A recent article in the Austin American Statesman on the rising rents of Austin Apartments stated that these rents will continue to be on the rise for years to come and cited several reasons.  If apartment rents will continue to rise then so too should the rents for single family dwellings and for the same reasons.

One of the reasons cited for the uptick in rents, is that many baby boomers are selling their homes and downsizing to living in apartments (back to the college days?).  These folks that have sold their homes can afford that and thus diminishes the supply and conversely increases the rent basis for the area.  Interesting.

Of course, the biggest factor in our area for rising rents are the number of good paying jobs being created here.  Tesla to the south, Samsung to the north, and the expansion of Apple, Oracle, Facebook, Indeed and Google in between.  Folks taking these jobs can afford higher rental rates and if you are relocating from California who are already accustomed to paying a lot of money for rent.

The article went on to state that because of the wealth of the high tech companies coming here from California that high income renters will be here for years to come and I might add that should also apply to renters of single family dwellings.  So far it has done just that for the past years.

Now add into the mix that the Austin area real estate market is becoming very expensive and has low inventory.  This means that if you want to buy a house you will need to have a hefty down payment as the price of homes continue to increase.  For example. I recently checked a listing on a brand new home by a national builder listed in our MLS.  The home had been on the market for 3 weeks, and the builder increased the price by $30,000.  That’s the Austin area real estate market.  Now if you already own an Austin area rental you might be tempted to sell and take a profit.  Whoa!  You have to pay taxes on profit.  Instead consider refinancing, take out some tax free cash, and let the tenants continue to make the mortgage payment while the house continues to appreciate.  Caveat:  Always check with your tax advisors before making any financial decisions.

So, if the Austin area is becoming too expensive to make the numbers work where do to you go to catch a piece of the action?  Look outside the Austin area to those places that have good schools and good access to freeways getting to Austin.  Eventually, it will all blend together much as what happened in Santa Clara Valley (now affectionately called Silicon Valley) where I was raised.  I saw the growth there and I see the same growth happening here.

Contact one of our licensed REALTORS to see if adding a single family rental in our hot market can help you reach your investment objectives.