Austin, TX 78741|Multifamily|8 units|Built 1978|6,200 sq ft
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Solid fundamentals in a high-growth Austin submarket. Cap rate is slightly above market and cash flow is healthy, though the 1978 build year introduces near-term CapEx risk. Strong play for an operator comfortable with value-add repositioning.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Gross Rent | $163,200 | $168,096 | $173,139 | $178,333 | $183,683 |
| Vacancy Loss (5%) | ($8,160) | ($8,405) | ($8,657) | ($8,917) | ($9,184) |
| Effective Gross Income | $155,040 | $159,691 | $164,482 | $169,416 | $174,499 |
| Operating Expenses | ($45,240) | ($46,145) | ($47,068) | ($48,009) | ($48,969) |
| NOI | $109,800 | $113,546 | $117,414 | $121,407 | $125,530 |
| Debt Service | ($67,080) | ($67,080) | ($67,080) | ($67,080) | ($67,080) |
| Cash Flow | $42,720 | $46,466 | $50,334 | $54,327 | $58,450 |
| Cash-on-Cash Return | 14.9% | 16.2% | 17.5% | 18.9% | 20.3% |
| Estimated Equity | $310,500 | $333,960 | $357,889 | $382,297 | $407,193 |
Assumes 3% annual rent growth, 2% annual expense growth, 5% vacancy reserve, 2% annual appreciation.
East Riverside is undergoing a generational transformation. The Austin metro continues to absorb population growth from coastal markets, and Riverside's proximity to downtown, the Oracle campus, and South Congress keeps demand elevated. New Class A supply is being absorbed, but older workforce housing trades at a significant discount with strong rent upside.
Adding this Austin property would increase blended portfolio IRR by an estimated +0.6% while adding Sun Belt growth exposure. The 8-unit count increases operational scale efficiency. Moderate concentration risk given Austin's recent supply pipeline — Freehold recommends watching absorption rates quarterly.
See full portfolio impact analysis with Freehold OwnDSCR at 1.22x is adequate but tight. A purchase price reduction of $30K would bring DSCR to a more comfortable 1.31x.
The 1978 build year means near-term CapEx risk. Budget $8K–$12K/unit for deferred maintenance and factor it into your offer.
East Riverside rents are still climbing. Lock in current tenants with 18-month leases to capture upside while stabilizing cash flow.