UT Student needs to buy a property in Austin TX

Austin, Texas
First-Time Home Buyer
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UT Student needs to buy a property in Austin TX

Li-Chen Chang
Member since 2021 · 3 posts · 0 votes

Hi everyone!  My first time post here but really looking for your help! I joined BiggerPockets to look for investment deal for myself, however, my son just got admitted to UT Austin, and he loved there!  We are out of state and learned that we can establish TX residency after living in state for 12 months and he needs to purchase a property with sole ownership under his name (he is 18 years old) and established as his primary address.  We have about $200K refinanced to invest a property in TX (will retire in TX in few year), and if use for my son, we are unsure if he can get a loan so can't use that as down payment.  Also think it will be good to use the property as short-term rental to rent out so he can live in the dorm during school year and live in the condo during break (housing contract only offer for 9 months). I have few questions:

1. does anyone know or help out of state students invest in Texas?

2. is there still house/condo property in Austin around $200K? (I found few from BiggerPockets deal finder but they were 3 years old)

3. is short term rental easily set up (any management company to work with)? 

Sorry to have so many questions... appreciate any help or advise in advance!

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Ryan KellyBusiness Member
Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
4y

@Li-Chen Chang there is a lot to unpack with your questions so I'll do my best to give you a head start. In the city limits of Austin currently, there are only 3 condos listed at or just below $200k, which will likely sell over that price. They are either a studio or a 1-bedroom condo. Prices do tend to be a bit more affordable for smaller, older condos near UT as those tend to trade between parents buying small condos for their children while they are students. For a decent 1-bedroom unit, I would expect to pay between $225k-$300k. Since your child doesn't currently have a lot of income, it may be hard for him to qualify for a loan. You have the option to co-purchase with him so he can get his first property. 

Regarding short-term rentals, the city of Austin has a licensing program and you will need to acquire a license to operate an STR. You will pay an annual fee to hold the license and they will collect hotel occupancy tax as well. In addition, if you purchase a condo, you will need to review the HOA docs carefully to see if they will allow STRs in the building. Quite often they may either have a ban or a limit on how many units can offer STRs. I hope this gives you a good start. Happy to chat if you want more detail.

[email protected]512-674-5478
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  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @Li-Chen Chang there is a lot to unpack with your questions so I'll do my best to give you a head start. In the city limits of Austin currently, there are only 3 condos listed at or just below $200k, which will likely sell over that price. They are either a studio or a 1-bedroom condo. Prices do tend to be a bit more affordable for smaller, older condos near UT as those tend to trade between parents buying small condos for their children while they are students. For a decent 1-bedroom unit, I would expect to pay between $225k-$300k. Since your child doesn't currently have a lot of income, it may be hard for him to qualify for a loan. You have the option to co-purchase with him so he can get his first property. 

    Regarding short-term rentals, the city of Austin has a licensing program and you will need to acquire a license to operate an STR. You will pay an annual fee to hold the license and they will collect hotel occupancy tax as well. In addition, if you purchase a condo, you will need to review the HOA docs carefully to see if they will allow STRs in the building. Quite often they may either have a ban or a limit on how many units can offer STRs. I hope this gives you a good start. Happy to chat if you want more detail.

    [email protected]512-674-5478
    Ryan Kelly Group - Keller Williams5110 Reviews
    WebsiteView Page
    3Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    Is 200k your budget or the down payment you are going to be putting on a loan? It’s extremely tough to find anything that starts with a 2 in Austin. When does your son plan on moving here? I am more than happy to educate you on this market and give you a clearer idea of what your options look like. 

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  • Li-Chen Chang
    OP
    Member since 2021 · 3 posts · 0 votes
    4y

    @Ryan Kelly thanks for the information. I wanted to co-purchase but the school wants student to have "sole" ownership of the property.  Maybe we can co-sign on a loan, but the title only list my son? not sure if that's possible. If we can co-sign on a loan, then we will be able to look into the condo near school or in Austin area. Maybe short-term rental will take too much trouble to acquire.. a 9 month lease sounds better. :) 

    @Eliott Elias I know the market is really hot in Austin now, and originally thought the $200K can be used as downpayment for investment property, but not sure if my son can get the loan (with no income) and unsure if having me on the loan could affect my son's residency status or not.  We will pay out of state for the first year, but looking for ways to gain residency as we plan to move to TX later.  My son's school starts in late Aug. 

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  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @Li-Chen Chang if your name is on the loan it will also need to be on the title. However, your name can be on the title but not the loan. Hope that makes sense. Unless your son needs to live right near UT, you will have more options looking around the metro area. The UT condos tend to be older and solely targeted by students, so they don't appreciate as well.

    [email protected]512-674-5478
    Ryan Kelly Group - Keller Williams5110 Reviews
    WebsiteView Page
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  • Li-Chen Chang
    OP
    Member since 2021 · 3 posts · 0 votes
    4y

    @Ryan Kelly thanks for the quick response.  He doesn’t need to by living next to UT as he will be living in the dorm and rent out the property. But he can live I. The property during summer break when doing an internship.  I need to check with school to see if it’s ok to have title shared with parents. Thanks again! 

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  • Meño C.
    Member since 2020 · 6 posts · 3 votes
    4y

    @Li-Chen Chang

    You need to make sure you truly understand what needs to be done to become a state resident for tuition purposes. You need to check with housing department at UT to make sure your student can live off campus. Most colleges do not let freshman live off campus unless family lives in town. Even if the student has their own place because colleges want students to feel connected to the college and this is done by living in the dorms. Also some colleges can waive out of state tuition if your student receives certain scholarships. Contact the scholarship office to get more information. Also it might be cheaper for your student to live in the dorms than for you to buy property in Austin. Austin is the most expensive city in regards to property in Texas. Not trying to say that you shouldn’t buy property in Austin but you really need to be educated on policies at UT before you purchase property. Good luck!

    1Reply
  • Celine Crestin
    Real Estate Broker · Austin, TX · Member since 2022 · 89 posts · 93 votes
    4y

    What @Ryan Kelly said is great info! You will be hard pressed to find anything under $200k currently and if that's going to be used as a down payment, you'll have to see if your son qualifies for a loan if you want him to be sole owner. 

    There are also quite a few rules in the city of Austin regarding short term rentals, so you'll want to educate yourself on those and also consider condo deed restrictions as well. Good Luck!

    2Reply
  • Zeona McIntyrePro Member
    Real Estate Agent · Boulder, CO · Member since 2015 · 284 posts · 226 votes
    4y

    I am not sure if Texas is different but in Colorado a parent can cosign for a loan and not be on the title (I also live in a College town). 

    Have you considered medium-term rentals? It is furnished rentals done month to month. They don't require a license or extra taxes, it would be a great option for your son so he would have furniture when he lived there in the summer.

    Podcast Guest on Show Seeing Greene: Why Are My Rental Property Returns Looking So Bleak?
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