Austin Real Estate Market Report 2019

Austin Overview

Austin is the capital city of the State of Texas and the fastest growing large city in the US.

With a population of more than 964,000 people, Austin is the 4th most populous city in Texas and the 11th largest city in all of the US as well as the 2nd largest capital city nationwide (after Phoenix, AZ). Austin serves as the economic and cultural core of the Austin–Round Rock metropolitan area, which has a population of nearly 2.2 million people.

Austin is not only one of the best cities in Texas to live in but one of the top cities in the entire US, as proven by rankings by various prestigious publications. U.S. News & World Report ranked Austin as the best place to live in the US for 3 consecutive years (2017, 2018, and 2019), right before Denver, CO, Colorado Springs, CO, Fayetteville, AR, and Des Moines, IA. Meanwhile, Forbes highlighted the Texas capital city as #1 among America’s Cities of the Future and America’s Next Boom Towns in 2016, before Salt Lake City, UT, San Jose, CA, Denver, CO, and Raleigh, NC. These rankings play an important role in attracting both commercial and residential real estate investments in Austin.

Although Austin enjoys a strong and diverse economy, it is somewhat dominated by high-tech. The emergence of Austin as a technological center has been supported by the annual influx of fresh graduates in engineering and computer science from the University of Texas at Austin. Numerous high-tech companies have operations in the city including Apple, Amazon, PayPal, eBay, Facebook, Samsung Group, Nintendo, 3M, and many others. This cluster has led to the Austin metropolitan area’s being nicknamed Silicon Hills. Other major industries in the local economy include pharmaceuticals, biotechnology, manufacturing, and construction. Retail trade, education, and the public sector also constitute important employers in Austin.

In addition, Austin has been named the Live Music Capital of the World because of the hundred venues which play live music on any given night. Other major tourist attractions in Austin include the Texas State Capitol Building, the Congress Avenue Bridge, the HOPE Outdoor Gallery, the Broken Spoke, Allens Boots, the Barton Springs Pool, the Barton Creek Greenbelt, and Lady Bird Johnson Wildflower Center. As a result, over 27.4 million tourists visit Austin on annual basis, making the capital of Texas one of the most popular tourist destinations nationally. This means that the Airbnb Austin rental business is among the leading ones in the US.

The average per capita income in the Austin economy amounts to $32,672, significantly above the nationwide level of $28,555. The median household income equals $55,216, exceeding the nationwide level of $53,482. The city features a lower unemployment rate and a higher job growth than the US average. With these positive indicators for real estate investors, the fact that over half (55%) of Austin’s population comprises of renters rather than homeowners further encourages investments in long term rental properties.

Austin Real Estate Market Overview

Median Property Price: $523,100
Price per Square Foot: $272
Real Estate Appreciation: 148% since 2000 (significantly above the Texas real estate appreciation rate and the US average)
Days on Market: 70
Listings for Sale: 673
Price to Rent Ratio: 21 (high)
Buyer’s Market or Seller’s Market: A rather seller’s market
Renters’ Percent of Population: 55%

The Austin housing market has been a top destination for real estate investors in the last few years due to its fast-growing economy, above average population growth, and touristic importance. In addition to all the other prestigious rankings mentioned above, in 2019 Austin was positioned as #6 among the US Markets to Watch for overall real estate perspectives by PwC in its annual Emerging Trends in Real Estate: United States and Canada 2019 report. This puts the Austin real estate market as the most promising housing market right after Dallas–Fort Worth, New York-Brooklyn, Raleigh–Durham, Orlando, and Nashville. According to the prestigious publication, the main reasons for the recent success of Austin, Texas real estate have been demographical, including a population growth three times the national average, strong in-migration, and young population. Economic factors also support this strong performance including good labor force growth, labor force productivity above the national average, and high business startup activity.

The report highlights that affordability is increasingly becoming an issue in the Austin real estate market. Nevertheless, the capital of Texas is ranked as #3 nationally in terms of homebuilding prospects, immediately after the Nashville real estate market and Tampa–St. Petersburg real estate market. This means that if you are considering buying an Austin investment property, 2019 and 2020 is the best time to do that before Austin home prices go even further up. Real estate appreciation in the local housing market is on your side as it has historically exceeded the rate in both the Texas real estate market and the US housing market in general.

