austin area rental market?

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austin area rental market?

Kevin L.
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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  • Alex Gaw
    Paralegal · Austin, TX · Member since 2015 · 44 posts · 11 votes
    10y

    @Bryan Hancock then would you say the house-hacking strategy that gets touted a lot here isn't a very good one for the Austin area right now? That's what I've been working toward and it has definitely been difficult finding a small multi that looks like it will cash flow. Admittedly I'm completely green and am just relying on the MLS and Craigslist right now while I work on fixing my credit and saving money.

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  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    10y

    I have no idea what "house hacking" is, but I'm not into fluff much.  It simply isn't a good time to buy long-term assets in Austin right now IMO.  There will be another downturn.

    If you're buying a primary residence than this isn't strictly an investment.  If you're buying property with the intention of holding for the long run it is a terrible time to buy IMO.  

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  • Dan N.
    Investor · Austin, TX · Member since 2013 · 113 posts · 30 votes
    10y

    @Bryan Hancock, I believe "house hacking" refers to buying an n-plex and living in one side while renting out the other (or perhaps renting out rooms in your primary). 

    I agree it's difficult to find cashflow in the area right now. San Antonio has better cashflow and lower price points. Also you'll likely get lower rates of appreciation. I am concentrating on multifamily partnerships with cashflow within the first year and forced appreciation potential. These are in greater Austin, San Antonio, Corpus Christi, and nearby areas. 

    @Account Closed, I would be careful to avoid the Del Valle area which is near the Austin airport. It's likely cheap but not desirable. Also, values and rent are pretty low in Taylor. You might check Hutto or Georgetown as well.  

    2Reply
  • Jacob Ramsey
    Austin, TX · Member since 2015 · 5 posts · 1 vote
    10y

    I'm about a year and a half out from considering a 2/3/4 purchase.  Really hope the market cools off a bit first.  

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  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    10y

    If that's what house hacking is then I will stand by my comments.  Buying anything to hold in Austin right now is probably sub-optimal in the long run.  I think there are probably plenty of other risk-adjusted places to put your money.

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  • David Thompson
    Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
    10y

    I'm finding good cash flow opportunities w MF in NE San Antonio along I-35 corridor. The stretch between Austin to San Antonio is only an hr drive.  People are moving to find value outside SA and folks will drive to jobs even in Austin from there.  Towns like New Braunfels, San Marcos exploding w new growth, big box retail centers spanking new. It's jobs driven w data / call and distribution centers w jobs salaries nicely aligned to match up MF renter profile. Texas State.in SM is also a great steady n growing draw w 30k students.

    1Reply
  • Li Yin
    Investor · San Francisco, CA · Member since 2015 · 12 posts · 1 vote
    10y

    @Bryan Hancock, curious on why you think Austin is bad for buy and hold now. I understand it has gone up a lot but would appreciate if you could dig deeper into your reasoning. I'm currently looking at that market for investing and I love getting contrarian views. :)

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  • Account Closed
    Wholesaler · San Diego, CA · Member since 2015 · 48 posts · 12 votes
    10y

    @David Thompson When you say NE San Antonio are you referring to the Valley Forge, Monterrey Village, or Royal Ridge areas? I did a quick search and did not see very many MF unit inventory on Redfin but lots of SF homes instead ranging in the $120-$190k range. 

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  • Vincent Crane
    Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
    10y

    You're going to be buying at the most expensive time in the history of Austin

    0Reply
  • David Thompson
    Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
    10y

    Universal city near Randolph air base and the city of Selma. I also like New Braunfels. All MF developments within 5min to I-35.  I work primarily w new developers, negotiate discounts and buy direct. Key pt, u have to be patient w build outs as tight labor mkt for subs. 

    I am seeing some resales. I talked to a property Mgr yesterday who had a resale 4plex for sale w an owner who decided to decline a FMV price for it because during remodel they were able to command solid, increasing rents. MF for resale in this area is hot. He said rents and prices in Matham Landing fourplexes up 4% last 6mos. I'm building a brand new fourplex for about same FMV as 7yr old plex next door. Locked in price last spring.

    I have a brand new duplex finishing up in Dec. I prefer to get it rented up, prop mgt in place before I sell.  I want numbers to be accurate.

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  • Will R.
    Residential Real Estate Agent · Austin, TX · Member since 2015 · 105 posts · 23 votes
    10y

    @Li Yin  I cannot speak for @Bryan Hancock but you cannot cash flow here anymore and that is bad for investing on any level other than for builders. Assets that cost you money every month are bad assets. 

    That said, I still do not think we are going to take a big dip. The population growth is huge. We could support a lot more units. If we do dip, I bet the bottom of the trough is still higher than today's price. 

    I am not advocating for stupid purchases. I am just saying I do not think it is any riskier than any other non cash flow market. 

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  • Account Closed
    Wholesaler · San Diego, CA · Member since 2015 · 48 posts · 12 votes
    10y

    @Dan N. Q's for you on the Corpus Christi area.  It looks like they have SF inventory ranging from $130-$150k.  Based on estimates from Zillow, it looks like rents are ~$1500 month for a 3b/2b. Do those data points jive with what you're experiencing? What have you seen as the vacancy rates? It looks the main industry down that part of TX is primary military, naval base.  Do you find a large % of turn overs for your rentals in this area?

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  • Wayne Gathright
    Austin, TX · Member since 2014 · 2 posts · 0 votes
    10y

    Your areas look good. I'd check out the Southeast area for the best pricing and growth potential. Also 290W toward Dripping Springs, but those prices are already getting pretty stiff.

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  • Gemma Clarkson
    San Jose, CA · Member since 2017 · 1 post · 0 votes
    9y

    Hi Guys,

    Really enjoyed reading this thread! We are currently living in SF but looking for advice on investing in Austin. Looking at family homes in Round Rock and wondering how easily a 3/4 bed house would rent? I have heard the commute to downtown Austin can be bad (and people dont commute like they do here in SF) so wondering if this will affect the rental market and if we should look at other areas or something more more central!

    Any advice would be most appreciated!

    Thanks!

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