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🤠 Austin TX

Market Overview

Austin Real Estate Market Overview:

Austin, the capital of Texas, has been experiencing a significant growth phase, positioning it as an attractive city for real estate investment. Known for its live music scene, burgeoning tech industry, and higher education institutions, Austin has a dynamic, fast-paced real estate market.

Market Statistics:

  1. Population Growth: Austin's population growth rate has consistently outpaced the national average. As of 2023, Austin is one of the fastest-growing cities in the U.S, fueled by its economic opportunities and quality of life.
  2. Median Home Prices: The median home price in Austin as of 2023 is around $475,000, showing robust growth year over year due to high demand and somewhat limited supply.
  3. Rental Yield: The median rent in Austin hovers around $1,900 per month, making rental property investment potentially lucrative. The demand for rentals is high, particularly in central city areas and near tech hubs and universities.
  4. Vacancy Rate: Austin’s vacancy rate is lower than the national average, pointing to strong rental demand and a fast-moving market.

Key Points for Investors:

  1. Economic Growth: Known as "Silicon Hills," Austin's tech sector is thriving. Major tech companies like Apple, Dell, and Google have significant operations in Austin. The city's economic growth translates to a strong rental market as new employees move to the city.
  2. Rental Demand: With a large student population from the University of Texas and a growing number of tech professionals, rental demand remains high, particularly for properties near the university and downtown.
  3. Neighborhood Analysis: Each of Austin's neighborhoods has unique characteristics and investment potential. Downtown Austin, East Austin, South Congress, and North Loop are particularly popular for different reasons, from nightlife and entertainment to quiet, family-friendly environments.
  4. Tech Boom: The continued expansion of tech companies can lead to job growth and increased demand for housing, pushing property values and rents up over time.
  5. Lifestyle and Culture: Austin's vibrant culture, music scene, and outdoor activities, combined with its reputation as a foodie paradise, make it an attractive place for both short-term and long-term renters.

Given these factors, Austin could be an appealing market for various real estate investment strategies:

  1. Buy and Hold: With Austin's significant population and job growth, buying and holding properties, especially rentals, could yield high returns over time.
  2. Fix and Flip: Austin's older neighborhoods may provide opportunities for investors to renovate and resell properties at a premium, although this market has become more competitive due to demand.
  3. Short-term Rentals: Given Austin's popularity as a tourism and business conference destination, short-term rentals can be lucrative, especially in central locations. However, investors should be aware of local regulations regarding short-term rentals.
  4. New Construction: With the city's rapid growth, there may be opportunities to invest in new construction, either for resale or to hold as a rental property.

As always, while Austin presents a promising opportunity, potential real estate investors should conduct thorough due diligence and consider seeking advice from local real estate experts. Market conditions can change, and it's essential to understand local trends and risks.

Asset Classes

LTR

Tough to cashflow, .7% rent to buy ratio is common.

Blue city in a red state, can take 3 months to evict

AirBnb/MTR

Illegal unless you live in the house

Purchase in an ETJ zone to avoid the regulations or transition to MTR

A lot are being sold off during Q1 2023

Mapping the City

Google Maps

It is a great place to invest in due to its rapid population growth, strong job market, pro-business environment, and cultural and recreational opportunities. Some of the major employers in Austin, TX include tech giants such as Tesla, Apple, Google, and Facebook, as well as healthcare providers like St. David's Healthcare and Seton Healthcare. The city also has a strong education sector, with the University of Texas at Austin being a major employer.

In terms of events, Austin is known for its vibrant music scene, with the annual South by Southwest (SXSW) festival being one of the most famous events in the city. Other notable events include the Austin City Limits Music Festival, the Texas Book Festival, and the Austin Film Festival. These events contribute to the city's cultural and recreational appeal, making it an attractive destination for tourists and residents alike.