While there is no clear consensus among Austin real estate experts on whether the Capitol City is a buyer’s market or a seller’s market, most tend to agree that it is a rather seller’s market though a shift towards a buyer’s market might be slowly taking place. The shortage in inventory in Austin homes for sale is one of the clearest signs that the city continues to be a seller’s market where homebuyers as well as real estate investors have to be prepared for bidding wars. Another indicator is the increasing Austin house prices, which have currently reached a peak with a median value of $523,100. This exceeds the national median property value of $229,000 by 128%. Moreover, appreciation is expected to remain high in the Austin real estate market in 2020. Once again, the rapid population growth is the main driver behind both of these phenomena. According to many experts, Austin is indeed the hottest real estate market in Texas in 2019, and this trend might easily continue into 2020.

Local Austin real estate investors as well as those from out of state are attracted by the strong rental demand for both traditional, long term Austin rental properties and Austin vacation rentals. The fact that 55% of the population rents rather than owns a home means that there are over 530,000 renters in the Capitol City. The high price to rent ratio combined with the increasing property prices in the local market supports the fact that more and more people will choose to rent. For real estate investors this means just one thing – continuously strong demand in the Austin rental market. Currently they can choose from 673 Austin, Texas homes for sale.

Best Property Types for Investing in the Austin Residential Real Estate Market

Single Family Homes for Sale in Austin, TX: 521
- Median Property Price: $539,700
- Price per Square Foot: $259
- Average Monthly Traditional Rental Income: $2,140
- Average Traditional Cap Rate: 0.7%
- Average Monthly Airbnb Rental Income: $3,520
- Average Airbnb Cap Rate: 3.0%
Condos for Sale in Austin, TX: 132
- Median Property Price: $421,700
- Price per Square Foot: $311
- Average Monthly Traditional Rental Income: $1,900
- Average Traditional Cap Rate: 0.8%
- Average Monthly Airbnb Rental Income: $3,090
- Average Airbnb Cap Rate: 3.0%
Townhouses for Sale in Austin, TX: 1
- Median Property Price: $1,029,000
- Price per Square Foot: $459
- Average Monthly Traditional Rental Income: $2,550
- Average Traditional Cap Rate: N/A
- Average Monthly Airbnb Rental Income: $5,920
- Average Airbnb Cap Rate: 1.4%
Multi Family Homes for Sale in Austin, TX: 15
- Median Property Price: $849,400
- Price per Square Foot: $314
- Average Monthly Traditional Rental Income: $,220
- Average Traditional Cap Rate: 0.1%
- Average Monthly Airbnb Rental Income: N/A
- Average Airbnb Cap Rate: N/A
Foreclosure Homes for Sale in Austin, TX: 17
- Median Property Price: $253,200
- Price per Square Foot: $149
- Average Monthly Traditional Rental Income: $1,150
- Average Traditional Cap Rate: N/A
- Average Monthly Airbnb Rental Income: $1,710
- Average Airbnb Cap Rate: 1.8%

Similar to the vast majority of top real estate markets for investing, the Austin housing market is dominated by single family homes, which make up as much as 77% of all Austin real estate listings. The next most popular property type for sale is condos, which constitute 20% of all listings. Another 2% of all homes for sale in Austin, TX are multi family properties, while there are nearly no townhouses available in the market at the moment.

Why Investing in Single Family Homes in Austin

Real estate data shows that single family homes constitute not only the most numerous Austin, TX homes for sale but also a profitable investment strategy in 2019. The return on investment is about the highest, regardless of which rental strategy you go for. Their price is just 3% above the median, so financing such a rental property is not a bigger challenge than any other type. Importantly, real estate investors can choose from 521 Austin, TX single family homes for sale, which means that they can find a top-performing property which matches their location, budget, preferred number of bedrooms and bathrooms, and other features. This property type is ideal for renting out on both long term basis and short term basis as single family properties attract young couples and/or small families who consider the property as their home and thus cause only reasonable tear and wear.

