What are the best neighborhoods to invest in Austin, Texas area?

Question

I'm looking for buy and hold SFH’s in Austin, Texas area. What are the best neighborhoods to invest there?

Thanks and happy new year

Joe Scaparra · Answer

@Vivek Sapre  Austin has been annexed by CA, no longer in Texas.  As far as sad style living, can't be worse than what everyone is fleeing in CA, LOL.   Austin is like CA as you can't cash flow positive unless you put a lot of $$$$$$ down.    If you are hell bent on investing in Austin, don't expect a positive cash flow!!!  1% has come and GONE!!!

Best place to invest in Austin.........really?  The best place to invest is where you find the best numbers.  Forget specific locations, school districts or how the neighborhood looks.  Why?  Because ALL AREAS in Austin are improving in quality and tenants.  POPULATION and JOBS are INCREASING causing increase housing prices and rents!    What that means is that marginal tenants are moving out of Austin because they cannot afford the increases.    Why do schools not matter?  Because tenants could give a rats ass about them.   Neighborhoods don't matter because investors are coming in buying the cheapest run down pieces of sh** and tearing down and rebuilding new multi-family if possible.  That in of itself raises the value on the entire hood. The best type property for any investor that priorities cash flow will be looking at multi-family.  The millennium's due to college debt and society trends are delaying house buying, marriage, and child rearing!  So they need/afford small units......duplexes are the hottest commodity in Austin for a reason.  I have 10 units in the Austin MSA and NONE OF MY TENATS EVER ASK ABOUT SCHOOLS.  List a property for rent and watch the circus!  I just had two turnovers this month, one in Round Rock and one in East Austin.  I jumped rents from 1200 to 1500 and 1325 to 1500 and I am still under market.  50 inquires each in less than a week.

Now back to Austin real estate investing.  More and more investors especially those from Texas are reluctantly resigning to the fact that appreciation has to be more of a strategy than in the past.  CA investors are used to this and is no big deal.  Right now all boats are floating as the tide is coming in big time.  Lower quality homes will hold their value better when the down turn comes but I am not forecasting that in the near future.  SHFs selling north of $600k probably have the greatest risk if a downturn happens but I think we are at least 2 years away from that happening in Austin.

The latest trend is investor's buying duplexes and rehabbing them and converting them to condos; selling each side individually.  Forced Appreciation is a real viability strategy right now.  That is why duplexes are so strong right now.  The renter's market is ON FIRE as well.  Lots of Apartments being built, but the homes subdivisions are favoring mid to large homes, ignoring the starter homes sector.  Thus favoring those who own rentals!!!!!   Just one man's opinion, Cheers!

Aaron Gordy · Answer

The entire metro is strong presently. The latest Austin board of Realtors (May 2021) stats show that the metro has appreciated at 42.2%. But not all areas will cash flow. You will have to do alot of digging to find sfh that cash flow. It is possible but most certainly harder to find than multi's. It's easier for duplexes. It's much easier for fourplexes.

Neil Narayan · Answer

@John Collins you would be working directly with me :)

Shuang W. · Answer

@John Collins, me myself is one of the tech people, and I know multiple of them rent a house near Domain or the 78729 zip code, and others rent in apartments, too. There are several reasons to rent a house, such as being a young couple, or sharing rooms with co-workers, etc. As for Pflugerville, there are many new constructions around or under 300k. Vacancy for a less than 1500sqft house near Domain is lower comparing to Round rock, Cedar Park, etc with more sqft based on my experience. I don’t mean one is better than the other, but the renter target are different. One is a better location for younger family, the other one is for people who would love great schools.

Tuan Nguyen · Answer

Thank you! Do you have any zip code suggestions for fourplexes?

Vivek Sapre · Answer

Thank You @Joe Scaparra. How is Buda? Can we call that part of Austin looking at its growth.

Andreis Bergeron · Answer

North Austin (Round Rock and Cedar Park areas) are booming right now. Very popular areas.

Javier Rubio · Answer

How can I find out where the A, B, and C class neighborhoods are located in Austin, Texas? Thank you!

Vivek Sapre · Answer

@Victor Steffin

Thanks for the reply. Yes that is what I see the rents are not as much to the price of the homes yet things are going above asking everywhere in USA. Do you guys see this price drop or plateau in the coming year? They say Austin will grow 2%/yr in population with that we hope rents can go up. Other thing I see is most houses have HOA which is a big negative for me as I have seen HOA can ruin your numbers. But is that what people in Texas prefer to be in a HOA community? Are you a property manager too? What type of renters do you people see? Are they tech ppl or also other types? Do family people buy or rent?

Another sad thing observed. With somuch land in Texas still these houses have such a tiny backyard like dense living. Why? This is how they push new American style living. Sad.

Victor Steffen · Answer

Southwest Austin is desirable, generally speaking the west side of the city is more desirable than the east. It is closer to limestone at the foot of the hills. The east side is agrarian with deeper soil, foundation settling is common. Most of the schools with higher ranking fall on the west side as well. You could throw a dart at an Austin area map and hit major employers- so no, it is not far from the work.

You will pay a premium for duplexes in Austin right now and what you can charge per side is 100% dependent on the quality of the unit and location. Assume the gross rent you will be able to collect each month will be .65% of the price you pay for the property. This assumes a traditional conventional transaction (no remodels or off market etc).  example: you buy a duplex for 500k, gross income will be in the realm of $3250 or $1625/ side.

@Vivek Sapre

What are the best neighborhoods to invest in Austin, Texas area?

Most Popular Reply