New Construction in Austin

[Laurie Wang]

Hi BP community. My partner and I are looking into new construction neighborhoods in Austin, TX for single family homes to buy and hold as rental properties. We're investing out of state and find new construction attractive due to the low maintenance required, home warranties, and the likelihood that we could manage the property ourselves (vs. paying a prop management company). It also seems that we may be able to get better deals from working with builders' lenders, but I haven't verified this yet. The main con of new construction seems to be that appreciation may be slower, especially in the first few years as other new properties come online next door.  

Does anyone have experience with this? What are the advantages and disadvantages? 

What developments and/or builders would you recommend? I'm primarily looking at new communities in Lakeway and the North Austin suburbs (e.g., Round Rock, Pflugerville, Cedar Park, Leander) due to the good schools and not-too-bad commutes to downtown.

Thanks!

[Billy Zhao]

Question: even for new constructions, the low maintenance period will only last 5-10 years. After 5-10 years, repair cost will start creeping in. Things like A/C, roof, water heaters are all built with builder grade equipement, which don't seem to last very long (15 year seems to be the limit for a lot of these). Also, there might be underline issues like foundation that cannot be discovered during the warranty period. I've seen quite a bit of foundation repairs in North East Austin in new neighborhoods. 

Why not houses that are 10-20 year old? Some of these houses are likely already had its first round of large ticket maintenance items done with new HVAC, roof, etc, and their foundations are stable after all these years. If they are adjacent to the new development, their price will likely be depressed and not yet appreciated much because the new home price pressure. Once the entire area is built out, the appreciation will start accelerating.