Investing in Austin real estate can be tricky. With inventory in the city of Austin remaining under 2 months (6.5 months considered an equilibrium buyer/seller market), many investors are hesitant to get into the market or become quickly frustrated with the competition, finding the “right” deal, and therefore quickly give up. However, it IS still possible to find quality real estate investments in Austin’s competitive sellers market.
That’s where we come in… check out these “case studies” for 3 bedroom, 2 bath, single family homes located in SEED’s top 5 neighborhoods we recommended to investors right now.
1. Taylor (east of Austin, zip code 78674)
Why: Taylor is that picturesque quaint Texas town with award-winning barbecue, antique shops and a growing number of hipster coffee shops and breweries. Samsung just announced they are building a $17 Billion (yes, BILLION) semi-conductor here and it’s located a mere 45 minutes from downtown Austin, 25 minutes from bustling Round Rock. While the investors have certainly swooped in since the Samsung announcement, there are still opportunities to be had. In our experience at SEED, homes go for 10% over list price in Taylor (unlike central Austin and the closer suburbs where we commonly see 20-30% over list price). For the moment, property taxes remain low in Taylor and (we think) the growth potential is exponential. Buy in now, rent and hold for the long haul. Surrounded by endless farmland, we project the housing starts in Taylor to boom over the next 3 years and where better to own an investment property than at the center of it all, the walkable, downtown historic area.
Purchase Price: $338,000
Down Payment: $84,500(25%)
Projected Monthly payment PITI: $1900
Projected Monthly Rent: $1900
Projected 5 year valuation: $443,000
Projected 10 year valuation: $641,000
2. Austin Colony (east Austin zip code 78725)
Why: Located due east of the Tesla Gigafactory, the Austin Colony has long been undervalued. With homes less than 5 years old, and therefore low maintenance expense along with the growing Del Valle infrastructure and economy along with excellent proximity to downtown Austin, major highways, and the Austin Bergstrom International Airport, we believe this area of Austin is the next Round Rock. Watch for record breaking new home starts in the next 3 years. Homes typically under contract with far less hype than other Austin suburbs like Cedar Park and Pflugerville and typically for 5-10% over asking.
Purchase Price: $448,000
Down Payment: $112,000
Projected Monthly payment PITI: $2300
Projected Monthly Rent: $2400
Projected 5 year valuation: $587,000
Projected 10 year valuation: $823,000
3. Northcape (northeast Austin zip code 78753)
Why: Northcape is blessed with a proximity to downtown and northern tech companies like Dell, Apple, and the Domain. As far as making your investment goes, the homes can be a little run down- so plan for light make ready costs and updates. However, prices are so low, there is no where to go but up! One major thing to note is that this neighborhood is prone to foundation movement so be prepared to have that checked out before purchasing.
Purchase Price: $360,000
Down Payment: $90,000
Make Ready Costs: $3000-$5000
Projected Monthly payment PITI: $1900
Projected Monthly Rent: $1950
Projected 5 year valuation: $471,000
Projected 10 year valuation: $661,000
4. Milwood, northeast Austin, zip code 78727
Why: The Milwood neighborhood is comprised of homes built mostly in 80s and zoned for excellent schools in both Round Rock ISD and Austin ISD (the boundary runs down the middle). Winding tree-lined streets, municipal parks, convenient shopping, and close proximity to umpteen tech employers including Indeed, Amazon, National Instruments, Apple I and the new Apple II keep this neighborhood top of mind for both families and investors. While some say this neighborhood may be overheated, we still think it has a long way to go. Expect to pay at least 20% over asking price to land a property in Milwood.
Purchase Price: $498,000
Down Payment: $59,800
Projected Monthly payment PITI: $2750
Projected Monthly Rent: $3000
Projected 5 year valuation: $652,000
Projected 10 year valuation: $915,000
5. East Austin, zip code 78721
Why: If you know anything about Austin, you know the East side is well loved and growing like crazy. Its proximity to downtown Austin and hip East Side restaurants and bars make it one of the most popular areas in the city- which has led to rapid appreciation and gentrifying neighborhoods. This area has plenty of new construction and move-in ready renovated homes, making it easy for investors to fill the property quickly. We also like that there are sometimes pre-MLS opportunities with infill builders. (contact us for the scoop) Excellent bike lanes to and from the University of Texas and downtown makes it especially appealing to younger tenants who prefer bicycle and public transportation.
Purchase Price: $575,000
Down Payment: $143,750
Projected Monthly payment PITI: $2950
Projected Monthly Rent: $3250
Projected 5 year valuation: $766,000
Projected 10 year valuation: $1,075,000
When to sell? In the words of the great Warren Buffet, “My favorite holding period is FOREVER.” Who can really argue with Warren?
Want to learn more about opportunities to invest in Austin’s real estate market? Contact a SEED agent today and we will show you how
The above projections are based on 7% annual appreciation (the current average in Austin area and has been around that for past 30 years).