Investing in Austin Rental Properties

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Investing in Austin Rental Properties

Vu V.
Homeowner · San Francisco, CA · Member since 2020 · 13 posts · 6 votes

Hi everyone,

I'm new to BP and the real estate world and would love to get some insights on buying my first rental property.

A bit about me, I'm a full-time engineer living in Oxnard, California. I'm looking to build a cashflow portfolio and have done a decent amount of research (mostly podcasts and articles) on the type of property I should be looking at. From what I've read, duplexes and triplexes can be a good way to start.

In California, buying a duplex can be quite challenging (price point, etc.) so I've been looking out of state, specifically in Austin,TX due to the newly planned Tesla factory and Apple campus. Being an engineer, I can predict how this will impact the tech-based migration. 

I'm wondering if the BP community can give me some insights on how the news on these developments has impacted the general real estate scene in Austin, especially the surrounding areas of these projects? Also, I also would like to learn more about how other long-distance investors have been managing their properties in Austin? Lastly, I'm frugal by nature so I have no experience on how best to estimate rolling expenses of owning properties in Austin so if there are some insights on this, they would be greatly appreciated.

To give this a bit more meat, let's say I'm estimating a 4 bed/2 bath duplex in East Austin.

Looking forward to learning more about you and your experience :)

Thank you!

Vu

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Ryan KellyBusiness Member
Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
6y

@Vu Vuong Welcome to BP! Here in Austin, the market has been on fire for well over a decade and those news stories are just fuel to already high demand. Apple and Tesla are just two of the hundreds of tech companies expanding their presence here. Duplexes are in high demand, and most of them are at least 30+ years old, so expect to put in some elbow grease to build you me equity in these properties. A duplex in the city limits will at least start in the $300k range, with most of them being $400k or higher. You might find a few cheaper ones in the suburbs, but not as much inventory of duplexes in those areas.

[email protected]512-674-5478
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  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    @Vu Vuong Welcome to BP! Here in Austin, the market has been on fire for well over a decade and those news stories are just fuel to already high demand. Apple and Tesla are just two of the hundreds of tech companies expanding their presence here. Duplexes are in high demand, and most of them are at least 30+ years old, so expect to put in some elbow grease to build you me equity in these properties. A duplex in the city limits will at least start in the $300k range, with most of them being $400k or higher. You might find a few cheaper ones in the suburbs, but not as much inventory of duplexes in those areas.

    [email protected]512-674-5478
    Ryan Kelly Group - Keller Williams5112 Reviews
    WebsiteView Page
    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    6y

    100% agree with @Ryan Kelly. People didn't start looking at Austin just because Tesla did, it's been red hot for a while. I just bought a big fixer upper duplex in East Austin for $341,000. I'll put about $55k in and it'll have gross rents of $4000.

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
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  • Vu V.
    OP
    Homeowner · San Francisco, CA · Member since 2020 · 13 posts · 6 votes
    6y

    @Ryan Kelly Thank you for your response. I'm wondering if you can share with me your thoughts on neighborhoods like Muller, Windsor Park? Do people who are coming to Austin often expect newer, more upscale rentals? I've read that these are up and coming (under gentrification) neighborhoods in Austin with some potentially affordable, light work fixer-uppers. 

    0Reply
  • Vu V.
    OP
    Homeowner · San Francisco, CA · Member since 2020 · 13 posts · 6 votes
    6y

    @Jordan Moorhead That sounds like a wonderful deal you have there. Just wondering, is your estimated gross rent for a 4 bed/2 bath duplex?

    The number I've seen is much lower for 4 bed/2 bath, between 2000 and 3000. Maybe this is due to Rentometer's known issue of undervaluing potential rent?

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  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    @Vu Vuong Mueller is a master-planned community started in the early 2000’s to replace Austin’s old airport site. It has all newer construction and is quite expensive. It wouldn’t be considered up-and-coming at all but rather a very prime hub of residential and commercial activity in East Austin. Windsor Park is to the north of Mueller, built mostly in the 1960’s, and currently popular with flippers fixing up the older homes. Many will require significant remodeling including foundation issues and replacement of cast iron pipes, but can be worth the effort if the purchase is made well. It has seen significant appreciation over the last decade due to gentrification and proximity to Mueller.

    In short, there aren’t any undiscovered areas or secret neighborhoods anymore. The key is to buy where you want to be for the next decade based on your goals.

    [email protected]512-674-5478
    Ryan Kelly Group - Keller Williams5112 Reviews
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  • Rick Reeder
    Member since 2019 · 124 posts · 95 votes
    6y

    @Vu V. Windsor Park is a great spot. Gentrifying rapidly, you can get a deal to add value to with a remodel.  Big lots, mature trees, and good location.  Mueller has less opportunity as most of the construction there is fairly new. 

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  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    6y

    @Vu V. both units on this are 3/1 units and will be completely remodeled with stainless appliances, tile baths and backsplash and quartz countertops

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
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  • Johnny Le
    Investor · Slidell, LA · Member since 2020 · 1 post · 1 vote
    6y

    Hi, 

    I am also very interested in the Austin market and plan to move there. I also would like to learn more about how other long-distance investors have been managing their properties elsewhere. would it be best to hire a property management team ?

    1Reply
  • Rick Reeder
    Member since 2019 · 124 posts · 95 votes
    6y

    Hi @Johnny Le!  Come on, we'd love to have you! :)  Yes, if you're not local, you'll probably want a property management company.  The exception would be if you're buying high-end property that is fairly new (few maintenance issues and collecting rent is not an issue).  Let me know if you ever want to chat about options.

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