How to Underwrite a Duplex in Georgetown

Thinking about buying a duplex in Georgetown and want to run the numbers with confidence? You’re not alone. With steady growth in Williamson County and spillover from Austin, duplexes can offer solid rent demand, but you still need a clean, local-first underwriting process. In this guide, you’ll get a clear workflow to estimate rents, taxes, insurance, utilities, operating costs, and financing so you can calculate DSCR, cash-on-cash return, and break-even occupancy. Let’s dive in.

Why underwriting in Georgetown is different

Georgetown sits in a fast-growing corridor where small multifamily properties compete with single-family rentals and new apartment deliveries. That means you should rely on unit-level comps within the same submarket rather than pulling broad Austin metrics. Property taxes, insurance, and utility setups also vary by parcel, which can swing your numbers if you guess.

A simple rule: get property-specific data early, then stress test your model before you write an offer.

Gather the right local numbers

Rents and rental comps

Start with recent leases and active listings for similar 2-bedroom or 3-bedroom units within 1 to 2 miles. Match for size, condition, parking, yard, and whether utilities are included. For a baseline benchmark, you can also reference the federal rent estimates by checking HUD Fair Market Rents for the Austin–Round Rock–Georgetown area as context, not as your final number. Review the latest figures on the HUD FMR dataset.

Aim to build a comp set for each unit. If the duplex units differ, underwrite them separately.

Vacancy and collection loss

In stable suburban Texas markets, small multifamily often pencils at 5 to 10 percent vacancy and collection loss. If you lack strong local data, use 7 to 10 percent for conservative underwriting. Adjust down only if you have consistent, verified leasing performance.

Property taxes in Williamson County

Texas property taxes are a major expense and are set by multiple taxing entities. Here’s the process you should follow:

• Pull the parcel’s current appraised value at the Williamson County Appraisal District.
• Identify the combined tax rate from all taxing units: City of Georgetown, Williamson County, Georgetown ISD, and any special districts. Check current rates through the City of Georgetown and the relevant entities.
• Calculate: Annual Property Tax = Appraised Value × Combined Tax Rate.

Because values and rates are updated annually, it’s smart to model a potential increase in a fast-growing area like Georgetown.

Insurance and flood risk

Insurance costs in Texas are influenced by wind, hail, and flood exposure. For initial underwriting, budget a range and verify with quotes:

• Typical landlord policies for duplexes can vary widely. Use 1,000 to 3,000 dollars per year as a placeholder until you obtain quotes.
• Check the parcel on the FEMA Flood Map Service Center. If the property lies in a Special Flood Hazard Area, include a flood insurance estimate.
• Consult the Texas Department of Insurance for guidance on coverage and shopping carriers.

Utilities and paid-by-owner items

Confirm which utilities the owner pays. Duplexes sometimes include water, sewer, and trash, while tenants cover electricity and gas. If there is one water meter for both units, get a usage history or estimate using City of Georgetown Utilities rate information via the city website.

Maintenance and capital reserves

If you lack a property’s historical P&L, use practical heuristics:

• Repairs and maintenance: 5 to 10 percent of Effective Gross Income (EGI), or 500 to 1,500 dollars per unit per year depending on age and condition.
• CapEx reserve: 250 to 1,000 dollars per unit per year, or roughly 1 percent of property value annually. Adjust based on remaining life of roof, HVAC, plumbing, and major systems.

Property management

Local management for small portfolios often runs 8 to 12 percent of collected rent. Placement fees may equal one month’s rent. If you plan to self-manage, consider time cost and potential leasing velocity; if you assume a lower management cost, keep vacancy conservative.

Financing terms and loan products

Duplexes can be financed through several paths. Confirm your loan product before you model income:

• Conventional residential for owner-occupants.
• Investor DSCR loans that size the loan on Debt Service Coverage Ratio.
• Portfolio loans from community banks with varying terms.

Gather these inputs: interest rate, amortization, term, and LTV or required down payment. Many DSCR-oriented lenders look for DSCR at or above 1.20 to 1.35.

