We recently rented our latest acquisition, a great little house just a mile from downtown Kyle. We liked this house due to it’s location in the Austin / San Antonio growth corridor, proximity to the downtown area, and modern construction. The table shows the expected performance over the first year on a cash basis. This particular house is held in an IRA, so taxes won’t be collected on the income until we take a distribution.
The bottom line is a 7.6% cash on cash return, which isn’t bad compared to our other options for income investments. And we expect to realize decent appreciation over time as well.
Want to do better? With today’s interest rates you could boost this return significantly. This same property with 25% down and a 4% mortgage would yield almost 13%!
Of course it’s possible to realize significantly higher cash on cash returns in the Austin area, but the trade off could be lower potential for appreciation, slightly higher maintenance costs and possibly higher vacancy and credit losses.
Give us a call if you’re interested in learning more about investing or would like to discuss opportunities in the Austin area. We’re never too busy to take your call.