Why Investing in Condos in Austin

Condos for sale in Austin offer high return on investment in terms of cap rate and cash on cash return for both rental strategies. Moreover, condos sell for 19% less than houses for sale in Austin, TX. Nevertheless, they are a bit more expensive per square foot as they offer more amenities and extras, but their overall price is lower because of their smaller size. The 132 condo listings in the Austin real estate market are a good choice for investors on a tighter budget who, however, don’t mind paying the monthly HOA fees. Before buying an investment property to rent out on long term or short term basis, investors should check out the specific HOA rules and regulations to make sure that rentals are allowed.

Why Investing in Townhouses in Austin

If you are looking to invest in townhouses for sale in Texas, the Austin housing market is not the best choice at the moment. The inventory is very low, and the prices are high. Furthermore, Austin townhouses do not generate as much rental income and return on investment as other property types.

Why Investing in Multi Family Homes in Austin

For those interested in buying multi family homes for sale in Texas, Austin has some good opportunities to offer. As expected, multi family homes in Austin are listed for a significantly higher price than other property types, but they provide a few rental units. One of the most important benefits of investing in multi family properties is that you can scale up your investment and grow your portfolio within the same location and without having to deal with numerous properties at the same time. Moreover, hiring a professional property management company is a smart and profitable move with multi family homes for rent which allows for passive real estate investing.

Why Investing in Foreclosures in Austin

While foreclosed homes constitute a lucrative investment opportunity is any real estate market, they are particularly profitable and desirable in such a hot, seller’s market as Austin, where affordability poses a challenge to many property buyers. This is the best option for investors in search of cheap houses for sale in Austin, TX. Austin foreclosures cost 52% less than other Austin, Texas homes for sale. Buying cheap real estate is one of the prerequisites for a profitable real estate investment. Meanwhile, if you perform some basic repair and maintenance work, you can rent them out for as much as any other Austin, Texas investment property, generating the same rental income but pushing your return on investment up. Real estate investors aiming at good cash on cash return in the Capitol City should consider buying a foreclosed home in Austin.

Important Stats for Austin Real Estate Investors

Safety in the Austin Real Estate Market

Crime Rate Index: 11 (100 is highest)

Orlando is safer than 11% of US cities, with a relatively high overall crime rate of 38 crimes per 1,000 residents.

Access in the Austin Real Estate Market

Walk Score: 40
Transit Score: 34
Bike Score: 51

Austin is the 33rd most walkable large city across the nation. It has some public transportation and is somewhat bikeable. Generally, Austin is car-dependent as running most errands requires a car.

Affordability in the Austin Real Estate Market

Cost of Living Index (Excluding Rent): 70
Rent Index: 50
Cost of Living Plus Rent Index: 60

The cost of living in Austin index excluding rent is 30% cheaper than in New York City. Rent is 50% less expensive than in NYC. Meanwhile, the average cost of living plus rent index in Austin, TX is 40% below the level in New York City.

Taxes in the Austin Real Estate Market

Austin, Travis County Property Tax Rate: 2.1965%
- County Property Tax Rate: 0.3542%
- City Property Tax Rate: 0.4430%
- School District: 1.1920%
- Community College: 0.1048%
- Others: 0.1052%

Austin, Texas property taxes are evaluated and levied on 100% of the appraised value of the property, and properties are appraised at full market value. Meanwhile, there are no Texas real estate taxes (at the state level). Overall, Austin property taxes are affordable and do not constitute an obstacle to profitable real estate investments in the local housing market.

If you’d like to invest in other states with no property tax, check out Hawaii, Alabama, Louisiana, West Virginia, and Wyoming.

Austin Real Estate Market: Traditional Rentals

Average Monthly Rental Income: $2,090
Average Cap Rate: 0.7%
Price to Rent Ratio: 21
Renters’ Percent of Population: 55%
Optimal Property Type: Condo or single family home
Optimal Number of Bedrooms: 3 and 4
Traditional Rental Listings: 6,036
3 Best Neighborhoods in Austin for Traditional Rental Properties: MLK, McKinney, and Johnston Terrace
3 Worst Neighborhoods in Austin for Traditional Rental Properties: University of Texas, North University, and South Lamar

The Austin real estate market 2019 continues to be one of the best places to invest in real estate not only in Texas but in the US too. While affordability poses a challenge for beginner real estate investors, demand for traditional rentals is high, which assures good rental income and return on investment. Rental demand is mostly driven by the high net migration, the high proportion of renters vs. homeowners, and the high price to rent ratio in the Austin housing market. The city average cap rate for long term rental properties – 0.7% – does not look like a lot for experienced investors, but it is comparable to what other top real estate markets offer in 2019. Moreover, different Austin neighborhoods offer widely varying capitalization rate and rate of return on rental properties.

