How To Buy, Renovate, and Profit from a Commercial Property in Austin as a 20-Something
If you follow our blog, you know by now that we’re big believers in “house-hacking.” Simply put, house hacking is getting other people to pay the mortgage payments on a house you occupy; it’s done by renting out the other units or rooms. My business partner, Steph, and I both house-hack at our primary residences and have also recently started to “office-hack.” What is office hacking? Office-hacking is getting others to pay for your mortgage at the commercial space that you also occupy. Win-win!
We found a commercial property in Austin that we could afford and needed some work. We bought it, renovated it and rented out our backyard to food trucks who pay our mortgage payment! One of these trucks is my boyfriend Eric’s coffeeshop, LeverCraft Coffee. He had quit his 9-5 job to work on his coffee business full time, and when Steph and I purchased this property, he approached us about being our first tenant. He completely gutted a 1955 43 foot Spartan trailer, and it now serves as a coffee shop on our property. You can see his renovation process here.
If you’ve lived in East Austin for a while, you probably remember driving by 3307 Oak Springs Drive and seeing a little yellow building. In the past, it has been the home to a flea market, a BBQ restaurant, and NA, but for the last few years, it has been sitting vacant. You may have slowly driven in front of this building, through the gigantic potholes to bypass the traffic light at the corner of Oak Springs and Airport boulevard. And you may have realized that just recently it went through a significant transformation. It is now our office building and event center; Open House Austin. If interested in the story behind this project, you can read more here.
I want to be as straightforward and transparent about our numbers for this project so you can see how we were able to buy a commercial property in Austin, at our age and with our own money. This tactic may still be possible for you in Austin or other cities nearby. I will say that $25,000 of the $72,000 we owed for our down payment came from my dad. We tried to find a bank who would let us put 20% down instead of 30% but none would. My dad saw our vision and agreed to lend us $25,000. We plan to do a cash-out refinance and pay him back in a couple of months — the rest of the project we paid for ourselves. We held about $20,000 of credit card debt from the renovations and paid it off after about two months. I’m typically a cautious person, and a very money conscious father raised me. Honestly, I didn’t even grasp the idea that you could spend money you didn’t have until college. I have never held any credit card debt until this, but I must say that if I weren’t able to use a credit card to rack up a bit of debt and points, we would not have been able to create this space. I’m probably not going to continue to spend big money I don’t have, but I have begun to rethink how I’m leveraging debt.
PROPERTY DETAILS:
List Price: $299,000
Sales Price: $240,000
Appraised for (before purchase): $250,000
Lot Size: 7,487 sq ft.
Building Size: 504 sq ft.
Down Payment: $72,000 (30%)
Closing Costs: $3,661
Agent Commission: $6,480 <<since I was our realtor, I earned commission for this deal
Sold Date: December 17th, 2018
Mortgage Payment: $1,287
**We have 3 tenants (trucks) that will pay $400-$500 a month in rent
RENOVATION DETAILS:
How Long Did The Major Renovations Take?: Around three months. We started construction in March 2019 and had our launch party on June 1st, 2019
Reno Cost: $56,000 So, that puts us at $240K (sales price) + $56K (reno cost)= $296,000. If we sold our property today, we believe we could sell it for at least $500,000.
Click here for before and after pictures
What work was done?
Trash clean up...there was so much trash!!
Closing open permits
Re-pave the lot
Adding parking spaces
Three 50 amp plugs for food trucks
Exterior Paint
Interior Paint
Garage Door, install. Our contractor had to bust through a cinder block wall to create the opening
Business sign
Security system
Office furniture
Awning
Deck
Fence around property
Interior/exterior lights
Have any questions about our space, company or real estate in general? Feel free to reach out!
Click here for before and after pictures
Click here to read about the story of how Open House Austin began
Click here to watch our instagram highlight of our entire renovation process
