Austin, Texas, $1 billion Apple campus, thoughts?

Question

Apple announced on Thursday that it is building a new $1 billion campus in Austin, Texas. This is big news for all the Austin investors! Interested in starting a discussion about it since Amazon was looking at Austin for HQ2 but passed. I've heard the traffic and roadways are already maxed out. How will an additional 15,000 employees effect the city?

Danny Webber · Answer

Caution- current rents do not support break even or cash flowing in any of these areas for the most part right now without buying your cash flow via larger down payments at closing. That goes for SFR and Multi.I've run the numbers on both fronts and there is very little if anything on the MLS that you can make work. You would need to bet on serious appreciation in rents while carrying a loss if you buy now. If anyone disagrees please reference specific properties on the MLS with a proforma showing purchase/monthly notes vs rents. I would be happy to be proven wrong. My opinion- it will take awhile for rents and property purchase prices to come in line for deals to make sense. All this new construction is great for housing prices but not as great for rental prices. IMO- they do not go up on and one to one basis and even if they did the N Austin is area is still very much underwater on rents vs purchase price/monthly notes. Also, please keep in mind that as prices rise taxes will rise too and this area has more HOA communities than not which decrease MCF as well. Same old same old= look for off market deals, rehab/refi/rent deals or negotiate the heck out of MLS deals.I am not a contrarian but the numbers are the numbers. Current housing affordability is not great in the area as is. Combine interest rate hikes, stock market losses (possible bear market on the way), possible recession on the horizon, and many other economic factors and you really get to a point that makes you want to pause to see what will happen next. Just about all of the leading indicators point to a slowing of the economy. (transports, housing, etc)A good investor can make money in any market! I am still buying deals that make sense but unfortunately i do not see many of those around right now. My humble opinion only. (excuse grammar- written quickly)

Steve R. · Answer

@Jenna Lee North Austin is really booming. Cedar Park, Leander and Round rock have pretty good schools as well. Domain is developing to be the 2nd downtown of Austin. The 133 acres apple campus is being built on An empty tract of land which is part of a huge ranch called Robinson ranch. The total size of the ranch is 7000 acres and the owners have been courting developers since the start of the year to develop a part of it. This is a prime piece of land in North Austin and expect lot more companies and mixed use development to happen here. With apple coming in, expect atleast 20 to 30% imcrease in property value once the campus starts operating in its capacity. If Robinson ranch is going to be built out, then the appreciation near that area would be crazy. Concentrate on areas within a 10 mile radius of this apple campus up north. Leander has a metro station which connects to Domain and very close to the apple campus as well. Try to look into properties in Leander near the rail station. They have new schools being built there as well. Very good area for future appreciation and rental yields.

Aaron Gordy · Answer

Apple and Oracle creating substantially more jobs is like adding steroids to an already heated market that has been appreciating at 8% annual. Its a good time to invest in Austin real estate. Those guys (Apple and Oracle) are doubling down for a reason. So what is an investor to do in light of such news? Double down. At least I am. There are still deals to be found on the mls as people are people. I find them. Sometimes people do not have the ability to fix up their house prior to selling it. People go through divorces. Foundations crack and people don't know how to deal with it. Tenants run amok and the landlord/owner doesn't know how to deal with it. Drugs, mayhem, rat infestation, raccoon tearing up chimneys...doom and gloom causes good deals. Things happen and that is where a good savvy investor comes in to save the day.

Curt Barbour · Answer

@Steve Rick ya the Robinson Ranch will be the next large Woodlands- type community before we know it. Its my friends family that owns it. That ranch is our outdoor paradise in the middle of the city. Will be sad to see it all developed one day. Headed out there for several days...gonna raise a toast on the Apple section. The ranch is riddled with a cave system like they've discovered in the Round Rock subdivision (which used to be part of the ranch) Curious how developers deal with that.. Anyhow, bittersweet.

Danny Webber · Answer

Good for retail market, not so good for investment market. Overall good for me because i have property in the area.Although, i am not looking forward to more traffic!

Harry Bermudez · Answer

Apple will be tight lipped about that information. Employees that work for Apple don't know.

Steve R. · Answer

yes. Thats precisely the area I'm referring to as well. Glenn high school is brand new and the biggest high school in Leander ISD. They are building a middle school right next to it which is slated to open by Fall 2020. New schools and good access to public transportation is going to help the property values in a big way. I am looking to buy something there sometime next year.

Jaron Walling · Answer

@Andrew Allen I agree with that. I think they stayed in the shadow of Amazon. They probably even looked at the commercial buildings in the same markets!

Andrew Allen · Answer

All I know is I'm happy I have a house less than a mile from there. re: the Amazon thing, I'm kinda wondering if Apple waited for Amazon to make a move before they decided

Rahul Prabhakaran · Answer

Which developer is Apple working with for their new campus in Austin?