Overall, condos are the most profitable property type for long term rentals among homes for sale in Austin, Texas, followed by single family homes. With regards to the most optimal number of bedrooms, Austin houses for sale with 3 and 4 bedrooms bring the highest return when rented out on long term basis. Smart real estate investors should check out foreclosures in Austin as they make for cheap but profitable investment properties in any housing market, especially a hot one like the Austin real estate market.

Landlord-Tenant Law and Regulations in the Austin Rental Market

Like Dallas, Houston, San Antonio, and other cities within the Texas real estate market, Austin does not have its own landlord-tenant ordinance but follows the Texas real estate laws in this regard. Encouragingly for Austin property investors and landlords, Texas comprises one of the most landlord friendly states in all of the US. To begin with, the state law does not impose a limit on the amount which landlords can charge for a security deposit. The security deposit though needs to be given back to the tenant no later than 30 days after he/she leaves the rental, provided that no major damage has been detected. In addition, Austin landlords have the right to refuse to pay for repairs if renters are late with their rent payments. Moreover, landlords and tenants are free to draft their own rental agreements and agree on who pays what repairs and fees. Even if things go from bad to worse with your rental property in the Austin housing market, you will be protected as a landlord as eviction works in favor of landlords in all of Texas. A tenant not paying rent can be easily evicted after a 3-day notice to pay or move out, after which the landlord can file for eviction at court.

If you’d like to explore real estate investment opportunities in the other landlord friendly states, check out traditional rental properties in Arizona, Indiana, Colorado, Georgia, Kentucky, and Alabama.

Best Austin Neighborhoods for Investing in Traditional Rentals

Austin Real Estate Market Report 2019 Best Austin Neighborhoods for Traditional Long Term Rentals

1. MLK

Median Property Price: $478,600
Price per Square Foot: $545
Average Monthly Rental Income: $2,400
Average Cap Rate: 3.0%
Walk Score: 25

The MLK neighborhood is the best location for Austin real estate investments in long term rental properties. Austin, Texas real estate data reveals that this area brings the highest return on investment for the traditional rental strategy. Though somewhat far from Downtown Austin, this neighborhood can easily be ranked as one of the best places to live in Texas as it offers all that is required for an urban lifestyle including excellent schooling and nightlife opportunities in a diverse environment. It is good for families, and the majority of the population rents rather than owns a home, which means strong demand for Austin rental properties here. Bying an investment property in MLK costs less than in the rest of the Austin real estate market, which makes it a good option for new property investors and others on a tight budget.

2. McKinney

Median Property Price: $246,200
Price per Square Foot: $161
Average Monthly Rental Income: $1,680
Average Cap Rate: 2.0%
Walk Score: 14

The McKinney neighborhood is #2 among the best neighhorboods in Austin, TX to buy a traditional rental property. One of the most attractive features of this area is the low prices of houses for sale in Austin, TX here. On average, real estate listings in McKinney sell for 53% less than in the rest of the Austin housing market. This location is one of the best ones to own a house in Austin, so the majority of residents own. However, there is still enough demand for long term rentals to make them a profitable real estate investment strategy. This neighborhood offers rich parks, restaurants, coffee shops, and bars options. Beginner real estate investors should consider investing in a traditional rental in McKinney because of the low prices and good cap rate.

3. Johnston Terrace

Median Property Price: $340,600
Price per Square Foot: $196
Average Monthly Rental Income: $1,830
Average Cap Rate: 1.8%
Walk Score: 40

The Johnston Terrace neighborhood is yet another one of the best Austin neighborhoods for traditional rentals. This suburban area is mostly inhibited by young professionals and families who generally own their home. Still, the diversity, access to amenities, good schools, and good nightlife attract renters. Austin, Texas houses for sale here cost 35% less than in other top neighborhoods in the Capital City. Buying a rental property in Johnston Terrace is an excellent real estate investment strategy in 2019.

