How to Buy in Central Austin home without blowing the budget?

Central Austin is really the one of the most expensive area’s to buy a home in Austin.   Downtown Austin is one of the most exciting areas of town.   I wanted to move there just to shop at Whole Foods Market on a daily basis.   

The above photo is a duplex that has been converted into a condo. 

The few ways I know to get a great place at a reduced price are as follows:

1.  Buy a condo.  This is a great way to cut your central city living price tag by about 30% off the price of a single family home.  Of course- you won’t save any money at the new luxury downtown highrises.  There are plenty of older buildings that have been remodeled nicely.
   
2. Buy a duplex.  Duplexes sell for at a lower cost per square foot than regular homes.  Why?—there are just less buyers in the market for a duplex.    This is a great way to get your foot in the door with central city property own the land as well. 
3. Buy a duplex that has been condo converted.  Otherwise known as a half duplex.  I have seen some beautiful half duplexes that have been wonderfully designed from the curb to the back fence line.  Most of the ones I have seen have been wonderfully updated.  Its still less money than a single family residence.   

The best strategy I know would be to buy a duplex.  Live in one side.  Convert it to condo so that you cansell off one side of the duplex.   If you intend to do this you need to choose a lender that will allow you to release a portion of the collateral upon the sale without refinancing.  This could be a bit of a feat in this lending environment.  I do know a few small local lenders that will allow this.  Realize that all of the sale proceeds would go to the lender, including your payback for fix up costs.

This could be a great way to live in a high end area at a serious discount.  Yet not give up all the advantages of owning the land beneath you and having a back yard for pets.   

Lenders will generally consider 75% of the income on the unit that will rented when evaluating your debt to income ratios for the duplex purchase.  Its worth a discussion with your lender.

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