I wouldn’t believe anything you read on a pro-forma sheet. I’ve never seen one that was right yet. I don’t know anything about the Austin market, but $170,000 sounds like a lot for a duplex. What are the gross rents? (Unless they are more than $3,400 per month, this doesn’t sould like a good deal to me).
I agree with Mike, $170k for a duplex is too much unless its really bringing in big numbers. I’m guessing its only going for that much due to out of state investors like you blindly pushing prices up when you buy sight unseen.
You may have found a great deal…, but why Austin? Anyway, you need to either consult a Real Estate Attorney or a Realtor. Most rental investment properties will not pencil out in the black without a large down payment, but can be a good deal in the long run. Have a free CMA done by a local or do your own and compare.
The Realtor services to buyers are normally FREE…no joke. The seller normally pays a Fee which is split between the Listing Agent and the Selling Agent, but if you only deal with the Listing Agent then that Agent will scoop up all the commissions or fee and … worst of all “they only will represent the seller”… of course, who is their client. YOUR Buyers Agent will normally look out for your best interests only. They will review the Preliminary Title Report, look for problems and try to negotiate your best price/deal, all at NO Cost to you.
One way to pick out a great Agent is to call a Broker and ask for their best Agent… find a Broker from realtor.com or an online search.
Thanks for all positive inputs.
For Mike: the gross rent there is $1550. The prop. management charges 6% and 50% first month lease.
Why Austin? many articles said that Austin has gone up in values for years and could potentially be the next boom. I am kinda concerned about the prop. tax rate there, which is too high 2.99%
The other problem with Austin and other areas of Texas is that they are overly saturated with CA investors. You say that you read Austin will be the next boom area, it has already happened and is now hard to make deals pencil.
That is not to say that you can’t find cashflow in Austin, I have a friend that just bought a property there that is positive. You just have to dig for them and be very cautious about the area you are buying in. A lot of areas that look good on paper are so full of rentals owned by out of state investors that you are all competing for the same renters. It doesn’t work and means that you will likely be dealing with a lot of vacancy.
There are a lot of other areas in this country where you can find cashflow if that is what you are looking for and you can find duplexes, tris, and quads for a lot less than 170K. Be patient, do your homework, don’t buy sight unseen, and talk to people on the ground. Good luck.