How To Invest In Austin Real Estate


Will Housing Prices Drop In Austin

Best Areas to Invest in Real Estate Near Austin That Will Bring You a Nice Return!

Possibly. Most economists anticipate that the rate of growth may slow in housing markets throughout the country as mortgage interest rates rise, but that home prices will continue to increase. However, in some markets like Austin that experienced the sharpest pandemic-related price increases, prices could decline slightly and become more affordable over the next year or so.

Set Reasonable Expectations For Your Investment

Although investing in Austin real estate can generate ongoing passive income and may be a good long-term investment, its important to set reasonable expectations for the property you are investing in. Real estate can be profitable with patience. These investments may often be time-intensive and costly ventures. Be prepared to spend time, work and sweat for the property.

Austin Real Estate Market Forum


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What Makes The Austin Market Unique

Austin is certainly a magnet market for growth with respect to both business and population. This has been highlighted recently, but in truth, the market has experienced steady growth for decades.

The geographic location also creates some wonderful natural amenities. The Colorado River cuts through the middle of Austin, creating waterfront allure and a great place to enjoy outdoor activities. The Hill Country to the west forms stunning hillscapes covered in lush greenery. And of course, the annual festivals and music scene have quite a following here.

How To Spot A Great Investment Property In Austin Texas

The Best Investment Property Types in Austin

In our last blog post, we examined ways to identify a property that would make a great property investment in Austin, and we focused mainly on the tangibles from the perspective of being able to rent it out and optimize rents. In todays post, well take a look at how to be sure that the numbers work for your real estate investments.

  • Be sure that you can rent the property. Its no fun to jump into real estate investing and later discover that zoning laws or a homeowners association restriction renders your rental unrent-able. Be sure to read and understand any CC& Rs , homeowners association documents, and local laws that affect your property or area.
  • Do the math. When you invest in Austin, TX real estate, youre likely aiming to generate cash flow and/or make money. But, how will you know if the rent will clear the costs of maintaining the property? As a rule of thumb, if the rent is at least 1% of the purchase price, its worth considering. Beyond that, you want a mortgage payment to be less than 50% of the monthly rent. These two rules of thumb optimize your chances of making money on your investment in the long term.
  • If you want to crunch the monthly numbers to the letter, weve outlined ordinary expenses below:
  • Mortgage payment

    Property management

    Homeowners association fee

    Vacancy rate

    Repair and general maintenance

    Total these expenses and subtract the total from the monthly rent.

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    Austin Rental Market Trends

    Rental market trends are closely tied to the local economy and housing markets. In locations with strong population and high job growth, demand for rental housing typically thrives. When homes for purchase are scarce and prices are rising, that can also drive more people to rent. Austin ranks among the top 30 rental markets in the country, according to WalletHub, based on affordability and lifestyle.9

    Home Values Are On The Rise

    Increasing values in housing make Austin an inviting place for real estate investors. Since the home prices havent reached peak heights yet, the entire rental market situation still holds strong advantages when compared to similar U.S. cities. As a Texas real estate investor in the Austin area, its important to take note of this.

    The housing market values are definitely going to increase with every passing year for a long time. As a rental property investor, you are better off making the investment decision sooner rather than later. The affordable conditions in the Austin real estate market may not last too long as the city is undergoing changes in its housing.

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    Take Advantage Of A Booming Austin Real Estate Market

    Austin ranked number one on the 2017-Emerging-Trends-Real-Estate by Pricewaterhouse Coopers and the Urban Land Institute. According to the report, Austin has consistently ticked the majority of the top boxes related to recent real estate market attractiveness. The market has benefited from a diverse economy that was affected in a minimal way by the global financial crisis, a growing population base made up of an educated labor force, and the undeniable hip factor that makes Austin attractive to the millennial dominated workforce. As a result, the Austin real estate market has continued to bloom.

    In the 2018 edition of the report, Austin was ranked the top place for real estate investing in Texas and as the number two city in U.S. Markets to Watch: Overall Real Estate Prospects.

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    The Benefits Of Commercial Real Estate Investment In Austin

    Real Estate Investing Austin Texas Where I’m Investing $3,000,000

    Commercial real estate in Austin has been a hot commodity. Zero income tax, top-notch schools, nightlife, wildlife, and more have made it a destination for corporations and their employees alike, making it very likely that the trend will continue to arrow up. Here are just a few of the major benefits that come along with commercial real estate in Austin.

    Passive Income Potential

    Risk is inherent in any investment, even in a market like Austin, but once youve acquired a good space and filled it with a good tenant, money arrives in your account every month and it doesnt stop until that tenant leaves. Not only will a good tenant pay on time, every time, but most commercial tenants want to look the part to their consumers, so theyll most likely take great care to keep your property in tiptop shape.