4. Montopolis

Median Property Price: $309,000
Price per Square Foot: $238
Average Monthly Rental Income: $1,620
Average Cap Rate: 1.8%
Walk Score: 48

Montopolis is ranked as #4 among the best neighborhoods in Austin, Texas for renting out on long term basis. The Montopolis neighborhood is an urban area with strong rental demand as most residents do not own a home. The numerous parks provide for outdoor activity opportunities which attract families. Investing in a rental property in Montopolis can be a profitable real estate investment in the Austin real estate market 2019.

5. Barton Creek

Median Property Price: $743,400
Price per Square Foot: $277
Average Monthly Rental Income: $3,070
Average Cap Rate: 1.6%
Walk Score: 2

Barton Creek is not only one of the top locations for long term Austin rental properties but also the first one-million-dollar community in the Austin housing market. Property prices in the Barton Creek neighborhood are high, which makes it one of the best places for investing in luxury homes for sale in Austin, TX. The rental income from traditional rentals here is higher than in the majority of Austin neighborhoods, which pushes the return on investment up in spite of the above average real estate prices. Investing in real estate in Barton Creek offers good opportunities for investors with lots of cash or solid financing options.

6. Pecan Springs Springdale

Median Property Price: $353,600
Price per Square Foot: $221
Average Monthly Rental Income: $1,890
Average Cap Rate: 1.4%
Walk Score: 27

Pecan Springs Springdale is the last area on this list of good neighborhoods in Austin to buy an investment property to rent out on long term basis. This suburban location offers excellent parks, amenities, and schools which attracts families. While most residents own a home in the Pecan Springs Springdale neighborhood, the existing renters create enough demand for traditional Austin rentals. Buying a long term rental in Pecan Springs Springdale is an affordable real estate opportunity as far as the Austin housing market 2019 is concerned.

Orlando Real Estate Market: Airbnb Rentals

Average Monthly Rental Income: $3,430
Average Cap Rate: 3.0%
Average Occupancy Rate: 54.7%
Optimal Property Type: Single family home or condo
Optimal Number of Bedrooms: 4 and 3
Airbnb Rental Listings: 4,112
3 Best Neighborhoods in Austin for for Airbnb Rental Properties: Windsor Road, West University, and North Burnett
3 Worst Neighborhoods in Austin for Airbnb Rental Properties: North Loop, Garrison Park,and Mueller
Orlando Airbnb Legal Status: Illegal for non-owner occupied single family homes and duplexes in residential neighborhoods after 1 April 2022. Legal for all other property types and locations. Legal for owner-occupied short term rental properties while the Airbnb host is on site and no more than half the property is rented out. A short term rental license from the City of Austin is required, and city (9%) and state (6%) hotel occupancy taxes have to be paid.
Annual Events in Orlando with the Highest Airbnb Occupancy Rate:
- Formula 1 World Championship: 3-day event in mid-November

This annual F1 event takes place at the Circuit of the Americas track and attracts over 120,000 local and international guests, some of which are really wealthy. In addition to racing, it features live music acts, international performances, and even camping.

- South by Southwest Conferences & Festivals: mid-March

Founded nearly 30 years ago, this annual event turned from a small music festival to one of the major conferences and festivals nationwide. This music and film event attracts over 2,000 international bands in more than 100 stages across the Austin.

- Austin Marathon and Half Marathon: mid-February

This annual event is one of the largest combined marathon and half marathons in all of the US, attracting over 20,000 runners and 40 bands.

- Austin Film Festival: late October

This is one of the top film festivals in the US which features both high-grossing movies and alternative, low-budget movies and highlights the craft of screenwriting.

- Pecan Street Festivals: early May and late September

The Pecan Street Arts Festival is held twice a year on 6th Street, showcasing the work of artisans from all over the US including fine art, jewelry, woodwork, folk art, and mixed media art. Numerous music performances also take place during this event.

- Austin Food & Wine Festival: late April

This festival hosts numerous Central Texas chefs, winemakers, and sommeliers as well as thousands of food and wine enthusiasts from far and near.

The Airbnb Austin, TX rental market is one of the biggest and hottest not only at the state level but also nationwide. This should come as no surprise provided the fact that the Capitol City meets over 27.4 million visitors per year, including both leisure tourists and business travelers. The status of Austin as a technological and business hub as well as the year-round festivals, events, and celebrations guarantee strong demand for Airbnb in Austin.

