Real Property Investing For Austin 101

Real Property Investing For Austin 101

The first thing experienced investors look for is what the market is doing in the area they are thinking of investing in.

Is the market up, down, steady?  The only way to tell how the local area market is trending is to look at the sales over the last year as no one has a crystal ball which works. The news and media sources will state the market is strong on Wednesday, yet report on Thursday the market is weak. Yes, I’ve actually heard this. If you follow any news source, you’ll notice a pattern; the media reports what they feel will be news, as their main goal is to sell advertising to make a profit. This is the primary reason to find a knowledgeable, trustworthy Realtor to assist you with real property investments if you’re not a seasoned real property investor. When seeking a licensed Realtor, find one who has experience in your market area. Ask the tough questions and think over their answers. The Realtor you choose can make or break you when it comes to investing. Many first time investors found this out the hard way by sustaining huge losses in the real estate market over the last decade.

Is there a housing shortage or overage? This is a very important question as it will dictate what your rents and vacancy rate will be. There are several good gauges to use to measure. One is what are apartment complexes marketing? Are they marketing giving a free month’s rent or specialty features of that complex? If an investor sees a large quantity of complexes giving away something, such as money, away, you may want to delve deeper into how that market is trending. Just because it may be a ‘hot’ market for sellers, doesn’t mean it’s a hot market for investors.

What is the average rent in the area they are looking to invest in? This is a very important question. An investor needs to know what type of return they’ll be making on their investment. Will you be carrying a mortgage, or debt service? If so, will your rent cover your total outbound expenses? If you’re paying cash for your investment property, will you make a larger profit from your rent proceeds than you would if you invested your money elsewhere (ig. Stocks, bonds, REIT…)?

What is the average cost of a property in that area? A seasoned investor typically looks for the best property for investment no matter what price range their investing in. The reason I bring this up is a new investor must be conscious of their investment, as like the stock market, real property prices fluxuate. A good question to ask yourself is how long you are willing to be in the investment market. Are you looking to flip the property for a profit in the next year or two, or is this a long term investment? Will this be your primary residence in the long term?

Is it better to buy a home which needs ‘fixing’ or is it better to find a remodeled property? A simple answer to this question is will the property bring in a larger cash flow to cover the expenses of rehabilitation of the property? If not, find a property that suits your investment needs and move forward. If you are a great handyman and can update a property with simple fixes you can do yourself, it may be worth a small investment to upgrade certain features such as paint, carpet or bathroom vanities.

What is 1031 x-change? Unless you’re intending to ultimately live in the property 2 out of 5 years you own it, you’ll want to look into your options for your exit strategy before investing. A primary residence is a property you call your primary residence for government purposes. Homeowners may obtain tax free profit from their primary residence up to $250K for a single person or $500K for a joint return with your spouse. (see IRS Topic 701 at  If you do not meet the IRS ownership test you have two options: 1) your gain will be taxable by the IRS. 2) Look into using a 1031 x-change expert to roll your profit in to another like investment. There is a fee based on the amount you’re exchanging, but compared to taxes, this may be nominal. There are several national 1031 x-change experts to choose from. If you know someone who can refer you, great. If not, do your homework by asking the tough questions before you start your sale process as there is a time frame for completing an exchange.

Investing in real property can be very profitable if you have the right team members. Once you’ve hired your team, let them assist you to help make your decisions as they are the experts in their field. Team members to consider hiring are financial consultant, an accountant that’s fluent with investment properties, handymen or a restoration company, property manager and Realtor and any other professional you may need during your investment career.

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Phone: 512-380-1823
Dated: July 16th 2015
Views: 186
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