Closing and one-time costs

Include lender fees, title and escrow, inspection, immediate repairs, reserves, and any costs to split utilities or get units rent-ready. These impact your total cash invested and your cash-on-cash return.

Step-by-step underwriting workflow

Follow this sequence every time you analyze a Georgetown duplex.

Step 0: Confirm lender rules

• Will the lender use actual signed leases, market rent, or a percentage of market rent?
• What DSCR or LTV is required? This affects your maximum price and down payment.

Step 1: Potential Gross Income (PGI)

• PGI = Sum of each unit’s monthly market rent × 12.
• Add other income: pet fees, parking, laundry, storage.

Step 2: Effective Gross Income (EGI)

• Vacancy Loss = PGI × Vacancy Rate.
• EGI = PGI − Vacancy Loss + Other Income.

Step 3: Operating expenses

Itemize and total the following annual costs:

• Property taxes: use WCAD valuation × combined tax rate from city, county, school district, and any special districts.
• Insurance: use quotes or a prudent placeholder, then refine.
• Owner-paid utilities: water, sewer, trash, and any common electric or gas.
• Property management: typically 8 to 12 percent of collected rent.
• Repairs and maintenance: 5 to 10 percent of EGI or a per-unit estimate.
• CapEx reserve: about 1 percent of property value or a per-unit reserve.
• HOA or misc fees if applicable.

Total Operating Expenses = sum of all operating line items. Do not include mortgage payments here.

Step 4: Net Operating Income (NOI)

• NOI = EGI − Total Operating Expenses.

Step 5: Debt service

• Annual debt service = annual mortgage payment based on loan amount, interest rate, and amortization.

Step 6: Key return metrics

• DSCR = NOI ÷ Debt Service. Many lenders target 1.20 to 1.35 or higher.
• Cash-on-Cash (CoC) Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested.
  • Annual Pre-Tax Cash Flow = NOI − Debt Service.
  • Total Cash Invested = Down payment + Closing costs + Initial rehab + Reserves.
• Break-even occupancy = (Operating Expenses + Debt Service) ÷ PGI.
• Optional: Debt Yield = NOI ÷ Loan Amount.

Step 7: Sensitivity analysis

Test the deal under realistic scenarios:

• Rents down 5 to 10 percent.
• Vacancy up 2 to 5 points.
• Interest rate up 1 percent or more.
• Property taxes up 5 percent or a reappraisal bump.
• One-time CapEx event like a roof or HVAC.

Step 8: Decision checks

• DSCR under the downside scenario still meets lender requirement.
• CoC meets your target. Many small investors look for 6 to 12 percent depending on risk and leverage.
• Break-even occupancy sits comfortably below what the local market can support.

Example: Run the numbers

Below is a simple hypothetical to show the math. Replace each input with Georgetown-specific figures from your comp set, WCAD, quotes, and lender terms.

• PGI: Two units at 1,600 dollars per month each = 3,200 dollars × 12 = 38,400 dollars.
• Vacancy at 8 percent: 38,400 × 0.08 = 3,072 dollars.
• EGI: 38,400 − 3,072 = 35,328 dollars.
• Operating expenses (illustrative):
  • Taxes: 6,500 dollars (from WCAD value × combined tax rate).
  • Insurance: 2,000 dollars (placeholder until quoted).
  • Utilities paid by owner: 1,500 dollars.
  • Management at 8 percent of EGI: 2,826 dollars.
  • Repairs and maintenance: 2,000 dollars.
  • CapEx reserve: 3,000 dollars.
  • Total OpEx: 17,826 dollars.
• NOI: 35,328 − 17,826 = 17,502 dollars.
• Debt service example: Loan 300,000 dollars at a fixed rate on a 30-year amortization. Use your lender’s payment to plug in annual debt service.
• DSCR: NOI ÷ Debt Service. If debt service equals 15,600 dollars per year, DSCR ≈ 1.12.
• Cash-on-cash: If total cash invested equals 150,000 dollars and cash flow is 1,902 dollars (17,502 − 15,600), CoC ≈ 1.3 percent. You would likely renegotiate price, increase down payment, or pursue better rents to meet your target return.

