Is Austin a flip or rental market?

Question

I'm trying to gauge the real estate market in Austin, TX and surrounding areas for a while now and based on my calculations rentals aren't making sense because I see no net cash flow yet. Clearly I'm wrong because I've heard investors making positive cash flows. I'm posting to see what folks have been successful in doing, rentals or flipping?

I'd appreciate if you could share your experiences, and I'm also looking to connect. I invest in rental properties out of state but I live here so I want to be able to invest here too.

Ryan Kelly · Answer

@Sooraj Maharjan as you predicted, long-term rentals are not going to cash flow in the near term with a traditional down payment. Most of my clients are making 1 of 2 choices: 1) bite the bullet and take negative cash flow to get a property now with a long-term tenant, or 2) use a creative leasing strategy to increase the cash flow yield using STR, MTR, rent by the room, or househacking to increase cash flow now. They can then switch to LTR later when/if the numbers make sense. If you live in Austin, would your current property work as an LTR? If so, I highly recommend keeping your current property and converting it to the rental once you go find a new primary residence. That strategy works well for those who purchased their current home more than 2-3 years ago.

Sooraj Maharjan · Answer

Thanks @Ryan Kelly, @Eliott Elias and @Jordan Moorhead. I'm bad at posting responses, but I thought it wouldn't do anyone justice if I didn't. As they say better late than never. I took your advice and I'm riding for long term appreciation despite negative cashflow. Similar to investing in stocks basically buying and forgetting about it for a decade or so; can't do it literally for properties though.

Sooraj Maharjan · Answer

@Jordan Moorhead I have all the time right now. I just don't know much about STR (I will research more, but please recommend any reads or info if you have). What other information do you need? I'm really hoping that this will work. More than hoping actually because I want to see how I can make it work and get it to cash flow instead of having to pay out of pocket.

Celine Crestin · Answer

Ditto to what everyone else said, but I especially like @Ryan Kelly's comments above.

You can take short term negative cash flow within Austin proper or if you're flexible with your area to invest in I have found investors cash flowing LTRs outside the city, as well as successful air bnbs outside the city.

Mid term rentals are needed and may work for cash flow better than a LTR right now if you're determined to be in city limits.

Jordan Moorhead · Answer

@Sooraj Maharjan both.

Rentals that work are short term rentals, co living and monthly rentals.

Flips work but many are going to ground up infill construction because the sale price is so much higher. A/B condos are very popular too. Buy a place for $300k, tear it down and build two condos to sell for $6-800k a piece.

Eliott Elias · Answer

The best way to take advantage of real estate in Austin is to hold a rental, short term or long term. Appreciation is the name of the game and investors are willing to break even to take advantage of that. STR cash flow stronger but there are stringent regulations that hold many investors back. There is a good forum regarding STR in Ausin

Peter Vekselman · Answer

Real estate is not a state or even a city type of a business. it is a pocket type of business. meaning you cant just say any city is this or that type of a market. there are pockets within all cities that have their own characteristics and type of deals that are more prevalent there. and sometimes these pockets literally change from several blocks to several blocks. that is why it is critically important to know your areas.

Jordan Moorhead · Answer

@Sooraj Maharjan @Conner Olsen on our team is an STR expert!

Eliott Elias · Answer

Depends how you look at it, cash flow sucks. But if you keep your property as a rental and let the appreciation ride you will make a way better return.

Jordan Moorhead · Answer

@Sooraj Maharjan there isn't an easy answer without knowing more. What makes the most and what sort of time are you willing to commit? STR can do really well but you need to provide a great product and you can't just set it and forget it like LTR.

Is Austin a flip or rental market?

Is Austin a flip or rental market?

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