Investing in South/South East Austin (zip code 78747)

[Ridham Shah]

I am considering one of the new homes in the Vistas at Austin as an investment property. There are 500+ new homes planned in the area, as well as apartments and commercial development at goodnight ranch across the road. This could lead to an oversupply of rental homes keeping the rents down, but I am told there is tremendous demand. Furthermore, the proximity to downtown (~15 min) and proposed Tesla gigafactory (~20 min) seem enticing. 

Looking to buy a new SFH ~1800sqft for ~$300K. Worth it?

[Joe Scaparra]

@Ridham Shah Hold Up!  If you had said I am buying there because my wife likes it and we are going to live there, that is one thing and it then becomes an emotional decision.     BUT, I think I saw you said you are buying there as an INVESTMENT DECISION!  If I got that right, you are not using investment logic or analysis in doing so.  Hello..........wake up!!!!

In the current Austin market, buying anywhere all property values are expecting to increase.  The question is what is the BEST type property for investment.  If you grab a panel of SEASONED investors and asked them if a projected NEW SUBDIVISION of SFHs is the best investment decision to make in this current environment, I think all or most would say definitely NOT!  

Until the subdivision is built out you will always find yourself in competition with the builders.  Builders who can offer a lot more to clients than you.  Cash flow a new property will spell NEGATIVE CASH FLOW. Usually with new builds come higher tax rates.  What rents do you anticipate?  $1600?  2000?   Hell a modest duplex in Austin should fetch you $2400.  It is always easier to find two $1200 renters than one $2000 renters especially if the market goes soft.  I am not a fan of NEW SFHs as an investment for most investors.  But hey, each to their own.  Cheers!