I’m writing this newsletter from a rooftop patio in Isla Mujeres with a view of the Caribbean. March was a great month with lots of long hours spent with many of wonderful clients. Working hard is a blessing, and so is disconnecting and drinking too many margaritas in Mexico. Which I will resume as soon as I send this.
Before we dive in, a friendly reminder to file your Homestead Exemption if you purchased a home in 2018. It will save you money on property taxes. You can find resources on my buyer board here.
In this month’s newsletter:
- Living in 728 SF
- The Market
- The real deal with buying investment properties in Austin. Can you get cashflow?
- Multiple offers at 606 W 31 1/2 Street, and how to create them.
- Closings this month
- New listing in 78704
Living in a small space
In January, Chris and I bought a condo in the Tyndall in East Austin, and I’m happy to report that we love living in a small space. We are currently residing in 728 square feet with not a foot wasted. We are also finding ourselves being cleaner, because we don’t have room to make a mess. If anyone is wondering what it’s really like to downsize, just ask me. I feel like an expert at this point.
The end of 2018 was a little slow in the market, but 2019 is clearly heating up with tons of multiple offer situations. I’ve competed in lots of them recently. The numbers reflect that, with the median price for Travis County rising from $327,000 in January to $335,000 in February. I bet when March numbers come out, they’ll be higher.
We’re also at 2.1 months of inventory. Meaning if nothing new came on market, we’d be completely out of homes for sale in 2 months. That’s fast. I get questions all the time about what drives the Austin market, why it’s so competitive and why things sell so fast. It’s simple, really. We have more people who want to live here than we have homes for. And as long as that continues, prices will rise.
Buying Investment Properties: Can you get cashflow in Austin?
I referred a client of mine to Dallas, because he moved there for a job. The agent I connected him with was stellar, and she sold him a cash-flowing investment property that is returning $500-$700 per month. He loves this, naturally, and has decided he wants to buy 12 investment properties this year. My competitive streak dictates that one of them must be in Austin.
So I set out to figure out if we can get similar cash flow on a property in Austin by putting 25% down. The answer is that it’s hard, but not impossible. I found him one we’re currently looking into. A duplex.
Austin is interesting, because most investment properties don’t pencil out if you’re looking for cash flow. Most of them are a slight negative or slight positive, say like $100 a month in cash flow. And that’s really not enough to justify the purchase if you care about cash flow, since we could easily over-estimate rents by that much. So I encourage investors in Austin to focus on appreciation over cash flow. If your $300,000 investment property is worth $318,000 next year and $333,900 the year after, does cash flow really matter that much?
And when you account for leverage, the picture looks even better. With a renter, someone else is paying your mortgage every month. If you only put about $75,000 into the property and your return in the first year is about $18,000 on that money, I’m going to take a bet that’s better than you’re doing in the stock market.
But I know some investors are determined to have cash flow in the short term, in addition to appreciation in the long term. That’s hard to find in Austin, but not impossible.
Multiple Offers at 606 W 31 1/2 Street
We recently hit the market with a beautiful listing at 606 W 31 1/2 Street. I was so excited to sell this home, for several reasons. First, the clients are awesome and really fun to work with, so I knew it would be enjoyable. Second, the home is charming and gorgeous, which makes marketing it lots of fun. And lastly, it was a unique size and price point, which meant I knew we had scarcity on our side, and that if we priced it right, we could likely create a multiple offer situation.
And that we did. We started with a focused “coming soon” campaign on social media, designed to build interest and anticipation. I had lots of engagement on social media leading up to our launch date. I used Instagram stories mainly, because I can do a better job of tracking views and interaction. If you don’t already follow me on instagram, find me at @funkyhomesofaustin where I post about coming soon listing, my dog Rosie, and other similarly important Austin real estate topics.
Anyway, we hit the market on March 21st and had our first offer on the second day on market. We asked them to wait until we had our open house to give them an answer. Good thing we held an open house, because it was spring break weekend and apparently every other real estate agent was out of town. Our open house was packed, and most visitors told me that their agent was away, so they were on their own that weekend, just looking at open houses.
By the time Saturday evening rolled around, I was fielding phone calls from multiple agents begging me to accept their offers and saying things like “Tell me what we have to do to win this.” We ultimately chose one that we felt most comfortable with, and here we are. I won’t celebrate until it’s closed, but I will say I LOVE being on the seller side of multiple offers.
Quick tips on how to create multiple offers as a seller:
- Don’t overprice your home. If the price is too high, buyers feel no urgency to make a decision.
- Prep the home for the market with professional cleaning, staging and repairs.
- Make the home available for showings that first weekend. If people can’t get in, they can’t fall in love.
- Hire an agent who knows how to create multiple offers, and what to do with them when you’re blessed with them. (It might sound crazy, but it is totally possible for an agent and a seller to squander a multiple offer situation. I’ve watched it happen many times from the buyer’s side.)
And that’s it. If you’re a seller and want to get in on the multiple offer bonanza this spring in Austin, you know where to find me.
Congrats to Brett and Mia who vanquished the competition in a multiple offer battle, and closed on a home off of South 1st Street near St. Elmo. Shout out to Patrick Birdsong, the listing agent and seller, who was a pleasure to work with.
And congrats to my other buyers who closed on a home in Travis Heights, but who shall remain unnamed since someone was too hung over to take a closing photo. You know who you are.
Listings in 78704
Coming soon-3303 Garden Villa Ln, Unit B, 78704
In early April we’ll be hitting the market with a beautiful home in 78704. This home was built in 2018 and has 3 bedrooms, 3.5 bathrooms, and a fenced yard. Features include a beautiful white kitchen, huge windows, cool tile work in the bathrooms and a Tesla charging station. If you’re looking to stay under $650,000 for a newer home in 78704, we’re taking early showings by appointment. Hitting MLS April 4th. Photos coming soon. Email me if interested, or follow me on instagram @funkyhomesofaustin for updates.
And Chris’ new build on S 2nd Street was just featured in Curbed Austin. Available for purchase for $1.5M. Check out the article here.
Until next time,