Building rental property in Austin


I am looking at the possibility of building several 2 or 4 plexes in the NW Austin area and would like some of you investors opinions on what would make these properties appealing for purchasing.

As a builder moving out of the custom home arena, and with a spec home market that is saturated, I am looking at several projects that can create the volume that I need, and be attractive to investors.

Are new duplexes and fourplexes attractive to investors or do most look for older property to purchase?

What I would like to do is find an investor or group of investors who want to aquire 8-12 rental properties per year to purchase as rentals. I know of another builder in my area who builds quite a few rental properties to sell and has had success.

Another project that I am looking at is a condo project where a complex was 65% built out (25 units) in the mid 80’s and the remaining 10 units were never completed. I am looking at the possibility of partnering with an investor to build out the remaining units either to sell individually to occupants or sell to an investor as rental properties.

I have explored the possibility of building rental property to rent myself, but I haven’t been able to convince myself that I either want to get into the property management business or carry the long term debt associated with it.

I would appreciate any thoughts from you investors on these types of projects.



Too many good deals with the old stuff at prices way below replacement. The rental market sucks in case you have not seen all the ads and signs everywhere with free rent concessions etc. I would move slow if at all. My friend Gilbert Martinez is having good luck building $100,000 homes close in East Austin but he is only building a few at a time.


Thank you,

Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737

512-301-9171 home
512-587-6177 mobile

I doubt you could build and sell at a price attractive enough to get my attention. I’ve owned both in the past and would want my payment to be 50% of the gross rents. I think that would be difficult to do.

For a while duplexes and fourplexes were unbelievably hot commodities here, selling for 100 times monthly rent and going quickly. I think that if you could offer someone a payment that was 75% of gross rents, they would go.

I think your best margins would come from the OO market. If you go slow and find the right pace, the OO market would be a serious profit margin if you can keep your costs down.

my two cents…

OO market???

I do that too often as my typing lamely attempts to keep up with my brain. I meant Owner Occupant.

I’ve heard recent news on the radio that Austin has a freeze on new duplex construction. Seems the problem stems from too many “megaduplexes” being built. The city powers that be feel it’s causing problems with overcrowding and traffic/parking problems. They are deciding what,if any, changes need to be made but I suspect that 3/2 duplexes the size of houses attached together will be a thing of the past. I have a little house with a huge lot they I was considering building a duplex on so I’m waiting to hear what the city decides. Mine is in east austin and parking is a major problem.
I’ve found also that the rental market is so soft and it is SOOO easy for people to get financing for homes that I can’t cover the mortgages on duplexes and fourplexes. I have single family homes and have been looking at duplexes but can’t seem to find a reasonable deal. Don’t want to discourage you but I suspect you can’t build them for what we want to buy them for. 2 years ago was a different story. Good luck in what you do. Kathy

Hi all,

This is an Austin question. I’m buying a house on the East side that has room for another structure. Would building a small single-family rental on the lot be considered building a duplex? Or does the moratorium on new duplexes literally mean no new duplexes?

Thanks very much,


That was my intention also. I don’t know yet what the city definition of a duplex will be. It sounded as if the restaints will be on the square footage of the building but I dont know if that will include buildings that are not attached. I’ll let you know if I hear something. Kathy

Kathy (and everyone),

Hi–I was hoping you’d respond. I wasn’t sure if you were adding a single unit or actually building a whole duplex on your lot. I’ve done some research on %impermeable cover on the lot and other things like that. There are some good handouts at the City of Austin. I’d be happy to share. What i didn’t find out was whether adding a rental to a lot with a house on it constitutes creating a duplex. I was like Dorothy when she finally gets to the Emerald City–“GO AWAY AND COME BACK TOMORROW. THE GREAT AND POWERFUL OZ HAS SPOKEN…”


To those who might be interested: I went back to the City and found out it’s OK to add a rental to a lot with house that’s zoned SF3. Doing so is not considered building a duplex. (Which makes sense, right?) So onward! Looks like I’ll be installing metal roof in August. :roll:

Let me know what you’re up to, Kathy.


Randi, I’d like to talk to you more about building house in SF3. I sent you a private message but wasn’t sure if you got it. Contact me at or 680-3663 and lets chat. I think it could be mutually beneficial. Kathy