Hi Guys,
If someone is interested in buying rental properties properties, what part of austin has the best rental market or most rental houses.
Happy Investing.
MKAustin
MK,
I don’t currently have any rental property in Austin, but I know several people who do. I would say that one of the best areas for rentals would be area 10 and 11.
If I had rental properties in Austin I would want to own properties at 2/3 rd’s of the median price range and lower. That’s where you’re going to find the majority of your rental market and you can find those kind’s of homes in areas 10 & 11.
That’s my two cents anyway. I hope others with more rental experience in Austin will reply as well.
Happy Investing,
Stacy
MK,
I’m not able to answer your question without more details.
- Are you going to keep the rentals or sell them?
- Who’ll manage them?
- Do you have experience being a landlord?
- Where do you live?
- Why do you want rentals?
- How do you plan to buy them?
Etc., etc…
These above factors and more play into the answer…
low income, middle income, higher income?
cash reserves available now and later?
tax benefits and appreciation a motivation?
Without a better idea of what you’re trying to accomplish, a response is liking firing in the dark.
My personal opinion is that if you’re going to keep the properties long term you should be buying at no more than 80% of the median price. That caps me at approximately no more than 125k.
As far as the floor goes, again it’s an unknown for your goals.
In my experience lower income props will provide higher gross spreads (your rental requirement less your payment), but the lower income areas frequently will be higher maintenance without serious effort at being a good landlord.
Once you have this type information narrowed down, then it’s simply a matter of finding the neighborhoods that fit your criteria. I’d also recommend avoiding pure rental areas. Your prop and neighborhood will not deteriorate as quickly as a neighborhood of renters. The fewer renters the better.
Hi Tim,
Thanks for your reply.
Being a newbie, I was just exploring various investment ideas, and hence a very abstract question. Was wondering how should I go about finding rentals if I decide that- owning rentals is my cup of tea.
- Yes I would like to own some rentals some day. Buy and hold. As a part of my portfolio.
- Managing-Not sure.Managing myself or some property management Co probably,Still exploring
- I am a newbie have no experience. No landlording Exp
- I live in North Austin
- Why do you want rentals? - I think its a good idea to have some Buy and hold type of properties in the portfolio(especially in the long run).
- Still exploring.
I liked the idea of not buying rentals in pure rental areas. Thanks for the information.
MK
MK,
As you said, it’s merely a concept at first. I guess my point is that I think it’s important to spend the up-front time to develop a plan.
Holding rentals can be very cash-intensive at different times. If you acquire more than just a few properties, you will have vacancies, repairs, etc. that will require cash to carry.
If the goal is long-term, which areas and property types will be least affected by market cycles?
I think many folks, myself included, begin to buy off on the various guru promotions that making informed decisions, as one would do under a traditional buy and hold scenario, is no longer necessary under the creative methodologies. My experience is that is completely untrue.
So, developing your own specific gameplan is the critical part. Once you have that nailed down, finding the right areas to farm to meet that criteria is as simple as a phone call to a licensed real estate agent. More likely is that by that time, you’ll already know where you want to be.
Hope that helps…
MK,
I totally agree with Tim, you must have a plan. However, the best plan in the world is completely worthless without action.
I think a lot of new investors get too caught up in trying to do everything right from the beginning. Then they get overwhelmed and then they do nothing.
Realize that your going to make mistakes, LOTS of mistakes, and you’ll learn from those mistakes. But don’t let that stop you from taking action.
Good Luck
If you lease, make sure to structure the lease for possible pass throughs. I have 3-homes here in Florida and once I took the homestead exemption off the property the taxing authorities were required to revalue the property up to the FMV for tax purposes every year. Then we got hit by the 3-hurricanes and the insurance ballooned up. My taxes and insurance on the 3-properties 3-years ago were $6,800 … now they are over $17,000. Makes it tough when you have a lease agreement for 36-months which means I get to eat the increase each and every year until the lease term is up.
Congrats for going back over 5.5 yrs for this thread…
Why on earth would you have a residential lease for 36 months? And I can’t believe anyone would sign one for that long. I have people complain about 12 months.
Here’s a passage from my lease that avoids the problems you speak of:
“Tenant hereby agrees if the property is retained by him/her after the minimum rental period, all conditions and terms as stated remain effective with the exception of rental amount. Landlord reserves the right to renegotiate the rent amount when the property is being rented in a month-to-month status.”