Austin Rental property investment Cedar park vs Pioneer crossings

[Monty Panm]

I am planning to buy a rental property in north Austin in next 2-4 weeks. My budget is between 250K-325K. I will be buying a single-family house. After looking at different neighborhoods I have finalized three areas 1. Cedar Park 2. Pioneer crossings\hills area (near Samsung). and 3. RoundRock area. I am not able to decide between Pioneer Crossings and Cedar Park area. Of course, the number 1 preference is from the rent perspective but also looking for the Appreciation. Please advice which area is good for investing. 

[David Ivy]

@Monty Panm

At your budget, my order of preference would be Cedar Park, Pioneer Crossing (Samsung area), and then Round Rock. Very briefly, Cedar Park's maturing real estate market is simply running out of available land to develop. I was talking with Cedar Park's Assistant Director of Development Services a couple months ago about that. She said there's practically no way for the city to expand its territory. So, with high demand and a fixed/limited supply of real estate, I'd expect Cedar Park to do better than the Pioneer Crossing area in appreciation and rent growth when buying a resale home over the near and middle terms. There's plenty of new home development going on out in the Pioneer Crossing area that your investment would compete against for years to come. Leander to the north of Cedar Park is also packed with new builder activity. But Leander is not Cedar Park. If you're interested in new construction, you may consider getting in very early on in a newer community near Samsung to get some of the benefit from the regular price increases moving forward while they continue to build it out over the next year(s).

Of course, all that depends on how the rental numbers look for you in each area.  I never recommend buying something with negative cash flow with the hope that appreciation or future rent increases will make it a good investment down the road.