Rent Amounts Down in Austin Tx

[Sabrina Flores]

Single Family rent in Austin is currently Flat YOY (down 0.05%) How are you keeping your investments afloat in this market? What tips and advise would you give/ wish you knew as a newbie??  

[Greg Scott]

It always helps to understand supply and demand.

A few years ago people in this forum were saying Austin was on a rocket ship to the moon because of all the tech jobs moving in.  For a while that was true.  (And, it may be true again in a few years.)  Right now, it isn't true.

People were only looking at tech jobs; the demand side of the equation.  Looking at just the demand side is only half the picture. Currently, Austin has a huge amount of apartment construction coming on line, and this is putting the pressure on rents. (see graphic) I don't expect the next two years you will see much rent growth in Austin.

In the many cities in which we've invested, we have seen this supply / demand interaction play out in cycles. Early on, sometimes we won and sometimes we lost.  We've learned to seek out markets with steady or growing demand and a housing supply that is not quite keeping up.  Generally, that puts you on the winning side.

It's part of the reason I don't buy the normal BP mantra about "Appreciation Markets" vs "Cashflow Markets".  Having cashflow does not mean you cannot get strong appreciation.  If you follow supply /demand closely, you can experience both!