As the dawn of another real estate market cycle approaches, a new wave of investors has begun to take a serious look at the Austin market. Perhaps it’s due to Central Texas’ reputation as one of the strongest economies in the US, as well as the lowest unemployment, and strongest relative rental values in the country. Or perhaps it’s because the market offers values we haven’t seen in years. Combined with interest rates at record lows, it is again possible to build a positive cash flow portfolio in Austin.

Jeff Lowther has been perhaps the most consistently top producing local investment buyer agent since his first splash into the market in 1996. As an investor who owns many properties himself, Jeff has the experience of having worked through several local cycles, and has his finger firmly planted on the pulse of the market.

Jeff has a genuine empathy and patience in working with his investor clients. While the recent recession has culled the market of 80% or more of investment-focused agents, Jeff remains in the game as he has been for nearly 16 years. As he says, “I’ve seen so many agents with an ‘investment focus’ come into the business when things heat up. What invariably happens is their inexperience leads them to recommend the wrong properties. By the time the investment goes South, that agent is long gone.”

“What I liked about Robert’s offer to be Castle Hill’s ‘buy side’ agent is that Robert has a long term vision and commitment to the local investment market. He and Castle Hill Investments have hitched their star to this niche, and not only are they the most respected for their consistent top-ranked production, but are identified by local players as being far and away the market leader in the brokerage of residential investment property. I couldn’t pass up the opportunity to be half of the #1 team in the city.”

Jeff gets to know his clients by asking a series of questions about investment goals, risk tolerance, and the desire for hands-on versus passive involvement in management duties. From this profile, he is able to build a deeper understanding of investment (and owner-occupant) clients. He knows patience is the name of the game. “Right now, I’m more interested in building relationships. I know that coming out of the recession, the sales cycle is longer, and people want to look before they leap. I’m patient.”

Jeff has a B.S. in Communications from UT Austin, as well as an MBA in Finance from Rice University in Houston. He is married with two sons. He may be reached at jeff@castlehillinvestments.com or 512-444-2299.

Rental Values Continue to Soar

The latest analysis from the Austin American-Statesman shows that rental rates in the area have increased by 11% since the beginning of 2011.

Austin’s surging job growth and low unemployment is certainly the biggest factor. And because so little inventory was built after commercial construction financing dried up in 2007, there is at least another couple of years before new competing inventory arrives.

Further, land in Austin is more expensive than anywhere in Texas, thus new apartments developments have to charge high rents to make their numbers work. Because the majority of duplex and fourplex housing stock is now approaching 30 years of age (yet is still generally centrally located), rental values are a relative bargain, and thus less resistant to competition from new construction.

The key here (as with any investment) is ensuring that the assets being purchased are priced right. If you’re getting a good deal on the duplex or fourplex, the consistency of rental values and occupancy are historically more stable in Austin than almost any other market in the US. Jeff Lowther is an expert at identifying good value.

Investment Property Listings

North Central

7929 Vinewood Lane, Austin TX 78757 - $189,900
DUPLEX
| $2145/mo TOTAL RENT
Quiet cul de sac; cute units in popular neighborhood. Cash flow in Central Austin.

Technology Corridor

905 Fieldwood, Austin TX 78758 – $139,900
DUPLEX | $1445/mo TOTAL RENT
Cash flow in the Tech Corridor.  Fully leased and in good condition.

921 Fieldwood, Austin TX 78758 – $139,900
DUPLEX | $1350/mo TOTAL RENT
Cash flow in the Tech Corridor. Fully leased and in good condition.

South Austin

2200 Leah Cove, Austin TX 78748 – $179,900

FOURPLEX
| $2200/mo TOTAL RENTS

Best priced investment in Austin based on location, condition and cash flow.

East Austin


6211 Langham St., Austin TX 78741 – $189,900
DUPLEX | $1985/mo TOTAL RENT
Newer construction close to the action of Central Austin.  Always leased due to location and large 3/2 x 2 configuration.

Wrap or Short Sale – Owners Wanting Out Have Options

There remain a handful of investors of local property that are eager to sell and move on. For some of these investors that purchased at the top of the market, they’ve been waiting for market values to return in order to exit.

For properties that are heavily “under water”, short sales remain a viable option. Since 2007, we’ve successfully negotiated with banks on behalf of owners for close to 100 short sales. There is no cost to owners, and banks are becoming increasingly willing to work out deals, which is unlikely to last too much longer. The impact on the owner’s credit report is significantly less than that of a foreclosure, and some of our past clients have reported the impact was actually negligible.

For properties in which the loan balances are relatively close to market value, another option is called wraparound financing, in which a new buyer comes in and purchases the property (assuming all expenses and management responsibilities). The first lien mortgage on the property stays in place in the name of the original owner. The wraparound contract stipulates the longest the new buyer may keep the original lien in place is five years, after which time they must sell or refinance the property. Wraparound financing transactions are ideal for sellers who wouldn’t be able to sell after expenses without bringing money to the table, but want to keep their credit in pristine condition and are willing to allow the new buyer to take over payments.

Robert Grunnah has conducted more short sale and wraparound transactions for residential investment property than anyone in Central Texas, so if you’d like more information about these options, please contact him at robert@castlehillinvestments.com or 512-444-2299.

Revamped Website Launches Today
Re-working our website is a tough task that I do not look forward to. However, I am excited about this new version launched today (at www.castlehillinvestments.com). I think it cuts through the B.S., and accurately addresses what buyers and sellers of residential investment properly really want to know. Namely, what properties are on the market and why should I invest in them?

I hope you’ll take a look at our new site, and let me know if you have any suggestions or advice.

A well deserved thanks is in order for web developer Jennifer Chance, designer Joel Skotak, and SEO master Ben Pfeiffer.

Who Really Runs Things Around Here – The Client Services Team

The brokerage business can be back-breaking work, and as one of the Austin Business Journal’s Top Producing teams for five years in a row, Castle Hill Investments can be a crazy place to work.

Luckily, we have Adrienne Laosa to steer the ship. Adrienne has been with us for three years, and has recently been promoted to Director of Client Services, overseeing all operations of the brokerage team. Adrienne has mastered the art of managing unruly tenants, eager buyers and sellers, and fussy lenders – all with a great smile, positive attitude, and superb professionalism. Adrienne has recently earned her Realtor’s license, and will become increasingly involved in managing our book of business, as well as overseeing operations so that every client has a winning experience.

Justin Donjuan is rapidly becoming Adrienne’s “right hand guy”. Having joined us in 2010, Justin has already been promoted to Adrienne’s Assistant Director of Client Services, and looks forward to using his management skills, strong work ethic, and ambition to continue to learn the business inside and out. Justin is a valuable asset to the team, and we look forward to watching him grow into his professional role.

Preview of Winter, 2012 Market Update

In our next quarterly update, to be released in January, we’ll go quantitatively heavy and analyze the overall sales numbers from 2011, pinpointing which property types and neighborhoods fared the best and the worst, and identifying trends for successful future investments.