    Non-correlated Assets and Diversified Returns

    A non-correlated asset is essentially one that is not tied to the performance of others. The value of commercial real estate, for example, likely will not be tied to stock market performance. The Modern Portfolio Theory, developed by Nobel Laureate Harry Markowitz, suggests reducing the overall risk and boosting returns by spreading your investment across non-correlated assets.

    Inflation Protection

    Commercial real estate can create something of an inflation hedge, offsetting the long-term impact since property rent can be adjusted right along with it.

    Tax Benefits

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    Next Best Places In Austin To Buy An Investment Property

    Posted by Ryan Rodenbeck on Thursday, May 28th, 2020 at 2:59pm

    Austin, Texas has one of the best real estate markets in the nation. The strong job market, natural outdoor beauty, and laid-back lifestyle entice renters and homeowners to flock to the Lone Star State. What makes Austin the best place to buy investment properties? Why should investors buy rental properties in Austin? Is Austin a good place to invest in real estate? Well be answering your questions on why you should invest in the Austin housing market and the top 5 next best places to invest in Austin.

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    Meet With A Financial Planner In Preparation For Investing In Austin Real Estate

    When weighing the pros and cons of investing in Austin real estate, meeting with a qualified financial planner may be helpful. A financial planner is a professional wholl help you invest your money to reach your financial goals. These goals can range from generating income to saving for college to saving for retirement.

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    What Type Of Properties Do You Think Investors Should Consider In The Austin Area

    Whatever matches your comfort level and strategy. This is one of my favorite aspects of real estate investingthere are so many ways to make money!

    As far as specific niches, small multifamily properties that can be converted into condos and sold as individual units create huge exit strategy potential using this strategy switches your potential customer market from investors to homebuyers. Similarly, lots zoned for ADU developments could have a huge upside for forced appreciation.

    In A Nutshell: Buying Real Estate Investment Property In Austin Tx

    Investing in Austin Real Estate? Here

    The market offers a potentially lucrative plan for Austin real estate investors in a Texas city. Regardless if you are planning to buy your first rental property, or you are already a seasoned property owner, Austin has plenty of strong selling points, tipping this city in favor over other areas.

    With the housing demand, real estate investors in Austin are likely making the right decision.

    Here are some of the reasons real estate investors should consider investing in Austin:

    • Austin TX has a thriving economy and a strong job market, including positions in top tech companies.
    • The city offers a multitude of entertainment, dining, and outdoor recreation opportunities for residents and visitors alike.
    • The home values are on the rise but have definitely not reached the peak, providing a nice potential return on your Austin investment, for single-family or multi-family homes.

    Now that you have the facts, you may decide if investing in this area is the right choice for you!

    For further inquiries or extra help buying Austin rental properties, single-family or multi-family, feel free to contact Bigham & Associates, LLC. We can also provide real estate investors in the Austin region with many other property management services such as a real estate agent, tenant screening, financial reporting, rent collection, responding to tenant requests and much more. Whatever your needs, contact us today.

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    Listen To This Article

    To hear more audio stories from publications like The New York Times, .

    The third time Drew Menas manager asked him about relocating to Austin, Texas, he and his wife, Amena Sengal, began to seriously consider it. They had deliberated each time before, in 2017 and 2018, but landed on a hard no: Drew and Amena had lived in New York for more than 10 years, and they loved it. They owned a two-unit townhouse in the Bedford-Stuyvesant neighborhood of Brooklyn, and they felt lucky to have it, with its yard and the kind of close-knit neighbors who compete to shovel one anothers sidewalks after a snowfall.

    But now it was August 2020, and the pandemic had changed their calculus. When the city shut down, their daughter, Edie, was 7 months old Drew and Amena co-parented while working full time, one at the kitchen island, the other at the breakfast table. In May, they escaped to Drews familys cottage in New Hampshire, and gradually their tether to the city began to fray. When the relocation offer came in from Drews employer, an asset-management company, they started browsing listings online, and it looked as if they could get a lot more space in Austin. They would certainly save money on everything else, like gas and groceries. The world is ending, they said to themselves. Why the hell not?

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    Austins Economy Is Thriving

    As already established, the job sector in Austin is solid, which is much needed in real estate investing.

    Austin is a hub for large companies that need various types of employees and can offer competitive salaries. Young professionals flock to Downtown Austin for this reason.

    The tech industry has made a strongentrance to Austins business scene. In fact, there is an area on the west sideof Greater Austin that is called Silicon Hills. This nickname is derived from ahigh-density cluster of tech industry giants in the area.

