Investing in Austin Real Estate? Follow our Handy Guide to Make the Most of Your Investment
With its robust diverse economy, soaring population growth (almost 40 percent in the last decade) and reputation as the “Live Music Capital of the World,” it’s no wonder Austin’s residential and commercial real estate industry is thriving! All of these factors (not to mention taking the top spot for “Best Places to Live,” by U.S. News & World Report for the third time in a row!) create favorable conditions for real estate investors. Austin TX buyers and investors may enjoy a steady stream of current income and build long-term wealth for the future. If you’re a first-time real estate investor and are considering investing in Austin real estate, we’ve put together 10 important tips to put you on the right path to ensure your best chance for success.
1. Get your financial ducks in order
It seems obvious, but it’s imperative you have good financial footing when you first venture into property investment. Before starting your Austin home search, it’s important to examine your finances under a microscope. Steps include checking your credit report to determine your ability to finance investment property. Typically you’ll need a score of +/- 620 to get a mortgage and a score of 740 or above to secure better interest rates. To help qualify, consider paying down outstanding credit card debt or car loans. You’ll also want to save up for a down payment; the higher the amount you put down, the better the terms of your mortgage are likely to be and the less you’ll end up paying in interest. Get more financial tips here to help the process go smoother when you’re considering investing in Austin real estate.
2. Meet with a financial planner in Preparation for Investing in Austin Real Estate
When weighing the pros and cons of investing in Austin real estate, meeting with a qualified financial planner may be helpful. A financial planner is a professional who’ll help you invest your money to reach your financial goals. These goals can range from generating income to saving for college to saving for retirement.
3. Start small with your real estate investing
While you may be eager to jump into real estate investing with both feet, if you’re a first-time investor, we recommend starting out by dipping your toes. Investing in a smaller property allows you to gain an understanding of how investing works and to gain the know-how and experience to invest in larger properties down the road.
4. Be prepared for financial risks
Renting out your investment property isn’t always as easy as collecting a rent check each month. If you’re investing in Austin rental property, it’s important to keep in mind upkeep and repair expenses that every property owner will inevitably have to face. Not to mention the possibility of experiencing times without a rent check when you’re in between tenants, causing a financial blow if you’re not prepared. Remember to budget for unexpected home repairs, tenant changeovers and emergencies for your real estate investment.
5. Treat investing in Austin real estate as a business
Investing in Austin real estate is a business and you should treat it that way. Just like starting any other business, your ultimate goal as a property investor is to generate a profit. To do this, you’ll need to take the time to create a solid business plan that helps you focus on your goals and strategy and answers key questions. What’s the goal of your investment? Do you want to acquire property for future growth or do you need cash flow today? By investing in Austin real estate, are you looking for rental income? Do you plan on living in it and running it as a bed and breakfast? Will you be flipping the home you’re buying for a profit?
6. Set reasonable expectations for your investment
Although investing in Austin real estate can generate ongoing passive income and may be a good long-term investment, it’s important to set reasonable expectations for the property you are investing in. Real estate can be profitable — with patience. These investments may often be time-intensive and costly ventures. Be prepared to spend time, work and sweat for the property.
7. Consider buying the investment property sooner rather than later
In the words of actor, Will Rogers, “Don’t wait to buy real estate. Buy real estate and wait.” It’s expected that real estate prices in the Austin market will increase at a steady pace throughout 2019. According to the March 2019 Central Texas Housing Market report by the Austin Board of REALTORS®, the median price of single-family homes rose by 2.8 percent to $375,000 in the month of March. If you’re ready to start investing in Austin real estate, you’ll want to consider making your purchase sooner rather than later, to avoid potentially higher prices down the road. That being said, this leads us to tip number 8.
8. Don’t rush your real estate investment!
Buying an investment property is a big financial decision and commitment. Although it can be tempting to jump into a purchase, you should take your time. As a new real estate investor in the Austin TX market, you’ll want to have a clear understanding of real estate market conditions, such as how much properties are renting for, how they hold their value for resale and neighborhood factors.
9. Determine the best areas to look for investment properties in Austin
While Hyde Park, Clarksville, East Austin and other areas close to the center of the city are some of the most sought-after areas, many investors should consider extending their search to the surrounding areas. These communities are only a short distance away and offer more affordable options. Consider the following up-and-coming neighborhoods in the Austin area to invest in: Westgate/South Manchaca, Allandale/Crestview/Wooten, The Domain, Windsor Park and Northwest Austin.
10. Invest in an experienced real estate agent
If you’re interested in investing in Austin real estate, but aren’t sure where to begin, the good news is Habitat Hunters is available to walk you through the entire process. Even in the initial stages of weighing the pros and cons of real estate investing, it’s crucial to talk to a real estate agent in your local market. Our experienced team of Austin REALTORS® stays abreast of market trends, areas and what potential hurdles you may face when investing in Austin real estate. Contact us today at 512-482-8651 to learn more about investing in the number one best place to live in the U.S.