Out of State rentals: Austin, TX

General Real Estate Investing
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Out of State rentals: Austin, TX

Jon McCarron
Real Estate Agent · Salem, MA · Member since 2014 · 114 posts · 78 votes

Hello All,

Recently, 2 old college roommates of mine moved to Austin, Texas. I told them that I can't wait to make a visit down there (I am currently in Massachusetts) to see them, and check out the city. But giving it some thought, I figure, why not check out some real estate while I am there. I have not done out of state deals before, so I am not sure how I would get started with it. I think I am going to plan and visit those guys in March 2015, so like 5 months away. 

My strategy would be buy and hold rental/s that produce positive cash-flow. Single or multifamily homes.

I am currently listening to any BP pod-casts related to out of state investing, and reading any blogs and forums about the subject as well. And I figure I would send this out to get even more perspective.

My questions are as follows:

1) What are some good places to start research about the city? Websites, blogs, newspapers?

2) How/ when would I consider building contacts/team for Austin? Suggested property management companies or real estate agents or agencies.

3) Any suggestions on areas to avoid, or any areas to definitely check out?

Thank you for any and all advice! 

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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y

Hi Jon,

I live in LA and have always bought out-of-state. You will always hear people on one side or the other about it, but certainly know that plenty of people do it just fine. I wouldn't do it any other way personally. Not everyone will agree, but who cares, my investing has nothing to do with their opinions. :)

To answer your questions...the best thing is to network, especially on BP. Just start asking around for anyone working in or around that area. That's the best starting point. My word of caution though, is make sure you understand how to calculate cash flow correctly because you want to be sure you will get positive cash flow out of a property. The reason I say that is Austin isn't too slick on price-to-rent ratios that produce positive cash flow. Houston, Dallas, and some of San Antonio are good, but Austin isn't usually known for it. Not to say you can't find anything there, but it will be much harder.

Best of luck! You'll have fun with it.

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  • Jake Landry
    Contractor · Austin, TX · Member since 2014 · 47 posts · 8 votes
    11y

    I grew up an hour and a half away from Austin in Blue Bell country. I came to austin as a kid and as a young adult several times a month growing up. My parents lived here in the 70's, and I always loved Austin. I decided to move to austin to invest in real estate several years ago (right before the market crashed :(   ) I did tons of research and talked to lots of realtors. I purchased two properties before I actually moved there and learned very quickly that one block can make a huge difference and there are people that actually prey on the "out of town" investors. I would recommend analyzing the &%#£ out of the comps in any area and defiantly go in person to meet people face to face after you have started a relationship over the phone or Internet. Check references and go overboard on due diligence. This is a fantastic city but like Guy Giminez said, things can change without warning very quickly. Builders are super busy, building material distributors are very busy, prices of construction are up and there is a labor shortage. These things need to be considered if your buying a rehab property and you plan on getting other people to do the work for you. I live in Austin and am currently looking for buy and hold properties in other areas because you can cash flow much easier in other Texas cities. Please let us know what you end up doing. I'd love to hear about it. 

    Best,

    Jake

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  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    11y

    @guy Gimenez

    Good point.  The first house we bought was in 1985 and everyone at work said Austin housing never went down.  And the minute we closed, it did.

    But if you buy with a margin of safety and in a safe area, Austin looks posed to keep growing.  I don't even know if you have to worry so much about school quality where you buy.  People are waiting longer to have kids and people with grown children stay in the workforce longer...and if they're new in town or have credit issues they're going to need somewhere to rent.

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  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    11y

    But I guess I should add, for the original poster who wants to invest long distance,  I wouldn't buy south of the river because I don't know the areas well enough to feel comfortable. .. and I have lived in the Austin area 30 years.  So to invest from out of state seems risky to me, insane actually.

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