San Antonio vs Austin vs in between for rentals? (2021)

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San Antonio vs Austin vs in between for rentals? (2021)

Chilann Chan
Investor · San Jose · Member since 2020 · 10 posts · 11 votes

Hi All, 

I am looking for investment property along the Austin to San Antonio I-35 corridor. The range I am interested in is $200k to $300k property. I am open to either getting more in appreciation (e.g. Austin), or cashflow (San Antonio). However, if it is in Austin the rental income will need to be enough to cover all the expenses (including management fee) for it to work for me. 

So far, my conclusion is rent, as of Feb 2021, its pretty similar in the price range I am looking for in Austin, San Marcos/New Braunfels and San Antonio (Rent all around $1500-$1795 range depending on areas for $200-$300k property) 

Austin: Seems like you have to be willing to go $300k and above but the rent doesnt seem to increase with it, so either you need to put much more in downpayment or be willing to chip in each month for expenses, as an investor. 

New Braunfels/San Marcos: I am considering this area, but I dont know much about it yet. My theory is, as Austin becomes unaffordable, people will move to New Braunfels/San Marcos areas so in my opinion it will appreciate better than San Antonio, with similar cash flow for rental income since price is similar to good areas in San Antonio


San Antonio: You get more rental income for San Antonio, I feel that appreciation maybe less for New Braunfels/San Marcos, and less so than Austin. 

Please spark a debate!!! :) Love to hear what you think if you are familiar with Austin to San Antonio area. The realtor I worked with seem to only know either Austin, or San Antonio, so I cant get a full perspective comparing Austin, San Antonio and the in-between rentals. 

Thanks!

Chilann

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Andy V.
Investor · Austin & San Antonio, TX · Member since 2021 · 35 posts · 199 votes
5y

San Antonio 100%. I'm an Austin native and currently living in San Antonio & have been here for about 4 years now - the growth here is rapid these days (just announced 2nd largest growing city in the nation). It's such a large city with so much potential and yet still very affordable investment properties - depending on how much work you're looking to do. Large population will results in a desirable vacancy rate. 

I have dozens of friends I grew up who are constantly telling me they're ready to get out of Austin - the first place they're considering is San Antonio. I think there will be a mass wave of folks moving down I-35 slowly but surely as they look for new opportunities - If you think back to what Kyle/Buda were 10-15 years ago compared to today it's hard to deny the crowds moving further and further south. Same thing going north of Austin with Pflugerville, Round Rock, Hutto, Georgetown, Liberty Hill, Leander areas as you move North/Northwest from Austin. The population is just widening the circle. 

San Marcos is a college town, and NB is still very small with limited activities for people looking for the big city vibes. In my opinion, San Antonio is a real estate gold mine for the future of what San Antonio will be, partially due to the migrations from Austin but there are a lot of pros about this market. 

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  • Julie Sisnroy
    Realtor · Papillion, NE · Member since 2013 · 134 posts · 59 votes
    5y

    I am curious about this, too, but continuing even further up the I35 through Killeen, Waco, into Dallas.  I am aware, that is a very macro area, but thought I would jump in on this.  :)

    1Reply
  • Daniel Meador
    Austin, TX · Member since 2020 · 8 posts · 10 votes
    5y

    @Chilann Chan from what I've seen there is way more cash flow in San Antonio vs Austin. Honestly most places in Austin barely break even or lose money every month.

    Lots of places in San Antonio that have potential to be great spots. I'm currently trying to learn more about neighborhoods their. Honestly I'm not sure about New Braunfels. I've been there a few times and while you are close, you definitely don't have the benefits of a huge city like SA. I don't really see as much benefit there

    1Reply
  • Jeffrey Evans
    Investor · San Jose Ca · Member since 2020 · 125 posts · 115 votes
    5y

    I just closed on a new build in NB. I almost bought in Kyle since it is much closer to Austin. I ended up in NB for 2 main reasons. 1 the house was cheaper, 231$ for a new build and 2 the taxes in NB are around 1.6% vs 2.3-2.5% most other areas I liked. I have been considering San Antonio or possibly Temple for my next investment. Mainly due to more volume and more affordable places to do something like a BRRRR with.

    2Reply
  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    5y

    @Chilann Chan As some have mentioned, the $200k-$300k range in the Austin metro is quickly disappearing as appreciation continues to soar. For cash flow, you need to look at least two counties away from Austin. Look at New Braunfels and San Antonio south, or Bell County to the north. 

    [email protected]512-674-5478
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    1Reply
  • Chilann Chan
    OP
    Investor · San Jose · Member since 2020 · 10 posts · 11 votes
    5y

    @Daniel Meador thanks for the insight. Thats what I was wondering. Seems like the in between like New Braunfels or San Marcos will have more vacancy problems as rentals, since its rental demand is not as high as either Austin or San Antonio. They do have nice deals though. 

