To late for Austin TX?

Question

My family and I recently moved to Austin TX from Hollywood Fl.  We just closed on our home in Florida that is considered a high risk flood area. This proved to be true over the last couple of years. As we were affected by hurricanes and extreme king tides. It goes without saying that we are relieved to have gotten out with our heads above water!

It’s clear to us that real estate prices in Austin have been on the rise for some time. As tech and energy jobs have fueled the housing market. We remain optimistic that this trend has yet to peak. We would be potentially seeking opportunity to capitalize in long term rental properties.

I’m aware that opportunities exist in most any market. But at first glance Austin appears to be approaching it’s peak for investors. Is there still room to grow or are we “Late for the party”

Looking forward to your input.

Best David Gray

Kris Wong · Answer

Whether we are at a peak, and whether this market works for your financial (and other) goals are 2 independent issues. Many in Austin would say this market is not near any kind of peak. The economics and demand here remain strong. Even an economic recession at the macro level may only lead to a slow down/plateau in this market, vs. a dip in values/rents. This is consistent with the price history in Austin for several decades.

That being said, the Austin market is not a great fit for my financial goals, because investors here are betting on backend returns, and foregoing cashflow. This is great for investors looking to reduce their tax burden, and build long term wealth. That's not what I am looking for. So the question is, what are you looking for (what are your goals)?

Aaron Gordy · Answer

@David Gray I agree with Kris. There are cash flow deals out there but they aren't easy to find. There is an apartment building by the university of texas offered at close to a million and its not even cash flowing. I ran the numbers backwards and forwards looking for every angle but still it doesn't make sense. I find deals that do cash flow though. The interesting thing to me is the ever increasing property taxes going up much more than rents as a percentage. That makes it even more harder to cash flow.  The analysis must, imo consider a hard look at the property taxes, even though its deductible.

A really good website to look at data is texas a & m real estate center. I think its the best in the south. On the site one can do a real apples to apples comparison in terms of economic vitality.

Me, personally, I am buying in Austin as much as I can.

In Austin, we don't have the big boom and busts that Miami has had. We don't have the big speculative condo developments like Miami or that part of the Florida region. Its an interesting comparison.

Danny Webber · Answer

Step outside of the Austin 35 corridor and you can find some deals that will cash flow. In the Austin MLS there are not many deals with cash flow unless you buy it through a large down payment. I did a post recently about MF in the MLS that showed basically no cash flowing duplexes-tri-4plexes listed w/o a large down pmt.

Austin is overpriced for investors for sure + people are buying "ok" deals just to have somewhere to park there money.

Nirvana Mortell · Answer

Enjoyed following the thread..

My boyfriend and I are looking into moving to Dripping springs for more financial freedom as we are currently living in California. I am originally from Hawaii and as you can imagine, the two places we call home, are too expensive to start a first home as to why were looking at Texas for a few years to make a smart investment purchase for the future and hopes of moving back to Hawaii to be with family and start one of our own. Dripping springs caught our eye with the price point however we are open to any suggestions in the area! We will fly over a view homes asap. With that said, We really want a well versed agent that has insight into the pro's and con's of buying in this location right now and is likeminded when it comes to purchasing for appreciation. This is VERY Important to us  Thank you in advance for any insight on how to move forward in the right direction!Mahalo! :)

Scott Fehrenkamp · Answer

Great thread here, all!

Personally, just starting out, I am more interested in finding cash flow, so I am considering other markets. Even though I love this town and and was born here, so would love to invest more here.  Definitely going to keep my eyes open for opportunities still.

Tyrone Alcorn · Answer

@David Gray

Welcome to Austin David! I'm new to the area too but I live right outside of northern Austin.  I'm pretty new to the investing game but I can definitely tell this market is still on the rise.  Because I work in downtown Austin, I'm looking to invest in a duplex but majority of what you see doesn't fit the 1% rule however, areas south and north of Austin seem to be a hotbed of opportunity. Seems like south more most likely because its closer to San Antonio. Are you looking to buy and hold?

Ryan Kelly · Answer

@Judy C.Feel free to shoot me a DM. Happy to connect with you while you are here!

Judy C. · Answer

Thank you both for your input @Aaron Gordy and @Ryan Kelly! Getting the local perspective and speaking with more investor-focused agents is so important. Since I'll be there next week, I'll want to make the most of it.

Justin Windham · Answer

@David Gray

Welcome to Bigger Pockets, David!

You’ll find plenty of friendly, knowledgeable people willing to help respond to your questions. Many members are experts in their respective fields related to real estate investing, whether that is real estate brokerage, wholesaling, flipping, buy and hold, lending, self-directed IRA and Solo 401k investing, or tax and legal guidance.

There are some pretty cool discounts on various products and services offered as Perks to BP members that you might want to check out: https://www.biggerpockets.com/perks/pro

Ryan Kelly · Answer

@Judy C. , first of all, welcome to Austin! I agree with all the comments above about Austin as a great long-term market with steady growth, but more challenging to find immediate cash flow. As @Aaron Gordy stated, the Austin market has many different areas that I would consider for investment potential beyond the NW Austin corridor, especially because the entire nation is targeting that one location because of the Apple announcement. Feel free to DM anyone on this thread who is local to get more detailed information about market opportunities.

To late for Austin TX?

Most Popular Reply