Foodie may know Austin, Texas for its barbecue and Tex-Mex. But real estate investors know it as a hot market for small multifamily properties and short-term rental in the suburbs.
As an interested investor, real estate agent Brian Knott knows which neighborhoods and strategies work best for investors who want to enter the Austin scene. With the rise of buyers, experts are needed to find the right deals. Nath is the agent who can lead investors to real fat spoon equivalent real estate everyone and everyone knows those places are always the best.
Learn more about the details of the Austin market in Knott’s own words.
My real estate background
I have been an investor for many years and a fulltime agent for the last three years. Last year my team worked with about 250-300 clients, 50% or more of whom were investors only.
What makes the Austin market unique?
Austin is certainly a magnet market for growth in both business and population. This has been highlighted recently, but in a real sense, the market has been experiencing steady growth for decades.
The geographical location also creates some wonderful natural facilities. The Colorado River cuts through the middle of Austin, creating a lush waterfall and a great place to enjoy outdoor activities. To the west the hill country creates stunning mountain views covered with lush greenery. And of course, the annual festival and music scene follows quite well here.
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What kind of numbers can investors in Austin expect?
It varies according to location and type of asset. Cap rates for single-family and small multi-family properties are shrinking somewhat due to rising prices. Rent growth recedes, and this creates a disparity in a rapidly acclaimed market.
Rents are common for buying at a price ratio of 0.3% to 0.8%, while the cap rate ranges from 2% to 6%. It depends on the number of each investor and the corresponding asset class. For commercial properties, 3% to 5% is a reasonable expectation.
How competitive is the Austin market now?
Driven by low supply and high demand, Austin is now quite competitive. The market averages 17-18 days, but home buyers and investors usually feel the pressure surrounding the newly published list. These figures run around three to five days in the market, and often have multiple offers on the list price as well as waivers.
What do you like about your market?
Versatility. You can get a real city urban application, and in an hour, you can be a winery in the suburbs or hill country travel. From taco trucks to fine dining, everything is here.
Which area are you most excited about?
I am delighted to see more developed, local businesses and beautifully completed real estate developments in the eastern part of Austin. Another favorite pocket is the corridor between the Apple campus and the domain. This area is primary for growth with the basics of infrastructure and employers. I hope it will be a strong, top-performance area.
What kind of property do you think investors in the Austin area should consider?
Which matches your comfort level and strategy. This is one of my favorite aspects of real estate investing – there are so many ways to make money!
As far as precise niches, small multifamily properties that can be converted into condos and sold as separate units, create huge strategies to get out of there; Using this strategy your potential customer market shifts from investors to homebuyers. Similarly, putting a lot of emphasis on ADU (ancillary housing unit) development can be a big reversal to praise.
Which strategies have been most successful in your market?
Flips have proven to be very successful for me and investors who have the system, although the margins are tight right now. As home prices continue to rise, setting an ARV (after repair value) is like hitting a moving target, making it even harder to know what you can offer.
I like the buy and hold feature for long-term play. Cash flow numbers are solid in one and two years but usually look strong in subsequent years. One of my favorite functions of the BiggerPockets calculator is to guess numbers over the years.
Short-term rents have also strengthened over the past year, albeit higher in the suburbs. The city of Austin has short-term rental housing restrictions.
What do most Austin homeowners do for a living?
Austin has a diversified employment: technology companies (both large and start-up), major suppliers and distributors, medical, universities, manufacturing and more. The government also has a strong presence.
What kind of industry is going into the area? Which ones are coming out?
We don’t see too much area leaving. As coming, the technology sector is seeing the highest growth. Along with this, we have also seen an increase in production and distribution.
How connected are you with the professionals that investors will need after closing?
Quite well connected. Due to the number of investors our team works with, we have a number of professional connections with our contractors, sub-contractors, service providers, vendors, property managers, etc.