    0Reply
  • Chilann Chan
    OP
    Investor · San Jose · Member since 2020 · 10 posts · 11 votes
    5y

    @Jeffrey Evans thanks for the insight. Do your rental in NB fill up pretty quickly, is a vacancy rate of 8% realistic? And who are the tenant bases in NB if you happen to know? My realtor told me people in San Antonio prefer to stay closer to San Antonio, and people in Austin would def not live in NB. So I am a little perplexed what tenant bases can I get in NB. 

    2Reply
  • Chilann Chan
    OP
    Investor · San Jose · Member since 2020 · 10 posts · 11 votes
    5y

    @Ryan Kelly I see that you are both a real estate agent and handles rentals, love to connect with you to talk about the renters in these different areas and possibly see some places with you. Send you an invite to connect!

    1Reply
  • Lynn Wise
    Realtor · Austin, TX · Member since 2020 · 52 posts · 27 votes
    5y

    @Chilann Chan

    $300k in Austin would be tough, but not impossible, especially if you’re not looking for 100% turn key or are open to condos. San Marcos is a college town, so there’s some potential there IMO. I think you’re right that Austin will appreciate much more rapidly than many of the other areas you mentioned. I’m currently watching Lockhart ... I’ve been hearing it’s poised for growth.

    0Reply
  • Daniel Machado
    Investor · Sacramento · Member since 2021 · 18 posts · 21 votes
    5y

    @Chilann Chan I generally agree with your points, and I'm a believer in development along the I-35 corridor as well. When I was looking into where to focus, I decided not to pursue New Braunfels because I noticed properties seemed to be sitting on the market for a while without being rented. Austin was too expensive for me for my first property. 

    I ended up focusing on San Antonio because of its strong population growth, diverse industries and affordability. It might be worth deciding which factors or criteria matters to you most to help make this decision. Good luck! 

    1Reply
  • Andy V.
    Investor · Austin & San Antonio, TX · Member since 2021 · 35 posts · 199 votes
    5y

    San Antonio 100%. I'm an Austin native and currently living in San Antonio & have been here for about 4 years now - the growth here is rapid these days (just announced 2nd largest growing city in the nation). It's such a large city with so much potential and yet still very affordable investment properties - depending on how much work you're looking to do. Large population will results in a desirable vacancy rate. 

    I have dozens of friends I grew up who are constantly telling me they're ready to get out of Austin - the first place they're considering is San Antonio. I think there will be a mass wave of folks moving down I-35 slowly but surely as they look for new opportunities - If you think back to what Kyle/Buda were 10-15 years ago compared to today it's hard to deny the crowds moving further and further south. Same thing going north of Austin with Pflugerville, Round Rock, Hutto, Georgetown, Liberty Hill, Leander areas as you move North/Northwest from Austin. The population is just widening the circle. 

    San Marcos is a college town, and NB is still very small with limited activities for people looking for the big city vibes. In my opinion, San Antonio is a real estate gold mine for the future of what San Antonio will be, partially due to the migrations from Austin but there are a lot of pros about this market. 

    12Reply
  • Chilann Chan
    OP
    Investor · San Jose · Member since 2020 · 10 posts · 11 votes
    5y

    Thank you @Andy V. for your local insights! If you don't mind, I'd love to connect with you! Excited to scout out opportunities in San Antonio!

    1Reply
  • Jeffrey Evans
    Investor · San Jose Ca · Member since 2020 · 125 posts · 115 votes
    5y

    @Chilann Chan I just closed a couple weeks ago and my property manager is still looking for a renter.  I have had 4 or so interested.  I listed a little high to see how it goes.  Honestly I just trusted my agent, and he sent me rental comps to show all that,  looked at the appreciation in the area and it was good.  Rental rates seemed good. So I jumped in.  

    0Reply
  • Jim Piety
    Rental Property Investor · Austin, TX · Member since 2013 · 87 posts · 31 votes
    5y

    I, too, am eager to see the growth in San Marcos and New Braunfels. Currently living in Austin but doing my first flip in San Antonio. It seems like a good market but I'm still fairly new. 

    @Andy V. Would love to connect and better understand your POV on zip codes/areas of SA to look in.

    @Lynn Wise What makes you say Lockhart is poised for growth? 

    0Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    5y

    It's almost impossible in Austin unless you rent by the room. Other areas can work but of course they won't appreciate nearly as quickly. 10% appreciation on a $300,000 house is $30k. $100 a month cashflow is only $1200.

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  • Dan BurstainBusiness Member
    Real Estate Agent · Austin, TX · Member since 2014 · 360 posts · 331 votes
    5y

    San Marcos is 45 min from downtown San Antonio, 35 min from downtown Austin, and has a university there the size of UCLA in Texas State with its 38,000 students.  Average days on market is 17 days and falling.  I imagine if you price to market you will rent quickly.  Sounds like a pretty good rental market to me.  New Braunfels is a little tougher market but one of just a few places builders are selling to investors and 35 min to downtown San Antonio and 45 min to downtown Austin.

