Choosing the Ideal Investment Property in Austin

Real estate is one way to diversify your investment portfolio. Just like any property, you’ll need to secure financing and submit a downpayment of at least 20% to 30%. Unlike finding a home for yourself, you must select your property with tenant needs in mind. Here are a few tips for choosing the ideal investment property in Austin. 

Set Your Investment Objectives

Real estate is most often a long-term investment strategy. It can take years before you pay off your property. You may make a profit in the meantime, but building equity is often a top priority. Maybe even building generational wealth. 

Before you invest, determine:

• How long you plan to rent out the home?
• When you plan to sell the home? 
• When the property will be paid off?
• If you plan to pass the home on to family?

Determine Your Property Type

With the low taxes and attractive cost of living, tech companies from California are relocating and expanding to Texas. As such, our area remains one of the fastest growing in the nation. This influx also creates a demand for small and mid-sized commercial properties. 

Commercial

Commercial real estate can generate higher rental profits and multi-year leasing terms. However, the initial and ongoing investment is typically higher, and lease and property management terms are more complex. 

Mixed-Use

Mixed-use properties typically have commercial rentals on the first floor, and residential properties on the upper floors. These investments cost more upfront, and the commercial lease and property management terms are more complex. 

Residential

Residential real estate is the most popular type of investment property in Austin, especially for solo investors. Most everyday investors invest in small apartment buildings and single-family homes. Multi-family properties can be lucrative, but expensive. They’re ideal for small and large investment groups. 

Short-Term or Long-Term Rentals

Many of those new to the area will rent before they buy or rent until they decide they want to live in Austin long-term. 

Short-Term Rentals

With the right location, furnishing, marketing, and property management, Airbnb and other vacation rentals can generate 2 to 4 times the average monthly rent. The more luxurious the furnishings and amenities are, the more you can charge. There’s more of an upfront investment for short-term rentals, and higher operating fees related to turnaround and property management. 

If stays are less than 30 days, you must obtain an operating license and you must pay a Hotel Occupancy Tax (HOT) of 11%. 

Long-Term Rentals

Long-term rentals with leases longer than 30+ days aren’t subject to HOT and no operating license is currently required. Rent must remain competitive with the neighborhood, but you can charge more for luxury appliances, upgrades, and fully or partially furnished rentals. You can also charge more for leases that are more than 30 days but less than 12 months. Leases that are less than 12 months are appealing to those who move for work and are looking for somewhere to live while they house hunt. 

Where to Buy an Investment Property in Austin

The neighborhoods with the most growth and value are below. However, you can find lucrative properties in many other neighborhoods. 

• Cedar Park
• Circle C Ranch
• East Austin
• Georgetown
• Hutto
• Leander
• Manor
• Mueller
• North Loop
• Pflugerville
• Round Rock
• South Congress (SoCo)

We’re Happy to Advise on Your Next Real Estate Investment 

Stetson Property Management provides a variety of services to help residential real estate investors. From advising on the hottest neighborhoods and market trends to rental analysis and advising on upgrades and amenities. Our ultimate objective is to maximize your returns!

Once you identify your next investment property, we can connect you with quality contractors, manage your upgrades, and provide hands-free tenant acquisition and property management. 

Reach out to learn more.