Best Place to Invest in the Rental Market
Austin continuously stakes its hot ranking as one of the top 10 real estate investment markets in the United States, and it looks like popularity and demand is not going cold any time soon.
Out of 125 most popular metro areas, US News placed Austin #1 in Best Places to Live in the USA. In a busy marketplace like Austin, people are on the move. Rentals are simply in high demand.
What drives Austin’s rental investment market? We’ve done some homework for you. We’ll first discuss the fun stuff that draws people into the city. Then we’ll break down the facts and get into specific analytical market numbers. Most real estate investors are interested in either long or short-term rentals, so we have you covered with our Austin-specific rental review. Continue reading as we take a close look at the best places to invest in the Austin rental investment market.
THE CATALYST BEHIND AUSTIN’S TOP REAL ESTATE RANKING
What is there not to like? When people talk about Austin, graphic highlights of culture, climate, music, and outdoor spaces spill into the conversation, but these pieces are just fun icing on the cake.
Austin Real Estate Market Driven by Economy and Job Market
Who does not want to live where income is readily made? Austin’s economy is diverse and resilient, with a robust labor market. From dot-com entrepreneurs to vast technology in the job market, people are swarming into Austin in explosive numbers—in excess of 55,000 people a year.
The need for housing follows suit as Austin’s population climbs, greatly affecting the real estate market. This opens Austin up as an ever-blooming market for rental property investors, with over 40 percent of the houses in the metro area occupied as rental properties.
REAL ESTATE MARKET ANALYSIS
As an investor, you need a starting point. Compare investment opportunities and begin your market analysis using these Austin area figures:
2019 Median Home Sales Price: $296,999 – compared to 2017 $299,900
2019 Median Traditional Rental Income: $1,518 – compared to 2017 $1,223
2019 Median Short-Term Rental Income: $2,109 – with increases up to 38% in recent years
LONG-TERM VERSUS SHORT-TERM RENTALS
With the swelling growth of Austin and its rock-solid economy, as well as its student housing and annual event needs, investors need to consider two types of rental property that boom in the area.
Hold your horses, we aren’t going to repeat everything we’ve said about what drives the Austin rental market, but we are going to throw a few more important items into the mix. Traditional rentals consist of long-term rental properties which typically rent for a season (fall, winter) or for a year or more. Austin is home to the University of Austin, which pushes the need for long-term rental housing much above the rest.
How do you make money on short-term rentals? Rental properties earn upwards of $1,000 a night during annual events such as South by Southwest. We listed the median short-term rental income in Austin as $2,109, but with the right location, and the right sized rental unit, you can sweep in many more bucks. Other local events that drive up short-term rental needs in the area are university games, rodeos, music venues (Austin’s motto is the “Live Music Capital of the World”), as well as art and street festivals—and the growing list goes on.
BEST ROI AREAS IN AUSTIN
Steady rental markets with growth potential are golden words to property investors. We’ve compiled a list of the best areas in Austin that wield strong return on investments.
With thrilling nightlife, job centers, entrepreneurial incubators, universities, and gorgeous parks at just a walk or bicycle ride away, it only makes sense that downtown Austin is a core of appreciating property prices, demand, and growth.
Downtown Austin sports a rental market at 67%, with both old and new development properties ranging from $205 per square foot to $1500 per square foot between the years 2017 and 2019.
Student rental housing is a hot real estate market, and this makes West University real estate one of the strongest rental markets in Austin. It’s also in close proximity to Guadalupe Street, a diverse thoroughfare known for its entertainment venues, local bars, and fun dining spots.
West University’s residents call the area home with a rental market over 94%. A huge chunk of the area consists of condos, both old and new, with properties ranging from $219 per square foot to $497 per square foot between the years 2017 and 2019.
If you’re looking for charming rental property, comprised of townhomes, condos and traditional homes in a family-friendly and quiet area, in close proximity to Austin’s attractions, consider investing in Allandale property.
Allandale sports a steady rental market with a higher than average price for the Austin area with a median list price per square foot ranging from $305 and $318 between the years 2017 and 2019.
Cozy and historic, with a touch of urban-contemporary, topped with an abundance of nature, Zilker is a cherished area for renters. With a 10-minute drive to Downtown Austin, the area draws in millennials, students, and professionals.
Zilker holds claim to a steady rental market with a median list price per square foot between $265 and $637 between the years 2017 and 2019. Don’t let those numbers scare you. Zilker home values are known to increase up to 10% a year!
With a rush of home renovations in recent years, East Austin claims a major come-back. House-flipping and the buying-up of potential rental properties set the pace for affordable housing in this central location for students, young professionals, and first-time buyers.
East Austin is a hot spot for strong ROIs with a median list price per square foot ranging from $142 and $576 between the years 2017 and 2019, with a mix of single-family bungalow homes and new townhouses.
Conclusion: Invest in Austin Real Estate!
Austin is dubbed the “national hotbed of growth.” This surge brings the need for both affordable and upper-crust rental homes. Do your homework—compare and analyze. We hope to see you claim your investment spot in Austin’s widening rental whirlwind!