market conditions

[ptunic]

Hi all
I'm curious what is everyone's forecast going into 2004/2005?
I'm probably moving from Los Angeles to Austin later this
year if my fiancee gets into UT for grad school (crosses fingers).
 
It looks like appreciation is much lower in Austin than California?
This still means you can make good money, but means you
have to make more money on the cash-flow side and less
money on appreciation?  Compared to Los Angeles / California
where you are often cash flow negative at first but do well
with appreciation?    Though it seems risk of a bubble collapse
is much lower in Austin than California.

I'm still learning-- haven't done a successful deal yet myself.
I looked at forclosures in Los Angeles but they all seemed
to be within 5% of true market value, so didn't seem to
be enough room for profit to make it worth the extra
work to go to the courthouse, etc.    We ended up buying
our own starter house in LA at retail price, though got lucky
with appreciation.  We sold after just owning the  house
1.5 years since I had some health problems in the area
relating to the smog and pollen.

If we move to Austin, we are thinking of buying a duplex
and live in 1 of the units to sort of ease us into being an
investor/landlord for the first time.

Any advice for a beginner?  Since this is our first
investment per say, we don't mind if we leave something
on the table as long as we gain some experience and
come out ok.  Ie we don't need to buy this house for
20% less than true value, we would be happy getting
it for 10% less.  Ie if we can buy a duplex that is really
worth 200K for 180K and have 20K instant equity I
would be very happy.  I know some of you are good enough
to buy that same house for 160K that takes a lot of
skill and knowledge than we will have initially.
     
Thanks in advance!
-Taric
 

[agkatz]

Welcome!

I should warn you, if you have allergy issues: Do not come to Austin.  Austin's allergy and pollen situation is literally the worst in the nation.  Allergists get out of med school and set up practices here-- coming from all of the world-- because there is such a cottage industry for allergy sufferers.  

You might try renting for the first year or two.  Get a place that has a triple filtration system built in to the AC Unit.  I've heard that these can help somewhat.

I'm from Los Angeles.  My allergies were bad there... but far worse, here.  

As for the RE market... it's much more affordable by LA standards... however, we're still in a depreciating market right now.  I don't think you'd do horrible if you bought now and held long, but I think that probably in a year or two, it would be better to buy.  Prices are still far too high here, compared to how much rents have fallen.  

It's still very much a buyer's market.  Which is good, since you're looking to buy.  However, just don't DEPEND on the other part of the duplex helping you out a whole lot.  Vacancies are rampant.  Some complexes are offering tons of incentives.  One place is offering 6 months free.  (Of course, this is quite a way farther from the downtown area).

But downtown prices have fallen quite a bit too, from 2000.

Anyway-- it's a great city, aside from the allergy situation.

- Adam (Ha-choo!).

[ptunic]

Thanks for the info, Adam.

Yeah-- I went to college in San Antonio and had some bad pollen problems, sigh.  Well, I'm thinking I can tough it out for the 2 years my fiancee would be in school at UT-- I figure usually when you move it takes your allergies 1 year or more to get bad, and even with its pollen at least there isn't smog in Austin.   So that is our biggest concern with Austin-- other than we have visited and have friends there and really, really like the city a lot.  

Regarding real estate-- thanks for the update.  I got a bit of a sense of that when I was visiting-- I couldn't believe how low the rents were.  House prices didn't look like they would cover rents easily.   But I had no idea it is that bad -- thanks for the info.  

We are particularly interested in downtown real estate: both student housing and what I would term "financial housing" -- ie stuff that is within close distance to the banks, etc.   From my research Austin has been hit *harder* than San Fransico with the tech bust.  That said I think long term Austin will be very desirable real estate and want to get in with at the very least 1 small property in the next 5 years..  

We are also looking at Las Vegas real estate and possibly Atlanta real estate.   I won't touch Los Angeles with a 10' pole right now-- at this point in my opinion it is being driven higher by speculation and can really be set up for a big fall if another big earthquake hits or interest rates shoot up.   Where as if rates shoot up, I don't think it will hit Austin quite as hard, and will actually be good long-term since that will increase rental demand a ton.  
 
-Taric