austin area rental market?

CA · Member since 2015 · 56 posts · 2 votes

Hi everyone,

I'm from the San Francisco bay area and I'm just starting out in the real estate investment world and I'm really glad I found this website. I'm already learning so much from all of the experts on this site as well as the podcasts. so I'm thinking about investing in austin and have done some research on the different neighborhoods. so far, I've narrowed it down to the following neighborhoods. 78729, 78749, 78748. Since I'm not in Texas I was wondering what the locals think about these areas. My goal is to get a place and be cash flow positive ($100 ~$200) a month and hold the property for at least 5 years. Also, what's the best way to find rent estimate in those areas?

Thanks so much!

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Scott Sutherland

Real Estate Broker · Austin, TX · Member since 2013 · 87 posts · 73 votes

11y

You can still find some 1% properties in 78744 (southeast) or in 78758 (north). Those should still cash flow enough to hit your $100-$200 target and cover operational costs, some vacancy, and the unexpected repair. Over time rates will rise and when combined with loan paydown, you'll start creating some equity.

You could always go the vacation rental route as well. Our rents for vacation rentals are roughly double what we'd get on a long term basis. But the management is much more active.

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Marian Smith
Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
11y
search on hotpads.com where you can circle an area or austinhomesearch.com for rentals available right now. It should give you a ballpark idea. Be sure to verify property tax rates and mandatory hoa fees when Buying as taxes run high because there is no income tax in Texas.
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Guy Gimenez
Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
11y
@Kevin L.
All of those are great areas but cash flowing could be an issue. Those are strong sale areas with so you'll pay top dollar.
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Kevin L.
OP
CA · Member since 2015 · 56 posts · 2 votes
11y
Thanks guys! Yes, it does look like I won't cash flow the more I look into it since property tax is pretty high there...Is there any other area around Austin that you guys recommend I focus my research on?
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Billy ConesPro Member
Harker Heights, TX · Member since 2014 · 98 posts · 12 votes
11y
Welcome @Kevin L. to Bigger Pockets.
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Gene Maryushenko
Vancouver, WA · Member since 2015 · 10 posts · 3 votes
11y
I would also like to know the answer to Kevin's last question. Are there good cash flow neighborhoods in Austin?
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Marian Smith
Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
11y
I wonder if you should ask that question in conjunction with " are there many large village-sized apartment complexes going in around the area"....the answer to the second is yes for North Austin, Plugerville and Round Rock. You might be able to cashflow in a hot rental market--unlikely because low supply is also driving up prices-- but you need to be able to cashflow when the cycle heads back to normal, which it will eventially...so I am told.
Just be careful not to model based on 1 or 2 high rents in the MLS because when the rental supply gets larger people will be pickier. You wont get rhe high rents with a "meh" property with similar or even greater square footage. And the newbies will be competing with people who have been in for a while at lower costs.
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Scott Sutherland
Real Estate Broker · Austin, TX · Member since 2013 · 87 posts · 73 votes
11y
You can still find some 1% properties in 78744 (southeast) or in 78758 (north). Those should still cash flow enough to hit your $100-$200 target and cover operational costs, some vacancy, and the unexpected repair. Over time rates will rise and when combined with loan paydown, you'll start creating some equity.
You could always go the vacation rental route as well. Our rents for vacation rentals are roughly double what we'd get on a long term basis. But the management is much more active.
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Jared CrouchPro Member
Real Estate Investor · Austin, TX · Member since 2014 · 57 posts · 13 votes
11y
@Scott SutherlandWhat are your vacancy rates with vacation rentals in Austin?
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Scott Sutherland
Real Estate Broker · Austin, TX · Member since 2013 · 87 posts · 73 votes
11y
we run about 200-250 nights per year. If we focus on 30 day+ rentals we can hit 300 nights per year.
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Kevin Wood
Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes
11y
Originally posted by @Kevin L.:

