Good Markets in Texas to Invest in Small Multifamily
Nathan SmithPro Member
Austin, TX · Member since 2015 · 28 posts · 2 votesHi All, I'm interested in investing in small multifamily (open to 2 units up to 50) somewhere in Texas. Austin, Tx seems to be a little on the high side these days.
Any recommendations for other cities / towns in Texas where you can still get decent returns?
Inventory is low anywhere between Austin and San Antonio. San Antonio has MF inventory but SA is a different market than many of the other areas near Austin. Houston and SA are probably the two markets that will be hit the least by a down cycle. I am not hot on Austin anymore. It is quickly becoming a one-trick pony that is technology dependent. When prices were lower it was great with having the capital there, UT, and technology. Government workers are now priced out of the market and so are support personnel for UT. It is a very narrow market now that can afford to purchase in Austin. All of the surrounding cities are pegged to the Austin market. A decline in Austin is going to cause a decline in every commuting suburb.
Belton is a good suggestion. Good luck finding inventory in San Marcos. That is pretty much a new build town. It is a new build, master plan market like http://kissingtree.com/. You may be able to find lots and build. I am a newb at new construction but I am boots on the ground for anyone that has experience. The big developers are trying to get a foot into San Marcos but the old guard taxpayers are fighting back. Unless you can impress them you are not going to build anything significant in the best areas.
Kyle is a sea of cookie cutter homes and is managing to over develop itself into a substandard city. Unless they start master planning it is going to be less desirable than other areas. Cedar Park is land-locked. Round Rock still has potential but that is going to be new builds also. The area around old settlers park will be one of the hottest areas in round rock and it is underdeveloped. People want things to do and you have the jewel of round rock right there. Add in Dell Diamond, a water park, and better than average shopping, and it becomes that much better. I think it will eventually overshadow brushy creek.
If you want cheap with a huge upside then Seguin is a great option. Seguin is a poor town off of I10 and is currently dominated by owner financing bottom dredgers. Seguin has a river and a downtown that has huge upside. If I had more time and partners I would take Seguin block by block starting in the downtown areas and start gentrifying it. Buy and holding in Seguin will pay off eventually.
Canyon lake is probably one of the most underrated areas near San Antonio and Austin. Canyon lake is overrun by the retired mobile home owner. It used to be too far to commute and ran under the radar of big developers. Things have changed and Canyon lake is now in prime west side land between San Antonio and Austin. Eventually, Austin and SA will be one large DFW type metro area and Canyon lake will be the home to executives. West side I35 is hot whether you are in Austin or San Antonio. That trend is going to hold as you move up through Canyon Lake and Wimberly. If you think "man I wish I had built in Westlake or Alamo Heights years ago" and you believe Austin and San Antonio are the next Dallas/Ft. Worth then you should be looking at everything west of 35 between the two cities.
The problem is that Seguin and Canyon Lake are long-term plays. The quarries that run along 281 are another long term potential investment. The quarries are digging up limestone. Eventually, the quarries will close and what will be left is lakes in beautiful green scapes. Quarry lakes are gorgeous and clear. These quarries are west of I35 and in the path of development. Eventually, the quarries will start selling land because of the opportunity cost. I get to hunt on quarry land for one of my clients outside of REI and I drool every time I get to be out there.
If you want Multi-Family then I would look at new builds in San Marcos or old inventory in San Antonio.
I wouldn't do anything in Austin at the current prices. I am not an expert on anything so take my advice with a grain of salt and make your own decisions when it comes to investing.
6 unit apartment available in Cleveland TX. Asking 42k per unit.
Message me if your interested
Nathan,
I still like San Antonio for cash flow for big city / close proximity size. You might look into the tri-cities area to the north (Belton, I heard they are expanding the enrollment at the college there and they don't have enough housing as it is). Better value is found in secondary and tertiary markets but risk increases the further / smaller you go out as not as diversified and hard to manage. I like college towns, Lubbock (probably too far for you 6hrs) and A&M area. But for proximity, if you take anything from Georgetown to the north of Austin to NE SA along the I-35 corridor you can get to your investment. Texas state in San Marcos. All these towns are exploding. I just sold a duplex and a fourplex in SA from an out of state investor and the numbers are going to be a good win for him (new construction to boot).
Inventory is low anywhere between Austin and San Antonio. San Antonio has MF inventory but SA is a different market than many of the other areas near Austin. Houston and SA are probably the two markets that will be hit the least by a down cycle. I am not hot on Austin anymore. It is quickly becoming a one-trick pony that is technology dependent. When prices were lower it was great with having the capital there, UT, and technology. Government workers are now priced out of the market and so are support personnel for UT. It is a very narrow market now that can afford to purchase in Austin. All of the surrounding cities are pegged to the Austin market. A decline in Austin is going to cause a decline in every commuting suburb.
Belton is a good suggestion. Good luck finding inventory in San Marcos. That is pretty much a new build town. It is a new build, master plan market like http://kissingtree.com/. You may be able to find lots and build. I am a newb at new construction but I am boots on the ground for anyone that has experience. The big developers are trying to get a foot into San Marcos but the old guard taxpayers are fighting back. Unless you can impress them you are not going to build anything significant in the best areas.
