The Move-Up Investor

January 15, 2011 by · Leave a Comment 

Of all types of Investors, the Move-Up Investor is the most near and dear to my heart wallet. All joking aside, I am one of the many Move-Up Investors out there. At one point in time, my rental property was my primary residence. Now, it is an income producing investment. The good news is that this is easily repeatable and savvy investors are doing it all the time.

In this post we will quickly discuss the characteristics of the Move-Imvestor, how to analyze your current home as an investment property and then find the deals out there for your next home.

Let’s first outline the characteristics of the Move-Up Investor.

The Move-Up Investor typically:

1. Has never owned an investment property. (You have to start somewhere!)

2. Owns a home that can be rented and cash flow.

3. Can qualify for a loan without selling their current property.

4. Can repeat the move-up strategy to build long-term wealth over time.

Analyze your current property as an investment property.

1. Begin by removing any emotional attachment to the property. Treat it as if it were a commodity, not a home. You have to be as objective as possible.

2. Figure out exactly how much it costs you to own this property. Payment, Taxes, Insurance (landlord, not homeowners).

3. Research current rents for the area and find the median rent, not the average. It is best to be as conservative as possible here.

4. Figure out cap rate and cash flow for your property. Use the below chart for some help.

Now comes the fun part. Let’s find you your next home!

The first conversation you need to have is with a lender. Figure out how much home you can afford without selling your current home. Remember, “Move-Up” Investor doesn’t mean you have to buy a bigger, more expensive house. I have a few clients who own multiple homes in the same neighborhood.

Take a look at a few of the properties below for move-up deals in our current market. (If we’re dreaming, we might as well dream big!)

Each property selected below is only an example of what’s available. Prices listed below are just asking prices. Estimated market value is based on comparable sales in the area and projections are deemed reliable, not guaranteed. The idea here is to purchase BELOW Market Value in a down market.

For buyer representation on any of these homes or more information, please contact Patrick Birdsong at patrick@westaustin.com or by calling (512) 585-1571.

#1 Northwest Austin FORECLOSURE in Mesa Park | Asking Price of $202,000 | Priced 13% Below Market |Market Value: $230,000 | 4701 Beaver Creek 78759

Click photo for full photos and information. Courtesy of Beyond The Move Realty.

#2 Master Planned Community FORECLOSURE in Steiner Ranch | Asking Price of $344,900 | Priced 15% Below Market | Market Value: $407,500 | 13016 Titus 78732

Click photo for full photos and information. Courtesy of Progress Realty.

#3 Golf Course Community FORECLOSURE in River Place | Asking Price of $399,900 | Priced 20% Below Market | Market Value: $500,000 | 5005 Spartanburg Cove 78730

Click photo for full photos and information. Courtesy of Prominent Realty.

#4 Acreage Home FORECLOSURE in Long Canyon | Asking Price of $735,000 | Priced 17.5% Below Market | Market Value: $891,000 | 9205 Leaning Rock 78730

Click photo for full photos and information. Courtesy of StoneHaven Realty.

#5 New Construction FORECLOSURE in Tarrytown | Asking Price of $856,690 | Priced 18% Below Market | Market Value: $1,040,000 | 2401 Westover Road 78703 *Never been lived in

Click photo for full photos and information. Courtesy of Linda Welsh Realty.

#6 Lake Austin Waterfront FORECLOSURE | Asking Price of $2,700,000 | Priced 40% Below Market | Tax Value: $3,826,886 | Market Value: $4,500,000 | 4708 Island Cove | Island at Mount Bonnell Shores

Click photo for full photos and information. Courtesy of Goldwasser Real Estate.

About Laura

Laura is a third generation native of Austin who grew up in Tarry Town in Central Austin. She is the owner and broker of West Austin Properties and has been selling real estate in the Austin area since 1979. Laura is married to the love of her life, Brad, and they have two grown daughters. Together, they love to explore all of the fun spots Austin has to offer.