    [email protected]512-588-3260
    Dan Burstain, Investment Realtor51 Review
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  • Jeffrey Evans
    Investor · San Jose Ca · Member since 2020 · 125 posts · 115 votes
    5y

    I got my place in NB rented.  Took me 3 weeks from when I closed on it.  I did lower the rent a bit. 1545$ for a small 3/2 about 1300sqft.  pretty happy with that time frame and price.  my mortgage tax and insurance is about 1200$.  

    1Reply
  • Gregory Sanchez
    Investor · San Antonio · Member since 2020 · 11 posts · 3 votes
    5y

    @Julie Sisnroy Waco is booming!

    1Reply
  • Gregory Sanchez
    Investor · San Antonio · Member since 2020 · 11 posts · 3 votes
    5y

    @Chilann Chan Residents from SA are slowly moving to NB to get away from the big city.

    2Reply
  • Blaine Alger
    Investor · Waco TX / Conroe, TX · Member since 2017 · 376 posts · 228 votes
    5y

    I think SA is a great rental market.

    The rest of the I 35 corridor is great but the only issue is you are dealing with secondary markets and there is not as much inventory from what I have seen.

    Places like WACKO are great but there is only so many opportunities and a lot of buyers, so it is tough to find a good deal. I think it is better to invest in a larger markets where you have the ability to bounce around the suburbs and what not. 

    -BA

    0Reply
  • Christopher Campbell
    Realtor · Flagstaff, AZ · Member since 2020 · 106 posts · 118 votes
    5y

    @Chilann Chan

    I just wrote about the 35 Corridor on another similar post. I think you're mostly spot on. The issue with the two majors, San Antonio and Austin is the extreme lack of inventory. You'll have to compete (a lot more in Austin) for good properties. Buyers are paying up to ridiculous levels for good deals. I'm hearing from agents in Austin that they're selling properties at $40k, $50k, even $60-70k ABOVE the listed price in some areas. In San Antonio we're seeing closer to $10k-$25k over list in some cases.

    If the property is cleaner, newer, and anywhere in that 35 Corridor buyers really want it so competition is stiff. Also, just for your knowledge, New Braunfels properties can get above your price range pretty quickly. That's a very desirable and rapidly growing city; one of the fastest growing in the country currently. Great place to invest, but price points can get pretty steep. 

    I wouldn't sleep on San Antonio's appreciation. I'm not sure we have the capability to produce new housing fast enough to meet the pace of new residents. With this inventory squeeze coupled with still growing demand and sustained lower mortgage rates I'm seeing our values take big jumps YOY! See my recent post for more info. 

    Cheers!

    2Reply
  • Lynn Wise
    Realtor · Austin, TX · Member since 2020 · 52 posts · 27 votes
    5y

    @Jim Piety I’m just seeing more and more of my artist, musician, small-business owning friends move there. I haven’t dived into the real estate market there yet, but it’s high on my list to analyze. Seems like it’s becoming quite a little cultural hub.

    0Reply
  • Tanner Woolley
    Accountant · Austin, TX · Member since 2019 · 11 posts · 7 votes
    5y

    @Christopher Campbell I know I'm late to the party here, but this post was great. My wife and I are looking to buy in SA in the next few months for a STR/vacation home. Would you be able to connect about your thoughts on the area? We need an agent down there

    2Reply
  • Gabriel H. Gaytan
    Real Estate Agent · San Antonio, TX · Member since 2021 · 65 posts · 21 votes
    5y

    As for a faster appreciation, Austin certainly is the city.

    San Antonio has rents that come close to the 1% rule, or certainly higher than it, and certainly can pay the mortgage and other expenses. For example, I recently sold a duplex to my investor that bought it for 185k with 30k with rents for both sides being a combined $2700 in rent. In addition, San Antonio is a very much a appreciating city, just not as the rate that Austin is at.

    It just certainly depends on what approach you want to take. 

    1Reply
  • Payam Tarverdyan Chychi
    Member since 2021 · 1 post · 0 votes
    4y

    I'm looking at similar things here as well. Been looking in SA, Dallas/FW, NB, and Forney. It will be my 1st investment property for rent in TX, and having a hard time figure out where I want to purchase. Looks like I can still pick up some decent stuff for a budget of 200-300k. How are you folks prioritizing location (walk-a-bility) vs noise vs crime vs schools vs drive time to city centers?

    Thanks

    0Reply
  • Daniela Troncoso
    Rental Property Investor · OR · Member since 2022 · 3 posts · 0 votes
    4y

    hey there, I am trying to decide btw a Condo in Austin ($395k), near downtown, mortgage is cover by renting by the room. But I am unsure about condos appreciation versus single homes? Looking in Killeen, Temple and San Antonio, has been tough since I dont know the market well. But seems like the rent prices on greater Austin area are very similar to temple and SA. what would you recommend for appreciation and covering expenses? 

    0Reply
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