The Lone Star State houses some of the best real estate markets in the entire US. But what is the best place to buy investment property in the Texas real estate market? There are many contenders for this title. One of them is the focus of this blog: the Austin housing market. Why should investors buy rental property in the Austin housing market? Also, what are the best neighborhoods in Austin? Keep reading to have the answers to both questions!
Why You Should Invest in the Austin Housing Market
The Austin housing market is a top-tier location in the Texas real estate market for multiple reasons. The most noteworthy of these reasons include:
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Top-Notch Economy
Having a strong economy is a vital factor when considering where to invest in real estate. Luckily for an Austin real estate investor, the city performs remarkably in this regard. Austin has the #1 economy for metropolitan cities in the US, according to a report by POLICOM. The city has actually held this title for two years in a row and was previously in the top five during the past few years. Austin has other excellent economic metrics. Its unemployment rate is 2.7%, which is much lower than the state average of 4.0% and the national average of 3.9%. Austin has also experienced a job growth of 3.5% over the last year, which is, once again, much higher than the US average, sitting at 1.6%. Austin’s expected future job growth over the next decade is 47.0%, which trumps the 33.5% US average. These exceptional statistics make the Austin housing market desirable for both an Austin real estate investor and a potential tenant, for reasons we will now explain.
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Growing Population
A growing economy naturally leads to a growing population, and this is most certainly the case with the Austin housing market. Austin is currently the 11th most populated city in the US, and the 4th most populated in Texas. One of the fastest growing cities, Austin has had a population growth rate of 19.99% since 2010. Austin’s population is expected to double in just 40 years. The city’s growing population provides many potential tenants for Austin investment properties.
Related: The Austin Real Estate Market 2018-2019: Interview with Real Estate Agent David Bain
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Affordable Austin Investment Properties and High Appreciation Rates
As it stands, Austin rental properties are very affordable. In the best neighborhoods of the Austin real estate market, property prices are no more than $350,000, with the average Austin investment property being in the $200,000 to $250,000 range. However, with an ever-increasing population and limited supply, the Austin housing market is also experiencing high appreciation rates. In the last decade, the Austin housing market has appreciated a whopping 74.80%, one of the highest rates in the US during that time. The real estate appreciation rate since last year is 7.01%. Overall, Austin is in the top ten percent in appreciation in the US.
What does this mean for a real estate investor? It means that now is the perfect time to purchase an Austin real estate investment. By buying an affordable Austin rental property now, an investor can reap both high return on investment and high appreciation rates. In order to find the best Austin homes for sale, you’ll need to use an investment property calculator among other tools. Start searching for the best Austin rental properties right now with Mashvisor’s tools.
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Airbnb Austin
The success of Airbnb Austin is another reason why real estate investors should get into the Austin housing market. But before we dive into that, we need to focus on one question: Is Airbnb legal in Austin? Fortunately, the answer is yes. There are a number of Airbnb regulations necessary to operate an Airbnb Austin real estate investment. The most notable regulations include obtaining an operating license and taxes, which consist of a 9% Hotel Occupancy Tax and a 6% State Hotel Occupancy Tax. For more on Airbnb regulations in Austin, check out the Airbnb Austin help page.
Austin is the most successful Airbnb city in the state. In 2017, roughly 30 percent of Airbnb guests to the state visited Austin. This success is expected to continue into 2019. With events like SXSW, the Austin City Limits Music Festival, and many more, an Airbnb Austin rental property will remain a lucrative investment for years to come.
Related: The Best Places to Buy a Vacation Home in Texas
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The Time Is Now
All in all, it is clear that there is no better time than the present to invest in the Austin housing market. The city’s economy is booming. Its population growth is increasing rapidly. The average Austin investment property is affordable in the meantime and is expected to appreciate greatly in the upcoming years. Furthermore, Airbnb investing in Austin real estate is proving to be a profitable alternative to investing in traditional long-term rentals. Don’t wait, start investing in the Austin housing market today!
Best Neighborhoods in Austin: Traditional Rentals
Where exactly should you be investing in Austin real estate? If you’re interested in traditional investing, check out these neighborhoods:
University Hills
- Median Property Price: $264,123
- Price-to-Rent Ratio: 11
Traditional
- Rental Income: $1,989
- Cap Rate / Cash on Cash Return: 3.1%
Johnston Terrace
- Median Property Price: $285,778
- Price-to-Rent Ratio: 13
Traditional
- Rental Income: $1,789
- Cap Rate / Cash on Cash Return: 2.8%
Georgian Acres
- Median Property Price: $240,000
- Price-to-Rent Ratio: 14
Traditional
- Rental Income: $1,462
- Cap Rate / Cash on Cash Return: 2.1%
Best Neighborhoods in Austin: Airbnb Rentals
Looking to capitalize on Austin’s Airbnb success? Invest in the Austin housing market in these neighborhoods:
North Burnett
- Median Property Price: $353,100
- Price-to-Rent Ratio: 18
Airbnb
- Rental Income: $5,241
- Cap Rate / Cash on Cash Return: 10.6%
- Occupancy Rate: 55%
Mueller
- Median Property Price: $175,000
- Price-to-Rent Ratio: 16
Airbnb
- Rental Income: $2,739
- Cap Rate / Cash on Cash Return: 7.7%
- Occupancy Rate: 53%
University of Texas
- Median Property Price: $220,000
- Price-to-Rent Ratio: 12
Airbnb
- Rental Income: $3,016
- Cap Rate / Cash on Cash Return: 6.6%
- Occupancy Rate: 51%
To start your search for Austin homes for sale and to get access to our real estate investment tools, sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.
Related: Mashvisor’s Rental Property Calculator: A Guide For Beginner Real Estate Investors