North Austin Rental [SFH, 3-4 bdrm, new, appreciation]
CA · Member since 2019 · 5 posts · 2 votes
North Austin Rental [SFH, 3-4 bdrm, new, appreciation]
Most Popular Reply
Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes
5y@Andrew Der, so many unknowns about you. Bigger Pockets has a great tool, please utilize it: It is called a Profile. Fill it out, especially if you are going to ask questions. It will GREATLY help us in answering some of your questions.
Like, Where are you from and living now? That MIGHT help me understand your desire for a new home and your desire for a property manager. You might mention WHY you want to invest in real estate and what are your short/medium/long term goals you want to accomplish. That would help; us understand your motivation, urgency, and direction. Now off my soap box.
Investment real estate is different from personal real estate, unless you are just getting started and plan on house hacking to begin your journey. With that said, we are beginning to see investment objectives change within the city limits of Austin and moving out. It is as you suggested moving from a cash flow objective to more of an appreciation objective since the price of real estate is making it very difficult to cash flow positive. I do think an appreciation model can work but for me I still focus on cash flow and that is causing me to look outside of Austin.
Even if your focus is on appreciation, I don't think buy in new is the best option. If your not local and you think new is easier to manage because of lower maintenance, you might be dissapointed. Most of your headaches will be caused by your tenants and their upkeep of the property. Buying new to avoid maintenance issues is a steep price to pay especially when a bad tenant can ruin the new carpet in a matter of 6 months and cook with excessive grease and cause your new appliances to look very used in no time. Lastly, the AC filters or lack there of can make your AC system wear out faster than you would think. Yeah these are issues regardless of a new or old property and that gets us to who is managing the property. Buying new and having to hire your own property manager and trying to break even is a tall task. If your experience and tough minded it can be done but I don't know or assess that you are as I don't have any info on you (profile).
You seem to be concerned about the ability of acquiring suitable renters for the property you plan on acquiring. In a lot of areas of the country I can understand that concern but in the Austin MSA I don't see that as a problem. However, my experience is in small duplex units and I can find a suitable renter inside a week. Larger homes I am not as familiar with but I am guessing it might be a little tougher but probably not something that wouldn't be very manageable in Austin. The Rental Market in Austin is STRONG. On the flip side, I would hate to be a renter in Austin because rents keep going UP!! Demand is strong and supply is very limited.
Anyone who has experience working long term with a property manager understands that the stated 8-10% management fee is not what you end up paying........it is far more. With a property manager your vacancy rate will likely be higher than if you did it yourself (unless you are out of town, I wouldn't know as it is not indicated in your profile). I don't know if your new to investment real estate or if you're new to buying investment real estate in NORTH AUSTIN. Your opening line is confusing without seeing your profile.
Now to satisfy my curiosity, why are you stuck on buying a "single family home, 3-4 bedrooms, 2-4 bathrooms, new house". From my perspective, If your objective is to MAKE MONEY, that would be one of the worst type properties I would focus on. Large home, requires more RENT $$$$, MORE Maintenance, Increase opportunity for a tenant to tear your place up, requiring a longer make ready time to get it back on the market and you would be limiting your pool of renters to mid-large families.
Ask yourself, are families larger today than say 20 years ago? Is Austin a relative older population or younger population relative to other mainstream communities? Are the tech jobs (new age jobs) more suitable for a young professional or older established family type person? Is my desire for a 3-4 Bedroom and 2-4 Bathrooms that is going to require more rent be more or less desirable to the single or VERY young family with only 1 or 2 small kids or no kids. Are young people today hell bent on getting married and starting a family as those compared to 20 years ago. Put some deep thought into these questions and you might change your focus on to what type of real estate MAKES THE BEST INVESTMENT.
If nothing else, I hope I got you thinking about where I am going and am I taking the best path to get there. Cheers.
10 Replies
- Rental Property Investor · Orange County, CA · Member since 2019 · 12 posts · 5 votes5y
I’m not sure what you mean by north Austin, like round rock area? If so, the rental market is heavily saturated and you’ll not get close to cash flow neutral with a new house.
this is something I read today:“I am not sure if there are "investor gurus" or investor podcasts out there telling every investor on the planet where to buy, but the three hottest markets inside Austin are Pflugerville, Round Rock, and Cedar Park. Everyone tells me this is where they want to buy. But should they?
