All Forum Posts by: Dan Burstain

Depends where you are trying to go.  If working at Apple campus Liberty Hill may be as far as you want to be but if going downtown Liberty Hill is too far.  Price point dictates location for the most part but I will tell you there is huge demand just about everywhere. 

@Chen Li Thanks @Paul Sedillo- your points are spot on.  Chen, here are my answers below. 

 1. Would school district matter a lot in terms of SFH vacancy rate?  

It is far down the list of variables.  I would not put it as the deciding factor when worrying about vacancy rate.

Specifically we're looking at SFH A in Roundrock (78665) with good school vs. B in east Austin with no schools (78723). The advantage of the latter is it's closer to downtown Austin. And...what is a typical SFH vacancy rate in those areas?

If you have a decent Realtor and are willing to price your rental at the market value and not above, your vacancy rate will be very very low.  The demand is very high and the supply keeps shrinking.  If you are looking at larger homes (like a 5 bedroom) then schools play more of an impact.  Keep in mind 50% of a schools budget is from property tax so all these new big developments in East Austin are going to flood those schools with added money so they should be improving greatly.  

2. What would be a reasonable expectation for rent of a new SFH (3/2/2, 1900sqft, ~$400k) in 78723? I was told around $2800 but somehow that seems a little optimistic, any data point is appreciated (other zipcodes are welcomed)! 

There are a number of 3 bedroom homes renting for $2800 and higher in 78723 but most of those homes are about $600K in value.  Best to send me the address and I can run rental comps.  

3. We are looking at new SFH b/c way down the line they require less attention which fits our strategy especially since we are out-of-state. The assumption is that appreciation is proportional to the asset value so paying more for new only hurts cash flow. And...obviously no value add opportunity, which again, hard to see myself doing a remote flip anytime soon. That said, would love to know if there're other pros and cons with buying new SFH vs. old.

I wrote on this in another post but the main pro's on new builds - CapEx is very low (no roof or HVAC replacement for decades), repairs are low too with good pipes and new appliances.  The cons are usually has HOA's, no mature trees and neighborhood feel, slightly higher price point, lots tend to be small.

Austin lost its first place 2020 standing and fell to 2nd behind Raleigh as far as the best places for real estate but to be honest I just don't see any city competing with the return on investment you will see in the next 5 years from Austin.  Hell, even Elon Musk is moving him and his company here.  Oracle is moving their headquarters here.  Apple, Amazon, Samsung, Tesla, Google, UT Medicial, all have billion dollar Austin expansions in the works or in progress.  Add to it that Austin is the safest investment with a huge government and university job base keeping us out of any roller coaster ride.  Then there is the fact we have been voted the top place to live in the US four years in a row.  It makes it easy to see why people are snagging any home $300K or lower up here.  

@Neil Polehn Hey Neil, Ryan pretty much hit on this but here is a little more insight. Right now southeast Austin is one of the cheaper places to invest and that could see some nice appreciation as Tesla goes there, the airport is there, Circuit of the Americas is out there along with development around there. Taylor and Hutto (further to the north) can be even less expensive and they are hungry to bring in more companies there. Leander and Cedar Park will see great appreciation Leander is on the Metro Rail line already but again, those are pricier spots, ROI will be great but cash flow is slightly negative or BE at best.

Hi @Joe Wang,

If you are talking about buying a new build for an investment home, I have a lot of clients doing that. Many just don't want to deal with repairs and large CapEx allowances. So the upside is everything is under warranty and nothing much to do. No multiple offer scenarios to get in. Easy to rent out as well. You can literally put $1000 or less down and gain 6 months of appreciation on the home while it is being built. I have had clients gain $50,000 in equity while they built their home at a set price all for $1500 down. Not a bad return so far. The cons can be HOA fees, many builders won't sell to investors (but there are some), a bit further out of town, etc. PM me if you want more info.

Finding new builds for investors is certainly tougher than it use to be.  Many builders have stopped selling to investors completely.  However, I do know of some new builds available to investors in the Round Rock subdivisions of Siena and Teravista.  

Another option is to buy a lot or house to scrape and build the house you want.

There are two options.  Buy new where there are still plenty of brand new homes 20 minutes from downtown under $300K.  If you are looking in the highest appreciating areas, you have to think what the home will be worth in 6 months and bid around that point.  

@Bryan Noth    I completely agree Bryan.  Want a great deal....get something under contract and in 4 months it will look like an amazing deal.  

October and YTD MLS Statistics

SUPPLY Inventory is down 50 % from 2019 that is DOWN @ 3,500 Units.
STOP ---------------- and let that sink in.  That is HALF the inventory we had in 2019.

2019 = 7,041 inventory       2020 = 3,501 inventory

Inventory is DOWN 6,800 Units from 10 years ago in 2010. In 2010 inventory was 10,331 units and in the last 10 years, Austin has added over 300,000 population.

Months of inventory is 1.1 months.  (Months of the inventory measures supply and demand. The current inventory is divided by the average sales per month for the last 12 months to show months of inventory. Economists say that a balanced market should have about 6.5 months of inventory.) 

The Months of Inventory has NEVER been this LOW in the LAST 30 years of MLS reporting !!!!!!

Here are the numbers. See for yourself. https://www.recenter.tamu.edu/data/housing-activity/
Choose the State of Texas and the MSA for Austin/Round Rock.

 
The message to buyers is that there are not many resale homes to pick from and the good ones will most likely have multiple offers.  Buyers should consider looking at New Homes. With the toll roads, many new homes are just 20 minutes away from town.  Many of the employers like Apple are on the outskirts of town already. The driving time for many employers would be less than 20 minutes.  Buyers in the resale market are having a stressful time finding and winning the bid on a home.  Buyers in the New Home market find that the builders treat them like kings and queens.

Total Sold Units are UP year to date comparing 2019 and 2020. Yes, unthinkable in a pandemic.  UP + 7 % !!!! Who would ever have predicted that in the middle of a pandemic.

Comparing October 2019 vs October 2020 Sales are UP + 29 % @ 850 units !!!!!  Pending Sales that have not closed yet are UP an AMAZING + 28 % !!!!!!

Price is Up + 7.4 % to $336,000 Median Price.  Economics 101: Supply and Demand-  If Supply is low and the Demand is high the Price will go UP.  We expect Sales to continue to be UP the rest of 2020 and most likely for years to come with the amount of job growth projected.