Is now a good time to invest in Austin, Texas? The phone is ringing, if not exactly off the hook, then a little more than usual these days, with investors calling from all over the country asking about investment properties in Austin.
A lot of them call with unrealistic expectations. “I am looking for a property in Central Austin that will cashflow 20% and appreciate at 10% each year. If they have unrealistic expectations, we try to educate them on the ins and outs of Austin’s Central neighborhoods and let them know that for the most part you can get cashflow or appreciation in Austin, but generally you can’t have your cake and eat it too unless you want to put a lot of money down.
That’s not to say that Austin isn’t a great place to invest because it is. We have seen our net worth grow substantially over the last decade and most of that has to do with our real estate investing.
The best news with regard to investing in Austin, Texas is low interest rates, coupled with a ton of inventory and rising rents - make it one of the best times in recent history to invest in Austin. Perhaps the biggest contributor to this is rising rents. According to the Austin Business Journal, rental rates are expected to rise about 4.2% this quarter and 5% the next. This is mostly due to several factors - people moving to Austin in droves for jobs, low inventory of rental homes and difficulty first-time homebuyers are having obtaining financing. If you can’t buy, you have to live somewhere right? I have witnessed this with my own rental properties watching them rent in hours to well qualified candidates who are willing to pay anything so that they can live somewhere, anywhere.
Although we are not at the levels of Las Vegas (first in the nation in foreclosures), Florida or Arizona, there are still many foreclosure and short sale deals to be had. According to RealtyTrac, the foreclosure rate rose 7.5 percent in the first quarter of 2011. This means one in every 214 homes or a total of 3,218 were foreclosed upon.
As one of the strongest economies in America, the outlook looks good for future appreciation. Forbes.com says Austin is leading U.S. cities on the road to economic recovery. The Brookings Institute reports that Austin is among the top 20 urban centers to show steady development in economic output along as well as positive job outlook.
When it comes right down to it, the old adage applies: The best time to invest in Austin, Texas? 20 years ago. The next best time to invest in Austin, Texas? Today.
For more information on real estate investing check out: The Millionaire Real Estate Investor by Gary Keller and Jay Papasan.