Let's take a look at some dialed in and detailed numbers that really explain what these three markets look like.
Let's start in Pflugerville. As of this morning, there are a total of 13 homes for sale in all of Pflugerville. All price ranges and size Single Family Homes. Total of 13. 9 of those listings are new construction listings put on the MLS by builders and those builders won't sell to investors right now because they simply don't have to. So, there are really a total of 4 homes for sale in all of Pflugerville.
So EXTREAMLY low inventory to say the least. Now, let's look at home many homes there are for lease in Pflugerville as of today. Only SFR leases, not including condos. There are currently a total of 83 available lease homes in Pflugerville. 83!!! So what is that telling us???
Now let's look in to Round Rock, Texas. Round Rock has a total of 20 homes for sale right now, and only 12 of those are actually available to investors and not new construction listings put out by builders. Now take a guess at home many homes are currently for lease in Round Rock? 102. Yep, one hundred and two available rentals in Round Rock, Texas as of this morning.
Lastly, let's look at Cedar Park. Cedar Park has 4 total homes for sale right now and 33 homes for lease.
Let's try to put things in perspective and see what the numbers look like in Austin. Austin is a little more well balanced. Austin has 465 total homes for sale currently, and 504 rentals.”
- Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes5y
@Andrew Der, so many unknowns about you. Bigger Pockets has a great tool, please utilize it: It is called a Profile. Fill it out, especially if you are going to ask questions. It will GREATLY help us in answering some of your questions.
Like, Where are you from and living now? That MIGHT help me understand your desire for a new home and your desire for a property manager. You might mention WHY you want to invest in real estate and what are your short/medium/long term goals you want to accomplish. That would help; us understand your motivation, urgency, and direction. Now off my soap box.
Investment real estate is different from personal real estate, unless you are just getting started and plan on house hacking to begin your journey. With that said, we are beginning to see investment objectives change within the city limits of Austin and moving out. It is as you suggested moving from a cash flow objective to more of an appreciation objective since the price of real estate is making it very difficult to cash flow positive. I do think an appreciation model can work but for me I still focus on cash flow and that is causing me to look outside of Austin.
Even if your focus is on appreciation, I don't think buy in new is the best option. If your not local and you think new is easier to manage because of lower maintenance, you might be dissapointed. Most of your headaches will be caused by your tenants and their upkeep of the property. Buying new to avoid maintenance issues is a steep price to pay especially when a bad tenant can ruin the new carpet in a matter of 6 months and cook with excessive grease and cause your new appliances to look very used in no time. Lastly, the AC filters or lack there of can make your AC system wear out faster than you would think. Yeah these are issues regardless of a new or old property and that gets us to who is managing the property. Buying new and having to hire your own property manager and trying to break even is a tall task. If your experience and tough minded it can be done but I don't know or assess that you are as I don't have any info on you (profile).
You seem to be concerned about the ability of acquiring suitable renters for the property you plan on acquiring. In a lot of areas of the country I can understand that concern but in the Austin MSA I don't see that as a problem. However, my experience is in small duplex units and I can find a suitable renter inside a week. Larger homes I am not as familiar with but I am guessing it might be a little tougher but probably not something that wouldn't be very manageable in Austin. The Rental Market in Austin is STRONG. On the flip side, I would hate to be a renter in Austin because rents keep going UP!! Demand is strong and supply is very limited.
Anyone who has experience working long term with a property manager understands that the stated 8-10% management fee is not what you end up paying........it is far more. With a property manager your vacancy rate will likely be higher than if you did it yourself (unless you are out of town, I wouldn't know as it is not indicated in your profile). I don't know if your new to investment real estate or if you're new to buying investment real estate in NORTH AUSTIN. Your opening line is confusing without seeing your profile.
Now to satisfy my curiosity, why are you stuck on buying a "single family home, 3-4 bedrooms, 2-4 bathrooms, new house". From my perspective, If your objective is to MAKE MONEY, that would be one of the worst type properties I would focus on. Large home, requires more RENT $$$$, MORE Maintenance, Increase opportunity for a tenant to tear your place up, requiring a longer make ready time to get it back on the market and you would be limiting your pool of renters to mid-large families.