According to real estate data on the Austin housing market, short term rentals generate a cap rate at the city level when compared to other top locations for real estate investing. The best property types for the Airbnb Austin rental strategy include single family homes and condos, while the optimal number of bedrooms for the highest return on investment on Austin, Texas homes for sale is 4 or 3 bedrooms.

The skyrocketing growth of the Austin Airbnb business forces local authorities to attempt to impose tight Austin Airbnb regulations, in opposition to the general lack of restrictive Airbnb laws in the Texas real estate market. The state authorities have already tried to fight the restrictive Airbnb ordinance, and further struggle between the state and city authorities can be expected.

Austin Airbnb Laws and Regulations

The Airbnb Austin market has been one of the hottest in the country, experiencing immense growth in the past decade. Actually, the Airbnb industry is estimated to have brought $3 billion into the Texas economy in 2018, and a major contribution has been by the capital. Until recently, the Austin real estate market had some of the most relaxed rules governing short-term rentals not only nationally but globally. While Austin short term rentals are regulated, they are currently allowed for all property types and in all areas. According to Austin Airbnb regulations, vacation rentals are divided into 3 different types:

Type 1: Owner-occupied single family, duplex, and multi family units
Type 2: Non-owner occupied single family and duplex units
Type 3: Non-owner occupied multi family units

A short term rental license is required by the City of Austin authorities in order to operate legally as an Airbnb host. Applying for a license for the first time requires a non-refundable application fee of $500, proof of property insurance, and certificate of occupancy. Short term rental licenses have to be renewed annually, and the requirements include a non-refundable fee of $300, proof of property insurance, and proof of payment of the City of Austin Hotel Occupancy Taxes. Moreover, Airbnb Austin rental owners need to pay a 9% city hotel occupancy tax in addition to a 6% state hotel occupancy tax, with the latter being collected and remitted by the homesharing platform.

In 2016 the City of Austin passed a new Airbnb ordinance which affects mostly Type 2 Austin vacation rentals. According to the new Austin Airbnb law, no new Type 2 licenses will be issued for properties in residential neighborhoods, and all Type 2 short term rentals in residential areas will be phased out by 1 April 2022. As expected, this ordinance was met with strong resistance, and there have been several attempts by the state authorities to override local regulations in the Texas real estate market. While these attempts have been unsuccessful, the struggle is expected to continue before non-owner occupied short term rentals in single family homes and duplexes in residential neighborhoods become illegal. Regardless of how this battle plays out, Type 1 and Type 3 vacation rentals will remain fully legal in the Austin housing market beyond 2022.

Best Austin Neighborhoods for Investing in Airbnb Rentals

Austin Real Estate Market Report 2019 Best Austin Neighborhoods for Airbnb Rental Properties

1. Windsor Road

Median Property Price: $1,266,100
Price per Square Foot: $425
Average Monthly Rental Income: $2,790
Average Cap Rate: 7.0%
Average Occupancy Rate: 65.8%
Walk Score: 33

The Windsor Road neighborhood comprises the best neighborhood in the Austin real estate market to invest in a short term rental property. However, real estate investors interested in Airbnb Austin rental properties here will have to pay a price more than double the city-level median level. This urban area is ideal for Austin luxury real estate investments. The neighborhood has numerous restaurants, coffee shops, bars, and parks which explains the high Airbnb occupancy rate. Investing in an Airbnb rental in Windsor Road is one of the top ways for making money in real estate in Austin.

2. West University

Median Property Price: $323,300
Price per Square Foot: $343
Average Monthly Rental Income: $4,010
Average Cap Rate: 6.5%
Average Occupancy Rate: 65.9%
Walk Score: 82

Real estate market analysis of the West University neighborhood ranks it as the 2nd best Airbnb in Austin. The reason for the high profitability of Austin short term rentals here is the fact that this area is the most popular location for off-campus living among students of the University of Texas at Austin. This is also one of the most walkable areas in the Austin housing market. Austin homes for sale here are listed for 38% less than in the other Austin neighborhoods. Buying a short term rental in West University is a high return on investment option for beginner real estate investors.