This is only a math example. Your actual numbers will change with verified rents, the parcel’s tax bill, insurance quotes, and chosen loan product.

Stress-test for Georgetown realities

• Taxes can reset: Model a higher year-one tax bill if the purchase price is well above current assessed value. Pull the current assessment on the WCAD site and test a higher effective tax rate.
• Supply matters: New apartment deliveries and single-family rentals influence achievable rents. Keep rent growth modest in base models.
• Insurance variability: If the property is in or near a flood zone per FEMA’s Map Service Center, flood coverage can materially impact your operating budget.

Local checks before you commit

• Zoning and legality: Confirm the duplex use is legal on the parcel and whether separate meters or addresses are allowed. Start with the City of Georgetown for permitting and code.
• Utilities setup: Verify meter configuration and owner obligations with City Utilities and the seller’s bills.
• Landlord-tenant rules: Texas has specific statutes for deposits, notice, repairs, and eviction. Review state guidance and the city website for any local ordinances. Begin at the City of Georgetown portal and your attorney’s guidance.

Underwriting checklist you can use today

• Address and parcel ID: pull current valuation and tax history on WCAD.
• Unit mix: beds, baths, square footage, parking, condition, amenities.
• Rent comps: at least 3 to 5 per unit; cross-check with baseline context from HUD FMRs.
• Vacancy assumption: start at 7 to 10 percent unless strong local data supports less.
• Owner-paid utilities: confirm with the seller and City of Georgetown resources.
• Insurance: get 2 to 3 quotes; check flood status on FEMA Maps; use Texas Department of Insurance for guidance.
• Management: plug in 8 to 12 percent of collected rent if using a property manager.
• Repairs and CapEx: set per-unit budgets or percentages per the property’s age and condition.
• Financing: confirm interest rate, amortization, term, LTV, and DSCR requirement.
• Closing and one-time costs: inspections, immediate repairs, reserves, and any utility-splitting work.
• Run base, downside, and upside cases; confirm DSCR, CoC, and break-even occupancy meet your standards.

Work with a local advisor who knows the numbers

Underwriting is about discipline and local detail. The right advisor helps you source accurate comps, confirm tax and utility data, stress test returns, and negotiate with lenders and sellers. If you want a practical path from spreadsheet to closing, partner with a broker who blends residential and investor expertise in Georgetown and the Northwest Austin suburbs.

Ready to evaluate a duplex or build a short list of targets? Schedule a consultation with Rodney Bustamante Real Estate to get a tailored underwriting model and a confident plan forward.

FAQs

What does DSCR mean for a Georgetown duplex loan?

• DSCR is Net Operating Income divided by annual debt service. Many investor-focused lenders look for 1.20 to 1.35 or higher, so underwrite at or above those thresholds.

How do I estimate Georgetown property taxes accurately?

• Pull the parcel’s current appraised value on the Williamson County Appraisal District site, apply the combined tax rate from all taxing entities, and stress test for a possible increase.

Where can I find a reliable rent baseline for duplex units?

• Build unit-specific comps nearby and use the HUD Fair Market Rents dataset as a baseline reference while you verify real local leases.

How much should I budget for insurance on a duplex?

• Until you have quotes, use a placeholder of 1,000 to 3,000 dollars per year, then refine after checking flood status on FEMA Maps and carrier options through the Texas Department of Insurance.

What vacancy rate should I use in my model?

• If you do not have strong local data, a conservative 7 to 10 percent for small multifamily is a reasonable starting point, then adjust with real leasing performance.

Which utilities does a Georgetown duplex owner typically pay?

• It depends on meter configuration. Owners commonly cover water, sewer, and trash for shared meters; confirm costs with the seller and the City of Georgetown Utilities resources.