    In Austin, you can find tech company offices from key players like Apple, Amazon, Facebook, Google, IBM, PayPal, eBay, Cisco, and Intel. Even the University of Texas is located here. All of these major companies contribute to a healthier economy and a thriving market for jobs. The real estate market in Austin directly benefits from this.

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    Dont Rush Your Real Estate Investment

    Buying an investment property is a big financial decision and commitment. Although it can be tempting to jump into a purchase, you should take your time. As a new real estate investor in the Austin TX market, youll want to have a clear understanding of real estate market conditions, such as how much properties are renting for, how they hold their value for resale and neighborhood factors.

    Historical Home Value Trends

    Real Estate Investing Austin Texas The Rules Have Changed

    The Austin housing market has been thriving in recent years, even prior to the pandemic, with buyers flocking to the area in search of the lifestyle they prefer and relatively more affordable single-family homes, at least in comparison to coastal markets.

    Austin home values

    The ability to work remotely that so many companies discovered during the pandemic only increased the cityâs popularity. As a result, home values have risen nearly 90% over the past five years. Home values in Austin rose 39.4% over the past year, according to Zillowâs Home Value Index.6

    Austin median sales price

    While nearly every housing market has experienced sales increases, lack of supply and price appreciation in recent years, Austin has been a leader among markets. Nationally, the median sales growth was 13.5% year-over-year from February 2021 to February 2022. Austinâs median sales growth during that same period was 29.5%.6

    Austin median price per square foot

    Another way to measure home values is by looking at the median price per square foot. Here, too, Austin stands out with a 24.4% growth rate year-over-year to $260 per square foot, according to Redfin. Nationally, the median price per square foot rose from $184 in February 2021 to $218 in February 2022, an increase of 18.5%. In El Paso, the median price per square foot jumped much less, up by 16.4% year-over-year.7

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    Whats The Property Like

    No matter how good an area is, youre investing in the property itself. As a landlord, youre responsible for all aspects of the property. If it needs maintenance or repairs, its your responsibility.

    Do your due diligence and work with a licensed inspector and appraiser to determine a homes potential. Buying a home that needs extensive work may seem like a great idea, but if the value isnt there when youre done, you wont get the rent you want and it could be a bad investment.

    Working with professionals who understand the rental market and what you should look for is a key factor in successfully investing in real estate in Austin.

    Austin’s Massive Student Population Propels The Rental Investment

    Many people want to invest in the Austin real estate market because there is a massive student population that will rent properties for a premium if theyâre within easy commuting distance of the University of Texas Austin campus. That school alone has more than 40,000 students. The Austin community college hosts about as many students as UT Austin. Huston Tillotson University, Saint Edwardâs University, and National American University are also located in this city.

    Positive Demographic Momentum of Austin: About half of Austinâs population is between 18 and 44, though that figure is skewed by the large student population. However, the reality is that many college graduates choose to stay here because of the abundant, well-paying jobs. After all, Austin has the highest per capita of high-paying jobs of any Texas city. This helps explain why the Austin housing market is growing at the fastest rate of any major city in Texas. Many of these young adults are starting their families here, creating certain future demand for housing in the Austin real estate market.

    The average size for an Austin, TX apartment is 864 square feet with studio apartments being the most affordable. 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage.

    Where are rents growing fastest in Austin Metro Area

    The Fastest Growing Cities For Rents in Austin Metro Area

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    Austin Neighborhoods Are Hotspots For Real Estate Investing

    Austin is ranked as one of the best places in Texas to invest in real estate. Along with the Dallas-Fort Worth area, Austin has reached the top of real estate investors shopping lists. In the CBREs annual Investors Intentions Survey, Austin and DFW got the highest marks, outranking larger coastal cities.

    Austins housing market is sizable it ranked 7th nationally overall and 3rd among large cities. The citys stable job market and incredible economy not only draw employees of some of the countrys largest companies, but also entrepreneurs and start-up companies.

    The Austin metro area suffers from a low housing stock a problem exacerbated by the influx of new residents and the heightened desire for homeownership caused by the pandemic. With the onslaught of growth in Austin comes a higher demand for SFR real estate. To keep up with the demand for rental housing, investors, developers, and builders have turned to new construction projects and build to rent housing.

    Recently, Austins housing permit rate was ranked among the highest in the nation. Between 2011 and 2020, more than 135,000 new housing permits were filed in Austin the fifth highest rate in the country according to the National Association of Home Builders.

    Because of its size, Austin has several neighborhoods that promise continued growth, which means more opportunities for real estate investors to build homes or scale their SFR portfolios.


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