Metro Austin Residential Home Leasing Rates

4 Replies | Austin, Texas

Do the soaring prices for single family homes in the metro Austin area (including surrounding areas like Buda, Kyle, etc.) make sense to any other potential investors when applying the 1% rule? I can't make deals work out on my desired ROI without making some real concessions. The single family home rents don't seem to have caught up to the rapid growth of home price.

Is there a new metric others are using that I should be aware of and should consider when reviewing deals?

Thanks.

@Michael Watson Hey Michael. I’m a Realtor in the Austin area and am actually closing on my house that I’m selling in Kyle this week. From what I have seen, you’re spot on. Rental rates have not caught up to the rising home values. Every home that’s hit the market that’s priced correctly is selling in 2-3 days for 15-20% over list price. These numbers certainly don’t make sense for an investor looking for monthly cash flow. However, if you have capital to invest, the long term appreciation could make investing in this area worth it. You’ll probably have a year or few with negative cash flow, but once rental rates catch up to this latest home value surge, there may be some substantial profits to be seen.

It just depends on your investing goals, but cash flowing deals are few and far between in this area for the time being

Hello all,

first post here. I live in Austin and was wondering the same thing. Luckily I purchased 4years ago. Looking to use my heloc to purchase a multi family property soon (VA lozn). Finding a deal that works is hard while following investing rules. I've decided that I'm going to have to be ok with a slight negative cash flow for the short term, which I can swing.

@Neil- you are correct, unfortunately properties are selling over list price.