Ask yourself, are families larger today than say 20 years ago? Is Austin a relative older population or younger population relative to other mainstream communities? Are the tech jobs (new age jobs) more suitable for a young professional or older established family type person? Is my desire for a 3-4 Bedroom and 2-4 Bathrooms that is going to require more rent be more or less desirable to the single or VERY young family with only 1 or 2 small kids or no kids. Are young people today hell bent on getting married and starting a family as those compared to 20 years ago. Put some deep thought into these questions and you might change your focus on to what type of real estate MAKES THE BEST INVESTMENT.
If nothing else, I hope I got you thinking about where I am going and am I taking the best path to get there. Cheers.
- Redmond, WA · Member since 2017 · 134 posts · 65 votes5y
Andrew, mate - a big warm welcome to this forum and a merry Christmas to you!
I presume you meant Leander. Liberty hill , etc. Any reason Why you would only prefer N Austin? Steve wang hits some good points. Cash flow neutral is also hard on new constructions... but, keep looking! It’s not impossible. Just don’t buy a home knowing fully well you’ll be CF negative.
Also consider expanding your search to other neighbourhoodS like hutto, etc. The South too - Kyle, Buda, etc.
- Realtor · Austin, TX · Member since 2020 · 5 posts · 3 votes5y
@Andrew Der Welcome to the area :)
My name is Karin, I'm a realtor and invest myself in North Austin (mainly in RR).
I love north Austin -low vacancy, high appreciation and moderate to breakeven cash flow here are your best options:
- Round Rock
- Cedar Park
- Brushy Creek
- Anderson Mill
- Jollyville
All of these options have above average school districts and great proximity to both the city and functional parts of life (shopping, restaurants, schools).
I less prefer the below area, although you see lots of growth there
- Pflugerville
- Hutto
- Manor
- Leander
I understand why you want a single-family home, it's super rare to find multi family here, you might find in Austin city limit.
Also, regarding new house, most of the builders does not sell to investors. The market is very HOT and not a lot of inventory
Good luck,
K
- 5yRyan KellyBusiness MemberReal Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
@Steve Wang I agree with your assessments, to a point. This 2020 winter buying season is unlike any other I have experienced and the extreme demand is creating critically low inventory. At the same time, the rental season is on a more normal timeframe and the winter is the worst season to look for new tenants, so vacancies can be longer and lease inventories are normally up. I do believe next year will reflect a more normal bell curve buying cycle and the rental demand will go up as well.
For what it's worth, my rentals are all well within the city limits :)
Ryan Kelly Group - Keller Williams5110 Reviews - Real Estate Agent · Minneapolis · Member since 2019 · 338 posts · 219 votes5y
Could you expand on what you mean by "companies moving to North Austin"? I would love to hear more and love your investment hypothesis!
- Member since 2017 · 93 posts · 44 votes5y
@Tom Wagner
Lot of Software companies are concentrated in couple of areas:1. Near downtown
2. Near Domain (North Austin).
Around 5 mile radius of Domain you have the new & old apple campus, Tech Ridge (GM, Dell, Samsung, Blue Apron & several other companies in Parmer Village) and other software/ hardware companies (Visa, Paypal, Ebay, Oracle, Qualcomm, National Instruments, polycom etc..).
Domain by itself has several tech companies namely Facebook, Amazon, Homeaway/ Vrbo, IBM to name a few. You can google up these areas and figure out the companies in these area.
Also Robinson ranch is located up north and it is prime for development in the coming years. North Austin is positioned to establish itself as a huge tech park.Happy investing.
- Rental Property Investor · Orange County, CA · Member since 2019 · 12 posts · 5 votes5y
@Karin Howard
Why do you less those four areas? They all seem like great areas to invest in. Thanks
- Rental Property Investor · Orange County, CA · Member since 2019 · 12 posts · 5 votes5y
@Ryan Kelly
Good points. Let’s connect some times
- Redmond, WA · Member since 2017 · 134 posts · 65 votes5y
Originally posted by @Steve Wang:
@Karin Howard
Why do you less those four areas? They all seem like great areas to invest in. Thanks
+1
Hi Karin, I own rentals in Leander and they are appreciating well, and getting good cash flow too!
Join the conversationCreate a free account to reply, vote on answers and follow this thread.