Kyle, Texas (Austin) pros/cons for LTR?

Question

I was wondering if anyone has experience with LTR is Kyle, TX.  I was looking at some new construction with big incentives (lower rates, no closing costs) and it appears with a larger down payment on a townhouse I could provide decent cash flow at market rents.  I am totally unfamiliar with the area, however (been primarily searching FL and SC).  Statistics show it is growing but I don’t know if it is an ABCD area or what the rental demand is for new construction townhouse.  Any advice would be greatly appreciated!

Jordan Moorhead · Answer

@Chris Schmitt Kyle is one of the fastest growing cities in the country and there is a ton of new construction going on there with great incentives. We have quite a few clients targeting the area and sell a lot there! I would say it's a solid B and lots of cool new businesses are moving there.

Chris Schmitt · Answer

I am looking for a long term passive investment LTR strictly for asset diversification.  Wife and I both work good w2’s with pensions, an almost paid off SFH on Long Island, and plenty of retirement accounts, annuity’s, 401k etc.  I’ve initially started looking at condos in Myrtle Beach, Adventura and Orlando but just can’t make the numbers work.  Just recently pivoted to looking at SFH.  New builders are offering big discounts on rates and closing costs and I figure a new build will require little maintenance (more passive).  I am looking at some outside Orlando/Tampa where I am more familiar, but am also curious about Austin since it is a growing/thriving city and prices seem to have come down a bit but long term should appreciate.  My question is will there be rental demand in a new construction area and how do you determine comps?

Jake Pritchard · Answer

Hi Chris, just curious about what led you to this property as a long term rental besides the new construction incentives? Most properties in the Austin area in general are going to have a tough time cash flowing so I like to target areas around the city center and away from new development, and personally wouldn't consider a new build townhouse. Especially if I were to put down a large downpayment. In my opinion these are the areas that are more likely to see high future appreciation, which helps if you're only making a couple hundred dollars a month in cash flow.

That doesn't mean that this property wouldn't be a good investment for you. Maybe you are only interested in new builds and the incentives are too good to pass up. There are different strategies and everyone thinks about their investments differently. I think you may just need to spend some time developing your buy box and your locations to make sure you get exactly what you expect.