Austin investment map, Sep 2021
Sep - 2021
Austin map with color-coded neighborhoods

Central Red - Core "downtown" Austin. Young professionals and students $$ (700k+)

Purple - Established rich people neighborhoods $$$ (2m+)

Yellow - Cheaper, up-and-coming suburbs. Families who want more backyard space $ (300k+)

Green - Gentrifying young hipsters. Eastside is already expensive. North has tech companies, the south has more young families. $$ (600k+)

Top Employers

As of my last training data in September 2021, the following companies were some of the top employers in Austin, Texas. Please note that these figures can change, and for the most up-to-date information, you should consult the most recent reports or filings from each company or the Austin Chamber of Commerce.

  1. Texas State Government: As the state capital, many state employees work in Austin. The Texas state government employed around 198,000 people as of 2021.
  2. University of Texas at Austin: As one of the largest universities in the U.S., the University of Texas at Austin employed around 24,000 faculty and staff as of 2021.
  3. Federal Government: Various federal departments have offices in Austin, employing a significant number of people. As of 2021, it was estimated that federal employment was around 13,000.
  4. Dell Technologies: Founded in the Austin area, Dell has a significant presence there. As of 2021, they had approximately 13,000 employees in the Austin area.
  5. Austin Independent School District: As of 2021, AISD was among the top employers, with around 12,000 employees.
  6. City of Austin: The city government employed approximately 14,000 people as of 2021.
  7. Seton Healthcare Family: This major healthcare provider in Central Texas had around 12,000 employees in 2021.
  8. IBM Corporation: IBM had a significant presence in Austin, with an estimated 10,000 employees as of 2021.
  9. Apple Inc.: In 2021, Apple had around 7,000 employees in Austin, and they were in the process of building a new campus, which was projected to add thousands more jobs.
  10. Amazon: With several fulfillment centers and corporate offices, Amazon had a workforce of around 7,000 in Austin as of 2021.
  11. Tesla: In July 2020, Tesla announced plans to build a new Gigafactory in Austin, where they intend to manufacture the Cybertruck and Model Y for the East Coast market, as well as the Tesla Semi. Tesla's CEO, Elon Musk, has also announced his move to Texas. The Austin factory is expected to create thousands of jobs and significantly contribute to the local economy. As the site is being developed, it's expected that Tesla's presence will continue to grow in the Austin area.
  12. Samsung: Samsung has had a presence in Austin since the mid-90s with a large semiconductor manufacturing facility. In 2021, Samsung was considering multiple sites, including Austin, for a $17 billion chip plant. This new plant would reportedly create around 1,800 jobs. However, as of my last update in September 2021, the final decision hadn't been officially announced.

Insider tips

  • Anything more than a 15-minute drive is considered too far for locals
  • Austin has always been considered expensive vs the cash flow. Buy-in recognizing you're coming for silicon valley 2.0
  • Follow the new train lines, cap metro. You should also look to see if you’re in a TOD zone
  • Neighborhoods to look into to chase Apple's growth (15k employees)
    • Anderson Mill
    • Brushy Creek
    • Avery Ranch
  • Neighborhoods to look into to chase Tesla's growth (10k employees)
    • Del Valle
    • Hornsby Blend
  • Map of Employers
  • Austin public school rank low on greatschools due to weak equity and improvement scores. Ranked by test scores, college readiness, progress, SAT
    • Westlake, 10/10/7, 1332
    • LASA, 10/10/6, 1405
    • Westwood, 9/10/6, 1241
    • Round Rock, 9/10/4, 1124
    • Bowie, 9/9/8, 1140
    • Mccallum, 9/9/8, 1133
    • Anderson, 8/10/6, 1130
    • Vista Ridge, 8/10/5
    • Leander, 7/10/5

Commercial Tea

  • Republic Square had no underground parking because of risk of running into spring.
  • 1700 S Lamar, stonelake capital has to change development plans because of MF rents
  • Capital View Corridors limit development by line of sight at 60 ft
  • East austin exemption from capital view corridors
  • Domain has huge utility easement which is why things are so far apart
  • Apt behind soco are wiggled in because of tree requirements

SARE Actives

Miscellaneous

Trouble - Taxes in Texas!!!!

Texas is a no income state, but they subsidize it by being one of the highest property tax markets. This is where people tell the county to assess as low as possible to pay as minimal as possible.

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