3. North Burnett

Median Property Price: $262,300
Price per Square Foot: $211
Average Monthly Rental Income: $8,000
Average Cap Rate: 5.9%
Average Occupancy Rate: 62.7%
Walk Score: 38

The North Burnett neighborhood comes as #3 among the best neighborhoods for Austin vacation rentals in 2019 and 2020. One of the reasons for the high return on investment is the affordable home values here. An investor can buy a property here for about half the average Austin, Texas real estate prices. The neighborhood offers many amenities, outdoor activities, and entertainment options, which explains the high demand for short term rentals here. Buying an Airbnb investment property in North Burnett will allow an investor will make money from real estate right away.

4. University Hills

Median Property Price: $360,800
Price per Square Foot: $182
Average Monthly Rental Income: $3,940
Average Cap Rate: 5.9%
Average Occupancy Rate: 47.8%
Walk Score: 57

University Hills is yet another of the best neighborhood in Austin to buy an investment property to rent out on short term basis. This is a planned community built in the 1960s, dominated by ranch-style houses on quiet streets. Austin, Texas houses for sale in the University Hills neighborhood are listed for 31% less than properties in other areas. This suburban location generates high Airbnb rental income, especially when taking into consideration the relatively cheap houses for sale in Austin. Investing in real estate in University Hills to rent out on Airbnb is a good real estate investment strategy in 2019.

5. Wells Branch

Median Property Price: $338,000
Price per Square Foot: $197
Average Monthly Rental Income: $3,600
Average Cap Rate: 5.2%
Average Occupancy Rate: 47.0%
Walk Score: 31

Another top location for investing in Austin short term rentals is Wells Branch, a suburban area and one of the best places to live in the Austin housing market. The Wells Branch neighborhood has excellent access to amenities as well as nightlife opportunities, which makes it attractive for Austin Airbnb guests. The relatively affordable home values, compared to other houses for sale in Austin, Texas, make this area a viable investment option for those on a tight budget. Buying an Airbnb rental property is Wells Branch is worth your consideration if you are looking for lucrative opportunities in the Austin real estate market.

6. East Congress

Median Property Price: $359,500
Price per Square Foot: $309
Average Monthly Rental Income: $3,740
Average Cap Rate: 4.9%
Average Occupancy Rate: 39.5%
Walk Score: 34

The last on this list of the best neighborhoods in Austin, TX for vacation rental homes is East Congress. The East Congress neighborhood is a top area in terms of access to amenities. Austin, Texas real estate for sale here is listed for 31% less than in the rest of the local housing market. Renting out on Airbnb and other short term rental online platforms is a profitable real estate strategy for investors looking to make money in the Texas housing market. Although the Airbnb occupancy rate in this neighborhood is not too high, the cap rate is very good. Thus, investing in Airbnb in East Congress offers a money-generating opportunity in the Austin real estate market.

Investing in Austin, TX Real Estate: Optimal Rental Strategy

The Austin real estate market analysis 2019 above unequivocally shows that buying an Austin investment property is a smart investment move right now. The city-level return on investment – in terms of both cap rate and cash on cash return – is significantly above what many other top locations for rental properties offer in 2019, and the positive Austin real estate market trends are expected to continue in 2020 and beyond.

Considering the return on investment, Airbnb Austin rental properties are more profitable than traditional Austin rentals. Demand is strong for both rental strategies due to the high population growth and the ever-increasing number of visitors.

However, before buying an investment property in the Austin housing market to rent out on short term basis, real estate investors should consider the 2018 Airbnb ordinance introduced by the City of Austin. Based on this new Airbnb law, non-owner occupied short term rentals of single family homes and duplexes are expected to become fully illegal in residential Austin neighborhoods as of April 2022. This leaves Airbnb hosts with a few options. First of all, they can invest in multi family homes in the Austin residential real estate market, which actually offer a high return on investment. Alternatively, investors can consider buying a single family home or another property type in some of the non-residentially designated areas, provided that they are suitable for this rental strategy. Last but not least, those not owning a home and living in Austin can consider buying a duplex to live in one of the housing units and rent out the other. All these could be profitable real estate investment strategies in 2020 and beyond.

In case you are not attracted to any of these options, you can still find a very profitable long term rental property in the Austin real estate market. The key is to use the right real estate investment tools and to conduct thorough investment property analysis to assure a positive cash flow property from scratch.

