Positive cash flow on single family homes in Austin TX possible?

[Naz Hossain]

As above, austin is a growing market and I want to buy a rental property. The houses though are highly priced. Does anyone have any insights on how to go about this?

[David Ivy]

@Naz Hossain

I wouldn't say that housing in Austin is highly priced as just a blanket statement. The median 3/2 SFR in the City of Austin sold for roughly $325,000 over the past 12 months. The median 3/2 SFR in the greater metro area went for around $232,000 over the same period. That's still very affordable compared to other US housing markets (see below)--hence why so many people and business are moving here. However, the affordability of Austin area housing for actual residents making median incomes is a different issue. In that sense, yes, it could make sense to say that Austin housing is highly priced (i.e., the median home is priced out of reach for median income earners).

Austin area real estate is also priced too high in general to achieve cash flow given our comparatively high property tax and current rent numbers. A median 3/2 SFR rents for $1,750/mo. in the City of Austin over the past 12 months, but as I said, that same median home would sell would sell around $325,000.

Cash flow is not much better in the immediate suburbs, though the cost of entry is lower. For example, median 3/2 SFRs in Round Rock or Cedar Park rent for around for around $1,595/mo and sell for $237,000 and $257,000 respectively.

I hope this is helpful!