Is Kyle a good suburb for long term rental investment?

Question

Hi Folks - I recently joined BP community and look forward to learning from the network. I am based out of Seattle area and looking to invest in a real estate property in Austin area.

My goal is to buy a SFR in $500-$500K budget with 2500+ sqft. The plan is to rent the home and hold it for long term investment (5+ years). I am ok to be cash flow neutral or cash flow negative with focus on long term appreciation.

I found a property that matches our criteria in Kyle. Based on my research, Kyle seems to be a stable suburb with good schools. The only downside (based on my limited knowledge), it is not part of the North Austin area where the market is HOT now. At the same time, i do not want to just focus on north Austin area and go into bidding wars.

What is this community's feedback on a real estate investment in Kyle area? Any red flags to not invest in Kyle?

-Karthik

Bryan Noth · Answer

@Karthik Cherukuri it's true, almost every part of of Austin is on fire given the sheer volume of influx, both population and jobs.

By percentage, Hays County (home to Kyle and Buda) has been the fastest growing county in the nation by percentage the past 10 years according to the US Census Bureau.  I also second that corridor between Austin and San Antonio looks primed for growth.  Watch out for floodplains but parts of Kyle but overall it has seen exceptional growth and looks to be posted to continue.

Celine Crestin · Answer

Hi! I live and work in Kyle, TX so I have a lot of area knowledge. Growth is HUGE here. Hays County TX has been one of the fastest growing counties for several years. That being said, certain areas would serve you better than others. Would be happy to chat more and discuss your options. :)

Ryan Kelly · Answer

@Karthik Cherukuri the ENTIRE Austin metro is smoking hot - north, south, east, and west. Kyle and Buda are the two suburbs directly south of Austin towards San Antonio. They are booming and expecting tons of growth over the next 10 years. Hays county was one of the fastest-growing counties in America the past 10 years. You will be taking advantage of both appreciation and growth as Austin and San Antonio grow towards each other. A lot of investors are buying in Kyle and all the suburbs up and down the I-35 corridor. Your challenge will be to beat out all the other buyers and get the property under contract. Let us know how we can help.

Jordan Moorhead · Answer

@Karthik Cherukuri Kyle is a great market. Not only is it part of the Austin MSA and growing rapidly but it is also in between Austin and San Antonio which continue to grow together. Many jobs and many people have moved to Kyle because it's relatively affordable for the Austin area.

Aaron Gordy · Answer

Another important fact to know about the metro including Kyle is that rent is going up incredibly. If its harder to qualify to buy houses expect that rents will go up. Folks have to live somewhere.

Ryan Kelly · Answer

@Karthik Cherukuri regarding your questions about safety, Kyle has a small-town feel and is mainly suburban, so very few concerns regarding old or deteriorated neighborhoods. Schools are relatively good and families are generally happy to have their kids in the local schools. One thing to prepare for, the median price for the entire metro is approximately $450,000 and rising, and Kyle is considered one of the more affordable suburbs, so homes in these price ranges will especially be in high demand. At this current moment, the vast majority of properties will sell between 5-15% over asking after receiving strong multiple offers. I definitely recommend working very closely with your agent to get as much intel as you can from listing agents and draft strong offers.

Karthik Cherukuri · Answer

Thank you @Ryan Kelly, @Celine Crestin and @Jordan Moorhead

as you guys have rightly put, The SFR homes are going at around 450-500K range. And, based on current rental rates, interest rate and property taxes, i will be around $300-$500 cash flow negative. Keeping long term appreciation in consideration, i think i am ok with taking a monthly hit.

The key is finding a property where rental market is stable and the home does not go with out a tenant for months

Campbell Key · Answer

@Karthik Cherukuri As pretty much everyone has already confirmed - Buda/Kyle is a great area to invest in. Kyle in particular is poised for a lot of growth and new development. There is a Costco in the works off I-35 (by the EVO movie theater), and there are also long-term plans for an urban center similar to the Domain in north Austin.

Karthik Cherukuri · Answer

Thank you @Celine Crestin, @Bryan Noth for your input. Really appreciate it. This is the home i am interested in and would love to get your opinion on the area/community

https://www.redfin.com/TX/Kyle...

Karthik Cherukuri · Answer

Thanks @Ryan Kelly. Appreciate the response. Glad to hear that Kyle and the other suburbs down the I-35 corridor have good potential to grow. My only concern (due to lack of knowledge of the area) is if there are any avoidable spots in Kyle area due to some external factors (crime or bad schools or low income areas etc). Or is the whole suburb a good one for investments

@Ryan Kellyundefined

Is Kyle a good suburb for long term rental investment?

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