Why You Should Invest in Real Estate in Austin in 2019: The Pros

The first and foremost reason a real estate investor should consider buying a property in the Austin housing market is the high profitability. Nationwide real estate data reveals that the return on investment for both long term and short term rental properties in Austin exceeds the cap rate and cash on cash return in many other top real estate investment locations across the US.

Second, the Austin real estate market is expected to remain a strong one, with above-average home value appreciation, as demonstrated by the trust which PwC shows in this Texas market.

Third, all other factors beyond the real estate market show that property investments in the Austin housing market are safe and profitable. Both the population and the local economy grow at a pace which exceeds by far the national rate. These are strong positive indicators for real estate investors, looking for both short term and long term money-making opportunities.

Consequently, if you are looking for lucrative real estate investments in the US housing market 2020 and beyond, take a look at Austin rental properties. If you want to make sure that you find a top-performing investment property at a good price, hire a good Austin, TX real estate agent.

Why You May Not Want to Invest in Real Estate in Austin in 2019: The Cons

While the Austin real estate market 2019 provides more lucrative investment properties than many other locations, there are a few things which investors should consider before buying an Austin rental property.

To begin with, affordability is a real issue in the Austin housing market, where the median property price is 128% higher than the national home value in 2019. However, this also means that those interested in investing in real estate in Austin should hurry up and buy a property in 2019 or 2020 at the latest as Austin real estate prices will continue to rise.

Second, Austin suffers from a high crime rate, which means that you will need to install additional safety and security systems and devices in your Austin investment property. Whereas this will increase your start-up costs, the investment will be worth it in the long run due to the high return on investment which you will be able to generate.

Next, while the Texas real estate market has one of the friendliest legislations for landlords of long term rentals, the City of Austin has introduced some quite strict regulations on short term rental properties. This makes investing in Airbnb Austin a less viable option for full-time real estate investors and those out of state. However, they can still find profitable opportunities such as multi family homes. The new Airbnb Austin laws are not as bad as those in the New York City real estate market, the San Francisco real estate market, the Las Vegas real estate market, or the Santa Monica real estate market.

Austin Real Estate Market Forecast

The Austin housing market forecast 2020 is generally positive and promising. Real estate appreciation is expected to remain strong, which will put some further pressure on affordability. While a housing crisis might be pending, an Austin real estate market bubble is not expected any time soon. Meanwhile, homebuilding projects are expected to accelerate, in response to the high population growth, and this might alleviate the affordability issue somewhat. The fast-growing economy, the positive net migration, the strong business environment, and the numerous attractions will continue supporting the demand for both long term Austin rental properties and Airbnb Austin rentals.

Additional Resources for Investors in the Austin Rental Market

Best Austin Investment Properties

Using an investment property calculator, you can search through the 673 Austin, Texas homes for sale and filter the ones that meet your criteria including budget, neighborhood, property type, optimal rental strategy, cap rate, and cash on cash return in a matter of minutes. A heatmap tool will provide you with a map of Austin neighborhoods to find out the best neighborhoods in Austin buy a rental property to invest in rental properties as well as the Austin neighborhoods to avoid for real estate investing. A Property Finder will help you land a top-performing investment property depending on your preferred rental strategy and other preferences.

Austin Real Estate Agents

Beginner real estate investors as well as those out of state and those looking for passive real estate investments can hire one of the top Austin real estate agents. An expert Austin real estate agent specializing in working with investors can help you find a good property, negotiate the right price with property sellers, and close the deal quickly and efficiently. Here are some of the best real estate agents in Austin:

Austin, Texas Real Estate Auctions

If you’d like to consider investing in foreclosed homes for sale in Austin, you can check out this calendar for auctions as well as other foreclosure related events in the Texas real estate market.

Property Management of Long Term Austin Rental Properties

Investing in traditional rentals in the Austin, Texas housing market does not have to be equivalent to becoming a landlord and dealing with all the daily tasks associated with this job. Alternatively, you can hire a professional property manager to tackle all your duties and responsibilities, while you enjoy your passive rental income.

Property Management of Short Term Austin Rental Properties

If you’d like to convert your Austin vacation rentals into passive real estate investments, choose one of the top property managers in the local market to handle all responsibilities related to owning and renting out an Airbnb Austin property.