas, I am always here to help.

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