Is Austin, Texas Still A Good Place To Invest?

Question

Hi! Do you guys think Austin, Texas is a good place to invest? Why or why not?

Joe Scaparra · Answer

Can we all agree a dollar made in Austin TX or Bryan TX or Dallas TX or San Francisco CA, or Nashville TN or any where spends the same wherever you choose to spend that dollar.

So, when asking is Austin still a good place to invest, maybe one should add: relative to what other location.  Also, your real estate goal matters too.  One looking for cash flow might find a better place than someone looking for appreciation.

Due to the last few years in Austin, I now refer Austin as Austin California.  I have often stated there are two ways to make money in Real Estate....The California method and the Texas method (I certainly understand there are many more ways to look at investing but I am OVER simplifying).  The California method is you buy High and you sell HIGHER.  Nine out of ten years it usually works in your favor, but that one down year could take a big bite out or your ASS.  The Texas method is you buy where you buy and you don't care because the CASH FLOW IS THERE.  Used to be that way all over TEXAS.  Not in Austin TX, now it is Austin CA where you make your money on Appreciation but you have to hope the market rewards you.

If you have deep pockets, I think Austin will eventually reward you, but if you are a newbie in real estate looking to cash flow positive day one or shortly thereafter, Austin is probably not your best bet in TEXAS.  An investor with shallow pockets could get burned in Austin at this time.........proceed with caution.  Cheers.

Sean Spindler · Answer

Hey @Breeya Johnson!

Working at an investment brokerage in Austin, I can confidently say it's a strong market for real estate investment. However, Austin proper has a high barrier to entry due to the sharp rise in property values in recent years. Successful investors often focus on properties with potential for flipping or long-term appreciation. While cash flow can be limited within the downtown area, there are still excellent opportunities for cash-flowing rentals in surrounding regions. Some of the hottest areas I've observed include Temple, Kyle, and East Austin. I hope this insight proves helpful!

Sean Spindler

Ryan Kelly · Answer

@Breeya Johnson the entire market currently is in a cooling cycle with price declines and inflated expenses like property taxes and insurance. Long term, the Austin market will do just fine with strong population and job growth. For near term investors, be prepared for sizable down payments to reach a cash flow neutral stance no matter how far out you look in the suburbs. Secondary markets like Temple, Belton, Killeen, and College Station offer better options for cash flow currently.

Ryan Kelly · Answer

@Breeya Johnson Austin has gone through numerous changes the past five years, both good and challenging. It remains the fastest growing metro in the US and also a top market for job growth. As a negative, it also has the largest gap between the cost to buy versus the cost to rent, making cash flow extremely difficult without committing more equity up front. I’m happy to share more data if interested.

Kevin Brewster · Answer

@Ryan Kelly why the large spread between rent and prices? too much rental inventory? Was looking over the weekend, and was suprised by the spread , but love the future of Austin

Breeya Johnson · Answer

Hey thank you for sharing your insight. I will send you a connection now.

Breeya Johnson · Answer

Hey Sean! Thank you for your insight. I feel the same. There are still great opportunities in the surrounding markets still. I'm sending you a connection now. I would love to stay in touch.

Lindsay Davis · Answer

@Breeya Johnson,

Austin is one of the rare cities in the Sunbelt that’s highly unaffordable. If you’re in it for cash flow, you’ll likely find it difficult to find a deal that will pencil out.

Besides, like @Jason Taken said, hundreds of thousands of new units have come online post-pandemic, so there’s a lot of new builds at the moment. Median rents in Austin declined about 8% last year, I believe, and sales prices fell about 3% as well.

If you’re willing to consider other markets in the Sunbelt, you’ll have more affordable locales to choose from. In my view, you could have better luck in areas in the southeast, like Birmingham, AL or Chattanooga, TN.

Breeya Johnson · Answer

Hey @Kevin Brewster!

I can take a shot at this. Having been in Austin for nearly five years, I've seen a significant increase in incentives for developers to build multifamily properties. Recent zoning changes now allow for three dwellings on a single parcel, and parking requirements have been lifted in denser areas, both of which have boosted the local housing supply. While migration to Austin city limits has cooled, the surrounding areas are experiencing remarkable growth and present strong investment opportunities.

In places like Williamson County and Hays County, fast-growing markets such as Cedar Park, Round Rock, Buda, and Kyle rank among the nation’s fastest-growing areas. Although finding cash-flowing properties within Austin city limits can be challenging, the outskirts, where growth is booming, offer excellent prospects for both equity and cash flow. I’d be interested to hear if Ryan would agree.

Breeya Johnson · Answer

@Ryan Kelly I completely agree—Austin offers a strong opportunity to build equity, especially in the current market climate. I encourage investors to buy now while prices have cooled. Although it may require a higher initial down payment to achieve immediate cash flow, the growth potential in Austin is unprecedented.

Is Austin, Texas Still A Good Place To Invest?

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