Are you thinking of buying rental property in Austin, Texas? Landlords have long enjoyed the benefits of investing in rental property in the Lone Star state—from the growing demand for rentals to the high appreciation rates in the region.
For the past decade, Austin has been one of the fastest-growing large metros in the US. Property prices in this metropolis have appreciated so much that the city appeared in the Hostaway list of top Airbnb rental arbitrage markets of 2022.
Moreover, the AFIRE 2021 report ranked Austin the most attractive market for foreign real estate investors, making it a lucrative investment hotspot. Add that to the favorable tax climate, strong rental market, and exploding job market, and it’s easy to see why the Lone Star state is the place to be for anyone interested in rental property.
In this guide, we’ll explore the reasons to buy rental property in Austin, Texas. But first, a quick primer on Austin’s real estate market.
An Overview of Austin’s Real Estate Market
As mentioned, the real estate market in Austin is booming. As of January 2023, the median price for a home in Austin was $605,000, according to Redfin. That’s nearly 50% higher than the national average of $410,200!
The city’s population has seen an explosive growth of 3.1% since 2022, and the economy is projected to grow by about 23% between 2023 and 2030.
The average rent in Austin is also on the rise, with a current median rent of $1,799 for a 1-bedroom apartment—an increase of 6% from 2022. Rent varies by location, so you’ll want to find the best suburbs of Austin, TX, to buy to maximize your rental yields.
Additionally, the city’s job market has grown exponentially over the past few years. Austin’s year-over-year increase of 4.1%, or 51,000 jobs, makes it one of the top-performing cities.
Reasons to Buy Rental Property in Austin, Texas
Without further ado, here are five reasons why you should consider investing in Austin’s rental property market.
1. Low Taxes
Texas is one of the nine states that don’t levy state income taxes. Moreover, Austin has lower taxes than other major cities in the US, making rental investments in Austin more attractive to those looking for high rental yields. Additionally, Austin’s regulations are investors friendly, making investing in rental properties easier.
2. Appreciation Potential
Over the past decade, Austin has seen some of the highest property appreciation rates in the country. This has made the city an investment hotspot for those looking to grow their wealth through rental property investments.
Industry sources show that Austin’s real estate market has experienced stupendous growth, with property values increasing by 7.3% year-over-year.
The gain is more pronounced in multifamily homes. A 2022 Yardi Matrix report shows that the price of multi-family homes in Austin averaged more than $196,000 per unit in 2022, registering a 20% growth over the previous year.
3. Population Growth
The Austin metropolis is home to almost 2.5 million people. Located in Travis country, the Austin-Round Rock-Georgetown metro exponentially grew in population, adding over five hundred thousand residents between 2010 and 2020.
CBS reported that Austin has been the #1 fastest-growing city in the country for eight consecutive years. It’s estimated that over one hundred people move to the city every day.
This population growth has led to increased demand for rentals, making investing in rental property in Texas a lucrative idea. With more and more people coming in, it’s a great opportunity for investors to buy properties and rent them out.
4. Rent Growth
One of the top reasons to invest in Austin’s real estate is rental growth. A recent Newmark report shows that rent increased by a staggering 22% in 2022.
Some of the reasons for rent growth in Austin are the growing inflation and the increasing demand for rentals owing to the growing population in the region.
There’s also the issue of interest rates. Though unemployment is low, homebuyers are being sidelined with high-interest rates, causing more competition among renters. The home prices are also up, making renting a more attractive option.
5. Booming Economy
One of the major strengths of Austin’s real estate market is its healthy job sector. In February 2023, the state reached 13,891,900 non-farm jobs.
While other major US metros are battling declining economies, Austin added more than ten thousand jobs in 2022. The growth in the job market not only contributes to economic growth but also makes the state an attractive destination for entrepreneurs and job seekers.
Austin has also become a hub for advanced manufacturing, financial services, clean technology, and space technology. Add this to the world-class infrastructure, and it’s easy to see why Texas is home to 54 Fortune 500 companies.
Austin, TX, is a top destination for real estate investors, and for many reasons. The city has a favorable tax climate, a strong rental market, high population growth, and a booming economy. So, if you’re looking for the best city to invest in rental property, Austin is the place to be.
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