Episode 63, Segment 3: Investing in Austin Real Estate
John Schutze and Andrew Thurston of Supreme Lending have a revealing conversation with local investor and realtor Aaron Farmer about current investment opportunities right here in Austin, Texas.
Are there good investment opportunities in Austin right now?
"Absolutely," Aaron says. "I'm talking to homebuilders right now and their raw building costs are $80-90 per square foot because of the labor shortage - everyone in Austin that wants a job has a job right now. Prices are going up!"
"I think issues like transportation need to be fixed, but historically - even in the Great Depression - Austin never got hit the way other places did. We have government jobs, university jobs, etc. The reason the market is going up is demand-driven, mostly. That's why I don't think there's a bubble, or at least not a huge bubble.
"Rent prices are going up, but there's a lot of value in renting a single-family home or duplex. People that grew up here think everything is expensive and rates are really high, but I don't think they're that high considering the demand and amount of people moving here. It's a new lifestyle for those of us who grew up here."
Places to Consider Investing
Something to consider: 60 percent of millennials say they want to live in a walkable area, so this next generation coming up, which is even larger than the Baby Boomers - they don't want cars, they want to be able to walk places.
"One area I really love is the 78745 area just south of Ben White and William Cannon and that area, I really think that will be the next 78704. It's got a lot of the same characteristics and there's not a lot of HOAs, so there's much more freedom and less restrictions for your property."
"I look for at least a 1% rule - I want to rent it for at least 1% of what I paid for it," Aaron explains. "If I pay $200K for something then I want to rent it out for at least $2k per month. I'm making long-term investments and use that as my retirement instead of a 401k - so I make sure all my investment properties are on 15-year notes."
If you'd like to talk more with Aaron about investing in Austin, you can reach him by phone at (512) 585-9520 or emailing him here.