First rental propery investement in Austin

Investor · San Francisco, CA · Member since 2018 · 22 posts · 6 votes

Hello Bp community,

I have been preparing/reading to start investing in austin . Looking at 250k - 300k range. I am not sure which area out of round rock, del Valle ,pflugerville and cedar park to select. Or are there other areas which I am not considering but are worth checking ?

Also I wanted to check if anyone from BP community has done or knows if it is an option to invest near austin / del valle using "opportunity zones" ?

Thanks

jay

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Dan BurstainBusiness Member

Real Estate Agent · Austin, TX · Member since 2014 · 361 posts · 331 votes

Hi Jay,

The tax savings are pretty significant in investing in Opportunity Zones. The trick is to have enough cash to pull it off as you basically have to double your investment. The second half being a construction loan or cash. But again, if you can do it it certainly pays off if you hold it 7 to 10 years. Especially in and around the surrounding Austin area.

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Sean Lambert
Investor · Pacific City, OR · Member since 2016 · 175 posts · 123 votes
6y
no clue on the areas that you're looking at, but confirm it cash flows before purchasing. Good luck.
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Bryan Noth
Realtor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jay Shah All of those areas have merit. Round Rock and Del Valle will have the lower barrier to entry price (for now), Cedar Park and Pflugerville sit just a bit higher on the entry price point. Del Valle could see a bump with Tesla moving in, and if HEB / Costco / Sams / anyone else drops development news out there people buying now could benefit greatly. North side of Austin (and the northern suburbs of Cedar Park and Round Rock) have seen the considerably more growth in recent years.
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Ryan KellyBusiness Member
Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
6y
@Jay Shah Think about what type of tenant you want as well. Cedar Park and west Round Rock have better school districts and are more mature areas with lots of commercial development including restaurants, higher-end grocery (Whole Foods), entertainment, etc. Pflugerville is a bit more affordable and not too far from Austin. Del Valle is a completely different play as most of the area has been C/D class until lately with new construction neighborhoods. There are very few amenities in the area currently, so it’s a longer term play as you wait for commercial growth in the area.
[email protected]512-674-5478
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Jay Shah
OP
Investor · San Francisco, CA · Member since 2018 · 22 posts · 6 votes
6y
@Bryan Noth and @Ryan Kelly .Thank you for your insights. Those sounds important points. I still correlate my last visit of austin with torchy's tacos , food at lake travis restaurant , train ride with my kids at Zilker Park etc. so overall living experience does matter. I will have to brainstorm more looks like.

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Jose Matuk
Investor · Dallas, TX · Member since 2016 · 84 posts · 33 votes
6y
Adding to the thread, Pflugerville has a growth area in the northeast that is a little higher entry point, but has seen great appreciation the last few years. Now it's also benefiting from the new developments such as Amazon and Tesla pretty close to it. And like Ryan said, it's close to downtown Austin but off the beaten path, so to me it was a good selection for my first property back in '14.
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Dan BurstainBusiness Member
Real Estate Agent · Austin, TX · Member since 2014 · 361 posts · 331 votes
6y
Hi Jay,
The tax savings are pretty significant in investing in Opportunity Zones. The trick is to have enough cash to pull it off as you basically have to double your investment. The second half being a construction loan or cash. But again, if you can do it it certainly pays off if you hold it 7 to 10 years. Especially in and around the surrounding Austin area.
[email protected]512-588-3260
Dan Burstain, Investment Realtor51 Review
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1 Reply
Jay Shah
OP
Investor · San Francisco, CA · Member since 2018 · 22 posts · 6 votes
6y
@Jose Matuk thank you for info. I will add +1 for pflugerville after your post while looking.
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Joe Scaparra
Investor · Austin, TX · Member since 2013 · 680 posts · 1k+ votes
6y
@Jay Shah, your post got me thinking. Over the years we have seen out of state investors turning to Texas to invest. I get that and still do for most of Texas. I tell people there are two ways to invest in real estate (very basic theory I know). The California way and the Texas way. California you buy high and hope to sell higher. You make money if he market moves in your favor. The Texas way is you positive cash flow and you really don't care which way the market goes because your goal is cash flow. Rents rarely if ever crash like property values can. So with this being a back, here is my question to you.
Why is someone living in SF looking to invest in Austin, when the cash flow option is off the table. SF should have plenty of appreciation plays and you would be local. I know Austin is the buzz and I am in the market here, but any new investment have me looking else where. The rest of Texas I get as you can still find nice cash flow opportunities. Cheers.
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Jay Shah
OP
Investor · San Francisco, CA · Member since 2018 · 22 posts · 6 votes
6y
@Joe Scaparra ,Good to get opinion on other side of thought process. my thought process and reasons are like this. California especially bay area SF prices are too high to invest in my budget. So I move towards another silicon valley which is Austin and especially I have some friends who stay in austin and still invest there and keep asking me to think about it. So then I put some numbers Last year around march, I got ~ 4.2 % interest rate pre-approval and cash flow was not good as you also suggest but now I see interest rate down and momentum still up for austin. So I thought of taking opinion of experts who have been investing in local market of austin which I am getting valuable feedback here. Thanks again.
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
6y
@Jay Shah I haven't heard of anyone using opportunity zones but I have a ton of clients looking to be around where Tesla would be
[email protected]512-888-9122
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Jay Shah
OP
Investor · San Francisco, CA · Member since 2018 · 22 posts · 6 votes
6y
@Jordan Moorhead no problem. I was checking if anyone has client who went through that route or is it even feasible to go that route
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
6y
@Jay Shah most of my great investments have been rehab projects and I have a great team to do those. I should clear $150,000+ on the property I'm selling right now
[email protected]512-888-9122
The Moorhead Team5140 Reviews
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