SFRs in Kyle - Buda or San Marcos?

Question

Good day Austin BP!

I'd like to invest in an SFR in the Kyle/Buda/San Marcos area (I already own a rental in Leander. Whilst it's appreciated and I positive cash flow on it, there's no value in buying rentals in the Austin central and north area now). I'd even considered Liberty Hill but my cousin told me that whilst it's a great place to own, it may not be the best for rental investments.

So..... here I am looking at the southern corridor.

1. Any advice on which of the 3 areas (Kyle - Buda - San M) would offer a better ROI? (ROI for me being primarily - appreciation/growth and then cash flow).  Monthly payments seem $1450'ish for a 3/2 SFR whilst rent on realtor.com is in the 1550-1650 range.

2. How soon do houses in these areas rent?

3. Any upcoming 'big thing' (like a new big company campus, or a mall) that may add value and spike up the prices?

2.

Joe Scaparra · Answer

I think Pflugerville is an excellent choice.  For whatever reason it gets overlooked.  However, it is really becoming a suburb of Austin.  You can still find value there but give it a few more years and it will be valued like Austin proper.  Yes I would jump into Pflugerville probably quicker than the other three cities you mentioned.

One more thing, if this goes through and I think it will then you have a possibility of hitting a home run.  https://www.biggerpockets.com/...

Then you should be looking in Manor and Elgin as well.

Cheers.

Joe Scaparra · Answer

@Vikram Jayaram, your statement

1. Any advice on which of the 3 areas (Kyle - Buda - San M) would offer a better ROI? (ROI for me being primarily - appreciation/growth and then cash flow). Monthly payments seem $1450'ish for a 3/2 SFR whilst rent on realtor.com is in the 1550-1650 range.

2. How soon do houses in these areas rent?

Really anything along the HWY 35 corridor from San Antonio to Dallas should do well over the next decade.  San Marcos, Buda and Kyle all are good choices.  San Marcos because of the University and larger city may present more choices, but I would make my choice based on the deal versus the location of these three cities.

I do find it interesting that you want to focus on appreciation over cash flow.  I understand that the West Coast frame of mind is that without appreciation you don't have a viable investment.   Austin is or has become that as well.  But for most of Texas, Cash Flow is still the KING.  In my mind the better investment is a positive cash flowing property as it usually carries lower risk.

Liberty Hill is up and coming but I think you will have better success in San Marcos, Buda, or Kyle.  Don't rule out New Braunfels too.  The other thing I would consider is duplex investing. Duplexes in Texas is more a southern property type than you might find on the West Coast.  Duplexes here in Texas act a lot like a house but cash flow better.  If you can find a duplex that rents each unit for 800-1000 will probably do a lot better than a SFH renting for 1500-1600.  Remember, it is easier to find 2 $1000 renters than one $1600 renter especially if the market trend down.  Cheers.

Neil Narayan · Answer

IMO Liberty Hill is a bit far out and my bet is with the growth occurring in the I-35 corridor between Austin and San Antonio that area has more potential than LH

Jacob Pereira · Answer

@Vikram Jayaram, I'm surprised to see you think there is no more appreciation in North Austin. There's nothing wrong with the areas you mentioned, but personally I'm still seeing a lot of room for both cashflow and appreciation up North. My personal advice would be to cast a wide net around where you live (say maybe an hour drive from your home or so, or more if you're pretty hands-off), and then picking the properties that give you the highest return based on your strategy and circumstance.

Vik J. · Answer

@Jacob Pereira, I wanted to ask @Prasad Katta the same thing! I love seeing the various OOS investors in different forums on this site!

Vik J. · Answer

@Joe Scaparra - thank you! I'll look into those new areas.

@Jacob Pereira - thanks for the great insights. I didn't imply in my original post that there is no appreciation in N Texas. I just saw that houses were more expensive, and in some cases, rents equal to or less than the mortgage.

Prasad Katta · Answer

@Vikram Jayaram

Totally agree with @Joe Scaparra on Pflugerville. I am an OOS investor having bought one SFR recently in Pflugerville. Currently cash flowing $400+, but they are getting expensive.

I am also starting to look out at Buda and Hays.

Jacob Pereira · Answer

Edit - I just realized you were an out of state investor. In your situation, try to find a place that's within an hour of your current property manager's office, unless you find a truly amazing deal.

Robert Eyers · Answer

My .02... look in all 3 areas, and watch for deals close to i35. Kyle and Buda homes along the highway are still a tolerable commute to DT Austin, but if you start looking 10 minutes off the highway it gets dicey. That will help you with speed of filling the unit.

I would plan on 2 weeks from the minute the home is rent ready to move in date. Thats IF the home is priced right. If you're thinking 1450 for any of these 3 along i35 and a 3/2... your probably good. Some neighborhoods... sure you can get 1550, but just remember that its not worth it to keep the unit unoccupied for an extra $100 a month. The extra rent would take over a year to recoup 1 lost month at the lower price.

Let me know if there is a specific address you have in mind, I'd be happy to send you an opinion on it.

Prasad Katta · Answer

Six months

SFRs in Kyle - Buda or San Marcos?

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