What would you do with this situation?

My husband and I contracted a new home at $250k in a small community of the northwest area of Austin, and shall be expecting to close it sometime in June or July. Generally speaking, the home is in a good location (convenient and in a very good school district), and the neighborhood is nice and small, with 70+ lots and all the lots were already sold out.

This is our first property here in Austin. Although our primary intention to buy one was hopping to rent it out, however, as both of us are new to the market, we decided to consider where ourselves wanted to live as well, as a ‘backup’ in case we couldn’t make it. Not long after we signed the contract, an agent contracted one while a CPA came and did 2. Both the agent and the CPA have their own homes and bought the houses purely for investment. Now, what am I going to do with so many rental properties coming out at the same time, at the same location, even with the similar bed, bath, and square footage, even not mentioning in such a soft market?

I am thinking trying something creatively, like L/O, L/P, sell with owner finance, etc.

We have a good credit score (pre-approved 94% LTV) and have the fund to down 50k (20% of $250k, to avoid the PMI) and to keep the property. I believe the property will have good appreciation, as rarely find new homes below $300k in the area. But the challenge is what I could do to improve the cash flow. I contracted the property before I came to this site, I might do it differently today …, well, here are the numbers,

$1,900 rent (the rent range is $2,000 - $2,200 per month, but I believe it might be lower as the competition)

$1,200 loan monthly payment (6% 30 years for $200k, could be better)
$470 property tax (250k @2.2506% per year)
$9 homeowner’s association ($105 per year)
plus insurance, etc.

What would you do with this situation? Could you please help :-\ ?

Thank you very much indeed 8)!

Howdy Tracey:

Glad you joined the club. Looks like the best you can do is break even or make a few bucks but not much and if it is vacant any time you may loose cash flow wise. You should do well with appreciation if you can hold on until it becomes a sellers market again like parts of Ca or Fla today. There are a lot of L/P and L/O deals out there too. You may end up selling too low today on a L/P L/O deal so be carefull there not to short yourself for perhaps a few hundred extra per month cash flow.

I am not sure I would put so much down just to save on PMI. It is expensive but you could buy a small rent property and pay $50,000 cash and collect $600 to $700 per month rent or leverage it and get 4 or 5 small rent houses.

Just my few thoughts

Good luck and thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 home
512-587-6177 mobile


Thank you very much for your input. ‘pay $50,000 cash and collect $600 to $700 per month rent’ sounds good to me, I am looking …, the deals, and also someone I might team up with.

By the way, do you still run your REI regular meeting?

Best Regards,


I’m not current on available financing out there, but I just wondered if you had checked out loan programs other than 30 year fixed rate. Is there some type of adjustable rate that might “buy” you some time and meanwhile reduce your mortgage payment?



There are loan programs other than 30 year fixed rate. Actually, in our case, we can get much better rate than 6% for 30 year. I used 6% for 30 years, just as a figure to show how ‘no good’ our cash flow is (even with ARM), and hope I can have some lights to improve it. I see your point, and thank you.


One thing you can do is sell with owner financing or Contract for deed. Some have said that Contract for deed is no good anymore, but I have not found any basis for this.

You can sell for $300,000 @11 % interest rate. Ask for 5% down & carry the rest on a mortgage or land contract AKA contract for deed.

When the buyer refinances, you get cashed out.

David Garcia

The contract for deed laws have changed a great deal in Texas. There are several requirements the seller must abide by or the contract will be null and void.

Make sure you’re aware of all the issues concerning contract for deed in Texas before you use one.