1031 Exchange - Austin Condo for Galveston Loft

[Laird Doran]

I currently own a condo in Austin with spectacular views in the hills near 360 and 2222.  I am really interested in doing a 1031 Exchange for this property and getting into a historic loft in downtown Galveston near the Strand.  While I am familiar with the Austin condo market, I'm just trying to learn what the market for lofts is like in the historic area of Galveston.  Any thoughts / insights / recommendations would be appreciated. I am leaning towards having the property be a furnished rental (30+ days lease term).  Thanks in advance for the responses.

[Timothy Church]

There is definitely a strong rental market down here in Galveston but it will depend on what you are meaning with a 30+ day lease. While the STRs here perform well and there is a good long-term rental market, the mid-term market isn't the best. Most of the people we have coming down for those 30-90 day stints are a few workers on larger projects, traveling nurses, and people who are looking to buy on the island but haven't found a house yet. While they are out there, they aren't the most consistent market. 

Since most downtown buildings do not allow for STRs (per their HOA), you are really only left with long-term rental or the occasional mid-term rental if you are set on having a downtown loft. There are a few buildings that allow them but they are typically ones with very few units in the building or those that are privately owned. I have a building downtown with 6 lofts and currently run 2 of them as STRs. Short of buying the building, it kind of makes you stuck with their rules!

While coastal real estate has its risks, the beach and the various attractions of Galveston are what make it a strong short-term rental market. It is all about what you are wanting and if things here are a good fit. I'd be happy to answer any particular questions you have about the Galveston market though. That way you can see if it is a good fit for what you are looking for.