Rental Properties in Austin

3 Replies

Does anyone own rental properties (either long term or Airbnb) in Austin? Would love to hear pros + cons

@Daniel Pierson

I own rental property in Austin. The major pros to owning rental property in Austin mostly relate to the strength of the 21st century economy here. These include good appreciation for the foreseeable future (especially if Amazon HQ2 happens here) and low vacancy rates for attractive properties. Property in Austin is also more affordable compared to other hot areas, including the Bay Area and Seattle. The major cons include high property taxes, difficulty finding positive cash flow (especially when using property management), and slow rent growth due to, among other things, rising supply of multifamily units being developed all around town. Rents have lagged significantly behind property values in Austin over the past several years. If appreciation plays a big role in your investment strategy and/or you're buying all or heavily cash, Austin could be attractive.

If you are good at performing due diligence and can purchase something cash, then you could find a rehab/value-add (BRRR) opportunity. That would require having a team on the ground and the ability to manage the project from afar.

You may have heard this before. However, I've found that Austin's high property taxes make the numbers very difficult for California investors. There's no state income tax in Texas. So, the high property tax can make (somewhat) more sense. It's supposed to more-or-less balance out for most in-state property owners. At least, that's the idea. However, a California investor pays state tax in CA and has to pay the high Texas property tax. So, you get hit from both ends.

I hope this helps!

Another con to be aware of is regulatory risk. City council seems to have all kinds of “great” ideas.

Hello Daniel-

Yes, I agree with David and Andrew. Unfortunately, difficult to cash flow unless you are putting a considerable portion down (30% at a bare minimum). Looks like we are going to see another hot real estate market this year. Many of us are wondering when the slow down will occur, but the economy is great with IT and Healthcare leading the way. There is also a constant pool of young educated talent with UT, ACC, TSU, A&M, Houston and Dallas are 3 hours away.  

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