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Why Invest in Austin Residential Real Estate?

If generating passive income from rentals leased to well-paid tech workers, Austin residential real estate is a great choice for you! Tech jobs have lured young, well-educated workers in need of housing to Austin for over a decade. In 2018, a similar pattern of demand for housing will unfold. This healthy demand means investors will benefit by investing in Austin residential real estate.

The city is sometimes referred to as the Silicon Hills due to the number of tech companies with offices here. One of the standouts is Apple Inc., which houses its second-largest campus in the northern part of Austin. Here are a few other standout tech companies fueling the local economy and boosting renter demand:

  • 3M
  • Apple Inc. (second-largest HQ)
  • Hewlett-Packard
  • Google
  • Facebook
  • Cisco Systems
  • eBay/PayPal
  • National Instruments
  • Samsung Group
  • Oracle Corp

The tech sector isn’t the only job creator in the region. The state and federal governments, along with the University of Texas, also employ a significant portion of the local population. Last year, Austin was ranked the fifth-best place in the U.S. for job growth. It was also named the eighth-best place in the U.S. for business and careers by Forbes in 2017. According to the Austin Downtown Alliance, Austin is one of the fastest-growing cities in the U.S. Population in Austin’s urban core has doubled since 2000, and shows no signs of shrinking.

What Attracts Renters to Austin?

Austin’s mild climate, location, quality of life and ample entertainment options, attract residents. Three of the largest cities in Texas – Houston, San Antonio and Dallas – are no more than three hours away from Austin. Laredo, a major port of entry from Mexico, is four hours away. Renters also benefit from the metro’s convenient public transit system.
The Capital Metropolitan Transportation Authority provides bus service at more than 3,000 bus stops and 12 park-and-ride facilities throughout Central Texas. Capital Metro also operates a commuter rail line called MetroRail.

South by Southwest (SXSW), which started as a music festival in 1987 but has since blossomed into a film, interactive media, tech, music festival and conference, takes place each March. The one-of-a-kind event is Austin’s biggest attraction. In 2017, the event had an economic impact of nearly $350 million, according to Greyhill Advisors and SXSW.

Austin also has a legendary music scene with nearly 200 venues offering rock, blues, jazz, hip hop, punk or Latino shows nightly. And Austin is well-known for its swimming holes. The city’s parks department operates more than 50 public swimming pools in the region. The metro also features Deep Eddy Pool, the older man-made swimming pool in Texas. Barton Springs Pool, the nation’s largest natural swimming pool in an urban area, is also a huge draw.

Austin Investing by the Numbers

Austin rents for single-family rental (SFR) properties are expected to increase 2.1 percent by the end of 2018 to $1,705 per month. At the same time, vacancy will remain relatively unchanged to finish the year at 4.9 percent. Vacancy of 5 percent is considered low by national standards. Therefore, Austin’s high occupancy rate outperforms the nation

Prices for SFR housing remain low relative to other tech-centric markets such as San Francisco. In Austin, the median SFR price is just south of $290,000. Cap rates, or first-year returns, currently stand at 3.8 percent, making the region a stellar market for longer-term appreciation. Investment in A-level rental properties in Austin’s urban core has been strong over the past 10 years. That means investors might want to target B or C properties in suburban locations to find healthier yields and lower entry prices.

If you’re seeking passive monthly income in a burgeoning market, Austin offers plenty of real estate investment options for you. If you’re not sure which type of asset will work best for your investment needs, consult with one of our Solutions team members at solutionsteam@homeunion.com. They can help you select the right Austin residential real estate, in the right neighborhood.

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