Hi all,
We've been looking at getting our first rental property and have primarily been looking at suburb communities outside of Austin/ San Antonio, TX. A family member who lives in a town (population ~7,000 and growing) about 40 minutes outside of Austin sent us a combined commercial/ residential listing to evaluate. The town is projected to grow over the next 20 year. Median income of $50,000 for families, less than 10% under poverty line, increasing businesses moving to the area. What else should I know about it?
It's a historic multi-level property with 3000ish square feet right off the central town square. Downstairs is leased to a fitness business that brings in $1050/mo. Upstairs is a private entry 1 bedroom/ 1 bathroom property w/ washer/dryer connections, full kitchen, etc. It's unleased, needs at least cosmetic improvements, but is touted to be able to bring in $850/mo.
Listing is $200,000 (which doesn't seem that great) except that my family member believes it has been on the market for a while and could be negotiated for far less. I don't have any info yet on cap rate, etc.
Since we're relatively new to the concept of investment properties, and have only been researching SF's, we don't know how to evaluate this appropriately. Our initial questions are:
1) How long is the current lease on the fitness business
2) What does the market suggest comps are, etc.
3) Rental history of upstairs unit?
Taxes are low - roughly $2500/yr.
The units don't have central air, which seems like a red flag in TX, but not sure how that would be changed in a historic property. Because its historic, I suspect there may be limitations on changes made to it?
We're in super initial overview stages here and not looking to make any rash moves. Just need help conceptualizing how to evaluate it. If we could get the property for $150,000 or even less with cash, then it might have good cashflow potential and would meet the 1 - 2% rule.... but we want to make sure we're asking the right questions.
