San Marcos Investment Areas

[David Ferrette]

I own 2 properties in the Round Rock area but I have recently moved to South Austin and was looking into getting in the San Marcos market.  Any recommendations on areas to avoid/areas to focus on would be greatly appreciated.   

[Leland Barrow]

What is often not discussed is that Texas State is attempting to close the gap with other area schools. They want to be right on the heels of UT Austin, Texas A&M, and Baylor. They have a master plan to increase enrollment to 75,000 and just instituted their 1st tuition price increase. They are actively recruiting better professors and are wanting to elevate the business school. There is already friction between the old guard residents in San Marcos and the school. There are investors that are salivating about buying up land near downtown and turning into a miniature downtown Austin. The ease at which students can get student loans means that there is $10,000- 20,000 available to every student every semester. In a city like San Marcos that is a tremendous influx of cash that keeps the school growing, overflows to the community, and increases staff salaries. UT Austin doesn't have a river or the atmosphere that can draw students like it does at Texas State. They have revamped their football program and are leveraging their differentiation. When an MBA at UT costs 75k and 15k at Texas State it is a bit of a no-brainer. 

West San Marcos is hot with or without flooding. Drive from Wimberly to San Marcos and you will get an idea of why the area is so desirable. Three of the neighbors on my street work for energy company's out of Houston. If San Marcos is drawing from Houston then there must be something special. The area has been traditionally poor but gentrification is changing the landscape. The poor are being pushed out due to high rents and developers are looking at capitalizing on the transient student population. It is a pretty nice deal when students will rent for twelve months and only occupy for nine. 

The downside is that the flipping and buy and hold inventories are low. We just moved here in December and had to listen to my friends that are paranoid about floods. All of the flood zones are being remapped and the city has flood control as their highest priority. San Antonio used to flood also....now the riverwalk is one of the hottest areas around. Conversations are coming up again about an International regional airport that will serve SA and Austin. It is only apparent that growth is being forced between SA and Austin. You have big names that are starting to come into the area including Amazon, Walmart distribution, Sysco etc. Farmers are already starting to feel the pinch as what they can get per acre to develop skyrockets. There is no other place in Texas where you are within two of the fastest growing cities in the U.S. 

In recent years suburbs like Cedar Park, Kyle, Pflugerville, Leander, Georgetown, and Buda are becoming filled out. East of 35 is still available in most areas but no one really wants to live east of 35 no matter what city you are in. I believe that Cedar Park is almost entirely landlocked and their growth will be kept in check. Kyle has become a sea of houses and that has made it less desirable. New Braunfels is hot and will continue to be. It has a lot of what is great about the area and little of the downside. Kyle to New Braunfels will look completely different in twenty years. 

Then you have Gruene and Wimberly that if they can keep their character and charm they will become some of the hottest real estate around. Canyon Lake is almost completely off the radar but that area has a ton of potential. These cities have the distinct advantage at looking at how poorly growth was handled around Austin and being able to make decent master plans. Developers are getting shot down left and right because they dont understand these cities. They think that these tiny towns that are booming will get week kneed at their cash and fold. If you want to get a foot in the door you need to know who the power players are and who pulls the strings for the community. In San Marcos there are a couple of families that even Texas State struggles with.