Thanks guys! Yes, it does look like I won't cash flow the more I look into it since property tax is pretty high there...Is there any other area around Austin that you guys recommend I focus my research on?
Welcome to another Kevin! I'm still in the Bay Area, but from Texas. I invest in Houston, but hoping to expand to Austin so have been following the boards for awhile. From what I have read Round Rock just outside of Austin seems to be a good place some folks are finding deals. I agree with Scott that if you can get a couple 100 in cash flow appreciation should make you some good cash.
From the research I'm doing I believe Austin is going to be booming in about 2017 with several tech companies moving into the market. I hope to get down there myself before then. Good luck.
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Kevin L.
OP
CA · Member since 2015 · 56 posts · 2 votes
11y
I checked out Roundrock but ended up with cedar park. We closed a SFH toward the end of April and it has been on the rental market since. The place hasn't been rented out yet and seems like there's a pretty good supply of rentals available in cedar park as more investors shift to that area. Hopefully it'll get rented soon.
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Saberian Younger
Investor · Austin, TX · Member since 2014 · 83 posts · 39 votes
11y
What amount of rent are you charging for this place? Where are you advertising the rental at? Rentlinx and Postlets through willow are what I use and are both free. With these I usually get 15-20 inquires per week. I've never went longer than a month in this area without having someone under rental contract. The market here is very strong.
There's also a pain service called Renbits that I've read about here on bigger pockets. It's not very expensive ($20 or so)but will apparently bring a lot of action with stagnating properties. The houses that I usually see in Cedar Park don't cash flow enough for me... It's hard to find stuff there for under 150K. Cheers
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Saberian Younger
Investor · Austin, TX · Member since 2014 · 83 posts · 39 votes
11y
Also for people not familiar with any given area I often use:
https://www.rentrange.com
It gives four or five pages of rental comps with both the local market (City and zip code) and 0.1 mile micro market. I use it more as a back up because it's expensive. I have found that there rent estimates seem to be low and I'm able to rent for more than they predict...
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Raul Matas
Involved In Real Estate · Cedar Park, TX · Member since 2015 · 4 posts · 2 votes
11y
@KevingL.
In your initial post you didn't indicate what price point and down payment you intended to be in, also, are you looking for single family homes or duplexes as well? You're (best) neighborhoods will depend on this.
Here's a quick shot at the average rental price for a house < 2000 sqft in the suburbs north of Austin.
Hope this helps!
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Kevin L.
OP
CA · Member since 2015 · 56 posts · 2 votes
11y
Thanks all! Those are all really helpful tips. We are having our realtor advertise it for us since he will be managing it. It's advertised on the MLS as well as various online rental websites. The house is 2500 sq ft with hardwood floor throughout and we are asking $1750. It's been about 3 weeks since it first went on the market. Sounds like there's enough interest but just no bite yet. We will see what happens after this weekend and go from there. Hopefully it gets rented soon.
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Matt McNeil
Investor · Austin, TX · Member since 2015 · 4 posts · 11 votes
11y
@KevinL.
I own 2 homes in Cedar Park that are both 500 square feet smaller than yours, and I never have any problems renting them out for $1700-$1750 per month, so it sounds like you are in the right ball park for your rental rate. The rental market is strong here. I'm willing to bet you'll have it rented soon.
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Kevin L.
OP
CA · Member since 2015 · 56 posts · 2 votes
11y
We are right at the border of 1431. Hopefully it gets rented in the next several days!
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David Ferrette
Developer · Austin, TX · Member since 2014 · 266 posts · 110 votes
11y
Can anyone from this post provide their favorite area codes in Round Rock to invest in. I currently have a property in 78665.
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Account Closed
Wholesaler · San Diego, CA · Member since 2015 · 48 posts · 12 votes
10y
Does anyone know the average vacancy rate for SFR or 2/3/4 in the N. Austin area?
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David Thompson
Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
10y
I have held two SFRs in Teravista golf course community in Round Rock for the past 3 years and both have rented very quickly. Rents are in the $2K - $2200 range for 4bd/2.5 bath homes. Homes in the $250K - $300K now after 2 years of 8% appreciation. This is a great community w/easy access to I-35 and tech companies down the I-35 corridor / Tech Ridge (Parmer). I have one resident who's on an ex-pat assignment w/Samsung for 2yr lease. Samsung pays me directly. Very nice program. Area code is 78665. Good schools / solid area. It would be a good place to farm to see if a deal could be had as getting tougher to find.
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Account Closed
Wholesaler · San Diego, CA · Member since 2015 · 48 posts · 12 votes
10y
I'm looking at Austin housing inventory and I am seeing inventory NE and E of the Austin International airport for 3b/2b ranging from $135-$170k.
Any feedback on these areas? Any things to look out of as an investor? Any 'more desirable' pockets in that range within Austin? TIA for the feedback.
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David Thompson
Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
10y
Lena,
ABI is located pretty far out in the country side. Going east from ABI you go out towards Bastrop. I have a realtor friend that is building out there and probably knows the area pretty well if you are interested can provide her contact. She is an investor friendly realtor and has quite a few SFRs of her own all around N Austin and building to the east out past ABI. PM me separately and can provide her email and phone number.
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Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
10y
In general I think it is a poor time to purchase rentals in the Austin market. Everything is pretty frothy right now. A better strategy may be to wait and purchase during the next recession. This is what I plan to do.
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Will R.
Residential Real Estate Agent · Austin, TX · Member since 2015 · 105 posts · 23 votes
10y
@Bryan Hancock might be right with the frothy but I do not think it is a bubble. There are real jobs and people with jobs moving here and buying inventory. Austin is becoming like most other hot cities where it is impossible to cash flow without being creative. Think California. I guess there is some chance we will over build but it does not seem like we could build enough to take a big dip anytime soon.
You cannot cash flow here but it is still a safe place to invest if you are just wanting to put low interest rates to work over the long term.
If you are looking for a genie to tell you where to invest, I would say look at the I35 corridor heading south.
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Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
10y
If you're into speculating then Austin is fine. I just don't think it is a good time to find anything worth holding for the long term right now. There is hoards of dumb money circulating in town.
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