Kyle is a sea of cookie cutter homes and is managing to over develop itself into a substandard city. Unless they start master planning it is going to be less desirable than other areas. Cedar Park is land-locked. Round Rock still has potential but that is going to be new builds also. The area around old settlers park will be one of the hottest areas in round rock and it is underdeveloped. People want things to do and you have the jewel of round rock right there. Add in Dell Diamond, a water park, and better than average shopping, and it becomes that much better. I think it will eventually overshadow brushy creek.
If you want cheap with a huge upside then Seguin is a great option. Seguin is a poor town off of I10 and is currently dominated by owner financing bottom dredgers. Seguin has a river and a downtown that has huge upside. If I had more time and partners I would take Seguin block by block starting in the downtown areas and start gentrifying it. Buy and holding in Seguin will pay off eventually.
Canyon lake is probably one of the most underrated areas near San Antonio and Austin. Canyon lake is overrun by the retired mobile home owner. It used to be too far to commute and ran under the radar of big developers. Things have changed and Canyon lake is now in prime west side land between San Antonio and Austin. Eventually, Austin and SA will be one large DFW type metro area and Canyon lake will be the home to executives. West side I35 is hot whether you are in Austin or San Antonio. That trend is going to hold as you move up through Canyon Lake and Wimberly. If you think "man I wish I had built in Westlake or Alamo Heights years ago" and you believe Austin and San Antonio are the next Dallas/Ft. Worth then you should be looking at everything west of 35 between the two cities.
The problem is that Seguin and Canyon Lake are long-term plays. The quarries that run along 281 are another long term potential investment. The quarries are digging up limestone. Eventually, the quarries will close and what will be left is lakes in beautiful green scapes. Quarry lakes are gorgeous and clear. These quarries are west of I35 and in the path of development. Eventually, the quarries will start selling land because of the opportunity cost. I get to hunt on quarry land for one of my clients outside of REI and I drool every time I get to be out there.
If you want Multi-Family then I would look at new builds in San Marcos or old inventory in San Antonio.
I wouldn't do anything in Austin at the current prices. I am not an expert on anything so take my advice with a grain of salt and make your own decisions when it comes to investing.
@Leland Barrow Im in the middle of a double house renovation in Seguin walking distance to downtown. Have you or anyone you know about the permit process thru the city. Just getting bids I hear a lot of the contractors grumbling.
Got a 22 unit at 25000 a unit price negotiable 9563200698 located in Brownsville texas always rented at 350 a month on a single bed getting more info but give me a call let me know what you need prices are very low but its in a good location for this city in front of an elementary.
@Leland Barrow Agree with all that you said there. I was building in Creekside for the last three years. They cant keep up down there. They have even hired more inspectors to keep up. Canyon Lake may not be as much of a long term play as you think. Rumor from the inspectors was a large Australian company took out a ten year multi billion dollar permit near Creekside. That doesn't mean it will pass the finance muster but at least we know there is a lot if interest in the area.
@Saberian Younger I haven't built in Seguin yet but as close as it is to NB you will probably have to jump through hoops to get one. May even need a credit report done. Check with the AHJ and they will help you get what you need.
This advice is not near as precise and intellectual as @Leland Barrow and I do agree with a lot of what he is saying but I will throw my opinions in the ring. I invest in Canyon Lake, New Braunfels, and San Antonio. New Braunfels is a good market for cash flow and flips but throw out "owner finance" around this area and you will crash the system. San Antonio is also a great place to exercise any and all investment strategies in my opinion. I hiiiiiiiiigly recommend short term rentals in Canyon Lake. I have a 2 bdrm / 2 bath that rents out for $1600.00 a month (average). During the summer it brings $2,000.00 and up a month (that's a freaking 2/2). I also have a 3/2 out there that I just finished rehabbing. I was going to sell it but I bet it will bring well over 2k a month as a short-term rental. I believe this is the trend because New Braunfels does not allow short-term rentals and there are so many visitors to the San Antonio / New Braunfels / San Marcos / Austin area as well as the people building in the area that need a place to park while there house is being built (this is currently going on in another house I have out at Canyon Lake), as well as the winter Texans and summer Texans. I hope I didn't put anyone to sleep. Good luck out there @Nathan Smith.....or do what I do and make your own luck.
Hey guys. A little late here. I’m a MF investor in Phoenix and Seattle. I’ve got some 1031s coming up soon and would like to explore Texas markets (wife would love to end up living in Tx). Like to make some contacts with fellow investors or wholesalers.
I'm seeing a lot of great multi-family opportunities in San Antonio these days. The agents I work with are great at sniffing them out and we've closed on 10+ in the past 60 days with our investors.
If you're okay with remodeling, San Antonio is providing a lot of great opportunities. The thing is just having all of your ducks in a row and being ready for when the right one comes along. Things are very competitive and there's a shortage of inventory already so when a good multi hits the market, it'll get scooped up quick.
@David Thompson
You mention Lubock Tx is that an area that's growing? or is it too far out in the country?
Thanks Stephen
@Leland Barrow
What's your opinion on Lubock Tx?
Thanks Stephen
@Diyan Yap
We're interested in your 22 units
Stephen