It’s no secret that Austin’s housing market has shifted in the last two years. Gone are the days of bidding wars, cash offers dramatically over asking price and properties selling overnight. Right now, it feels a bit like the Wild West where anything goes. Mortgage rates are up, and tariffs wars are creating economic uncertainty in the mind of the public. So, what’s an investor to do?
While it might feel strange to be celebrating, the public’s uncertainty might be your golden opportunity to expand your investment portfolio. Austin has more available inventory than we’ve seen since 2017, and prices are dropping. For the first time in fifteen years, potential buyers have the upper hand. Here are five things you can do to successfully take advantage of it:
1. Take your time. With homes sitting on the market for 30, 60, or even 120 days, you have the freedom to shop around, take your time, and make more calculated decisions. Select an area of Austin in which you’d like to invest, and see all the homes, even the ones that don’t immediately catch your eye. Physically touring properties will give you a better idea of what’s available which can help you negotiate a better deal when you do find your ideal investment.
2. Make an offer. Right now, sellers are more likely to accept offers dramatically below asking price. Keep in mind, this won’t always be the case. Under-market offers reduce a seller’s purchasing power and with more opportunities for remote work, many owners can ride out the storm without selling quickly. But you never know when you’ll encounter that seller who’s ready to sell at any price. It’s a numbers game. Don’t be afraid to just make an offer. Find a realtor who specializes in rental investments and who’s willing to make any offer for you.
3. Consider your options. Long-term rental prices in Austin are also cooling off, so consider other possibilities. Austin still has plenty of appeal for tourists. Between ACL, SXSW, the Formula 1 Racetrack, the Q2 Stadium, and Longhorn Football, there are year-round events drawing large crowds from all over the globe. So maybe it’s worth considering a short-term rental. Websites like AirDNA and Rabbu can help you estimate potential profit on a short-term rental. Remember that these numbers are just estimates. You’ll need to do your own research to ensure you’re making the best decision. If short-term rentals feel too risky, the University of Texas may also present opportunities for mid-term rentals to students or adjunct professors.
4. Do your math and your research. Just because more options are available doesn’t mean you should go hog wild. With mortgage rates remaining stubbornly high, insurance rates increasing, and the cost of repairs going up, it’s more important than ever to stick to the numbers. Just because you can purchase an investment property for half the price you could have two years ago, doesn’t make it a good investment today. It’s also important to make sure you understand the laws and restrictions surrounding the rental market before you jump in.
5. Make relationships. The age-old maxim still rings true: it’s not what you know, it’s who you know. Find a realtor who has experience in Austin’s rental market. Realtors who specialize in sales will not necessarily have the expertise you need to succeed in rentals. Relationships in the housing repair industry are equally important. At Neighborhood Realty, we can keep the cost of maintenance work down because of the long-standing relationships with our vendors. The sheer volume of business we give them means we get the best deals for our clients. But even if your portfolio isn’t as large as ours, you can still use this strategy. Find a handful of vendors that you like and send them as much business as you can. This does not mean you shouldn’t get multiple bids. Long-standing relationship or not, you should always look for the best deal.
While the United States seems to be navigating into uncharted economic waters, you still have the potential to increase your wealth and create a healthy property investment portfolio. If you’re interested in purchasing an investment property, or you’d like to put your current portfolio in expert hands, Neighborhood Realty and Property Management has been one of the top-producing rental property management companies in the Austin area for more than 30 years. We’d love to help you reach new levels of success!