Hi BP, first-time investor here who's planning on "house hacking" by living in the first property I buy and having roommates / tenants help me pay down my mortgage.
I'm currently located in Austin, TX, and am looking at properties here.
What are some up-and-coming neighborhoods that you think would make good rental investments in Austin? Also, how do you evaluate if a neighborhood will make for a promising investment?
Let's start with your budget and what part of town you work in. That'll determine your neighborhood.
Thanks, Beau. My budget is max $225,000
I work downtown
Sarah, how far are you willing to commute? Normal house-hacking would make me think you wanted a duplex, but I'm not sure you will find that at $225 within a 30 minute rush hour drive of downtown. I did see some nice ones in buda that might fit that price though.
If you are ok with having roommates instead of having a duplex, I've seen some nice stuff at that price point in the slaughter lane corridor in south austin. Check out 78744 and 78747 along slaughter lane. Access to downtown via 35 and lots of stuff for you at south park meadows.
Thank you, Robert. I will check out those areas and zip codes.
What are some particular data points / characteristics that you look for when evaluating neighborhoods for a rental property? I'd love to learn about your thought process so I can try to apply it to my search, too.
That price point In that area will be tough without getting into something that’s going to need some major rehab.
Interview several investor friendly realtors! And I mean several. It sounds like you need one.
There are lots of 3bed 2 bath homes in that price range in Buda. Just watch out for the taxes- it varies wildly by zip code.
@Nina Hayden ... totally agree with your assessment. The property will definitely need some work. Having said that, if you are willing to live with your tenants, you may be willing to live with some rehab work in process.
I'm cant think of another area to find a home that can be large enough to add tenants, but come under 225k and commutes to downtown. I'd love to hear from some people that are better in touch than me though.
@Sarah Klein are you open to putting in some serious work to the property or being far from downtown? Like @Nina Hayden said, you're going to need to at that price or just start with a SFH that you can live in and rent out rooms. I found it easier to buy a SFH with an ADU in Austin than find a duplex.
@Sarah Klein How far do you want to drive? For a house you might have to drive a bit. You might not be able to get a house in some hot areas but you could always buy a 2 bedroom condo and ride the appreciation wave while renting out a room. Also, if you have a bit of experience then you might be able to qualify to use part of the income from one side of a duplex to qualify at a much higher price point. Also, how do I best determine the up and coming areas of a city? Other than looking at numbers and trends within those numbers, I go to the area and have lunch or a beer. One can determine alot by just checking it out. Believe it or not, South Congress area used to be super duper seedy. Now its a hotspot and a tourist mecca. The folks that recognized that trend from the beginning and had boots on the ground then made a mint no matter if they bought land, a house, a duplex, a condo, commercial buildings or whatever.
House hacking is one of the best ways to start in the market, build equity, and get real estate experience!
As far as locations, it depends what type of tenant you feel comfortable sharing a house with.
Neighborhoods that reflect the type of tenant you feel comfortable living with is a good guide.
@Sarah Klein this may help with your search. It's a choropleth map of Austin neighborhoods and their corresponding median home values:
Seems like the further outside the city center you go the less expensive it become with the notable exception of the west side.
As for assessing future neighborhood growth, I would look at trend data for various metrics such as population counts, educational attainment, poverty rate, household incomes, etc ...
Hope this helps
Wow, thank you everyone for all the helpful information!