Is Austin TX market too competitive?

21 Replies

How is anyone even buying in that area with cap rates being so low? And who is buying there?  

It seems that the only people who are buying in ATX are people from cali and NY overpaying for property in ATX

Fair point. I ask myself the same Q about Austin. But a wise man once told me, "In every cycle there is always someone screwing things up."  Deals are always out there.  Just not 'easy' by any means in this market.

Last month or two nothing penciling very close to ask, have to continue to review potential opportunities and keep the pulse on the market, but yes....have even see a few cap rates with a 3 on it (on ask)

@Frank Bonzai  The Austin market currently is not being driven by investors. They are getting run over by primary residents desperate for a home and willing to pay any price for it. People using logic, common sense, and spreadsheets are roadkill, haha.

We routinely buy deals listed on the mls for either at or below asking price (not that asking price means anything, but it's a metric commonly used to gauge market competition). Only cash flow positive properties (I use a Rent By The Room model). Of course, 99% of the properties you see will not work. I can share specific addresses if you'd like to check the mls and confirm. I'm also putting out 20-30 offers per week.. so there's that haha

@Frank Bonzai much of the market is driven by homebuyers as @Ryan Kelly mentioned.  Housing Inventory in Austin is low and the population continues to increase.  That puts the law of supply and demand into overdrive.  Those who can afford to pay more are seeing greater success in winning offers right now, but that is not the only option.  

As @Victor Steffen stated, there are still investment opportunities if you are patient. You simply have to do a lot more due diligence to find the properties that can deliver a good investment. Rent by the room, small multi-family, AirBnB (outside of Austin), and overpriced properties where you can find options to purchase without the same competition are good examples that can still work in this market. I'm also having success with people moving to Austin, choosing a primary home first with the intent to convert to a rental in the near future. 

I'm in the Austin area and I've been on BP for about 7mo now. I own a home in ATX that I purchased for 208k in Dec 2016 & was offered 356k for it by Opendoor this past Monday. The option period expires 4-13-21. They came out and did an indoor/outdoor inspection & made that offer, but after deducting fees (8K) closing (3k) and repairs (17k), they made me a solid offer of 324k. I owe 159k. I was thinking about selling it, pocketing around 164k and buying SFR or multi in SA or Killeen area. In your opinion if you were me, would you sell this primary res and pocket the 164 to invest, or take out equity loan to buy a rental SFR cash or finance a multi? My home needs about 20k in work to get it up to lease standards in my area. Thoughts?

Just an added note. I just acquired my real estate license and am going through the process to hang it as a brokerage now. I should be a member of ARBOR by the end of the month, could possibly use that to my advantage on commission from purchase?

Thanx in advance. If this is the wrong place to post this. apologies. I've never posted before, just saw a local thread and figured Id ask.

I'm in the Austin area and I've been on BP for about 7mo now. I own a home in ATX that I purchased for 208k in Dec 2016 & was offered 356k for it by Opendoor this past Monday. The option period expires 4-13-21. They came out and did an indoor/outdoor inspection & made that offer, but after deducting fees (8K) closing (3k) and repairs (17k), they made me a solid offer of 324k. I owe 159k. I was thinking about selling it, pocketing around 164k and buying SFR or multi in SA or Killeen area. In your opinion if you were me, would you sell this primary res and pocket the 164 to invest, or take out equity loan to buy a rental SFR cash or finance a multi? My home needs about 20k in work to get it up to lease standards in my area. Thoughts?

Just an added note. I just acquired my real estate license and am going through the process to hang it as a brokerage now. I should be a member of ARBOR by the end of the month, could possibly use that to my advantage on commission from purchase?

Thanx in advance. If this is the wrong place to post this. apologies. I've never posted before, just saw a local thread and figured Id ask.

Originally posted by @Victor Steffen :

We routinely buy deals listed on the mls for either at or below asking price (not that asking price means anything, but it's a metric commonly used to gauge market competition). Only cash flow positive properties (I use a Rent By The Room model). Of course, 99% of the properties you see will not work. I can share specific addresses if you'd like to check the mls and confirm. I'm also putting out 20-30 offers per week.. so there's that haha

20- 30 offers a week! Are you making these offers yourself? Or using a realtor? 

Originally posted by @Victor Steffen :

We routinely buy deals listed on the mls for either at or below asking price (not that asking price means anything, but it's a metric commonly used to gauge market competition). Only cash flow positive properties (I use a Rent By The Room model). Of course, 99% of the properties you see will not work. I can share specific addresses if you'd like to check the mls and confirm. I'm also putting out 20-30 offers per week.. so there's that haha

20-30 offers a week! Are you making these offers yourself? Or using a realtor? 

Besides the Primary Residence buyers buying up inventory, many of the investors are betting on appreciation. With the huge influx of people, and with companies like Amazon, Tesla and Apple creating jobs, what looks like a high price today might look like a steal in 5 years. And if you're locked into 4% interest for 30 years and rates go up to 8%, you might look like a genius. But that's gambling on the future. A person should do a lot of research on jobs, construction, etc.

As my man @Victor Steffen implied, in Austin we're no longer in a time where you can just buy something, do nothing, and watch the checks roll in. You have to use creative investment strategies, such as (in Victor's case) rent by the room, or (in my case) rehab value add. If you truly don't want to make any kinds of decisions, chances are good that you can sit on appreciation for a few years and you'll cashflow then, although I'm sure people said that in 2007 too (for the record I don't think we're in a 2007-style bubble because the rules have changed, but who knows if there's a new thing we haven't considered). The truth is that those who truly want a turnkey investment have almost always been better off investing in stocks. Real estate is a good investment because of leverage, you have control over it, and if you're willing to live in it, because the government subsidizes live-in homes.

From what I have been hearing from podcasts and investors on Instagram, the properties in Austin are going 20-30k above list price with atleast 15 offers on the listing so definitely competitive. 

@Allen Wu I definitely think persistence will payoff. But a good broker can set you apart. The truth is deals are done by relationships and as mentioned earlier, you have to be flexible on a business model to cash flow until you’re ready to exit. You can be confident this is still the mid innings for Austin with the way Texas maintains a healthy business environment attracting companies.