Investing in Austin real estate has become increasingly attractive in recent years. As one of the fastest growing metros in the U.S., Austin offers great cash flow and appreciation potential for real estate investors. The booming job market, influx of companies like Tesla and Oracle, and the University of Texas at Austin continue to drive up housing demand. While prices have climbed quickly, Austin still remains relatively affordable compared to other major Texas cities. This article will provide an overview of the Austin housing market, strategies for investing in Austin real estate, neighborhoods to target, and things to watch out for.
Austin housing market sees strong demand and tight inventory
The Austin housing market has been red hot during the pandemic. Home prices rose around 30% in 2021 alone as tech workers flocked to Austin. Bidding wars have become common and homes are selling rapidly above asking price. At the same time, market conditions are beginning to shift. Price growth is slowing down and inventory is gradually increasing. But overall demand still far outpaces supply in Austin. For real estate investors, Austin offers a strong local economy, influx of new residents, and major corporations opening offices. The city will likely continue to see above average population and job growth compared to other U.S. metros.
Target newer neighborhoods and suburbs for cash flow
For cash flow focused investors, newer neighborhoods and suburbs around Austin offer some of the best opportunities. These areas tend to have an abundance of newer single family homes for rent that garner high tenant demand. Neighborhoods like Leander, Cedar Park, and Round Rock in the north and Kyle, Buda, and Dripping Springs in the south are ideal for buying turnkey rental properties or small multifamily buildings. Monthly rents and home values in these areas remain lower than central Austin but are growing quickly. Focus on finding homes below $350,000 that can rent for at least $2000 per month to maximize your cash on cash returns.
Buy and hold properties in gentrifying East Austin
Investors focused on long term appreciation should consider buying and holding properties in quickly gentrifying neighborhoods of East Austin. Areas east of I-35, including East Cesar Chavez, Holly, and Montopolis, are undergoing major redevelopment and demographic shifts. New luxury apartments, trendy restaurants, and increased investment are driving up values. While these neighborhoods remain relatively affordable today, they offer strong price growth potential in the coming years. Focus on finding fixer upper properties with renovation potential below market value.
Target university housing near UT Austin campus
Another prime area for investing in Austin real estate is within university housing neighborhoods near the UT Austin campus. Areas like West Campus, North Campus, Hyde Park, and East Riverside offer excellent opportunities for building student rental portfolio. There is huge demand for furnished rooms and shared housing catering to UT Austin students. Look for small, older multi-family properties with 4-8 units within walking distance of campus. Market rents typically range from $800 – $1200 per bedroom.
In summary, Austin offers a range of rewarding opportunities for real estate investors seeking cash flow or long term appreciation. Newer suburbs provide turnkey rental properties while East Austin and university neighborhoods offer upside through renovation and redevelopment. Conduct thorough due diligence and target the right neighborhoods for your investing strategy in the Austin market.