According to a recent report by CNBC, renters nationwide (including the Austin area) will continue to see rising rents. They quoted a Harvard study which stated that even if income levels and rents increase by 2% a year, that renters will still see rent increases. The reason, more folks are deciding to rent vs. buy. The nation has more renters today than any other time in our history and construction for rent property (namely apartments) can’t keep up with demand. I see our whole culture as changing from young folks getting married and starting families and then going out and buying a home to raise those kiddos, into a culture where many young people prefer to remain single or co-habit a rental. Similarly, many retired persons are cashing out of the home they have owned for many years where they raised a family, and moving to more favorable climates that have amenities (like the Austin area).
Recon, a publication of the Texas Real Estate Center reports this week that California based Apple, Inc. has developed 38 acres on West Parmer Lane into its second largest operation in the world. This site will be Apple’s basis of operation for the entire Western Hemisphere and will be a bit large – like over 1 million square feet. Considering that there are 43,560 sf in an acre, well you do the math – it’s Texas sized! Apple will create 3,600 new jobs to fill the space and retain the 3,100 already in place. There are lots of towns that don’t have that many people. I suppose that with this many folks in one place that Apple could qualify for its own zip code and post office!
Just more reasons why owning Austin area residential real estate is a sound idea.
A recent article in REALTOR Magazine advised agents to inform their buyers to perform annual property inspections of their property as doing so can save them a bundle of cash by catching small issues before they become big expenses. As an absentee property owner obviously you can’t do that. For years we have been advising our investor – owners to have their property professionally surveyed for deficiencies that trained eyes can spot. The expense of the survey is minimal when you keep in mind that catching even one item can save you thousands of dollars in repairs. Since the cost of the survey is a business expense the price tag just dropped. In our central Texas area the condition of exterior paint is a frequent item of concern. Not only does flaking and peeling paint look bad which can lead to losing tenants or not finding replacement tenants quickly, it can cause the wood to deteriorate. In some instances we have had to replace wood panels because the wood was not properly cared for by owners. For instance, when paint is allowed to become flaky or to peel, it then causes the fasteners (usually nails) to become loose, and this in turn allows water to penetrate to the interior. This in turn can lead to mold and insect infestation as the wood paneling begins to separate. Roof coverings also take a beating in our area. We can have several days of summer well over 90 degrees which causes the asphalt shingles to expand; when cooler days come the shingles contract. Then come the rains and guess what, the roof leaks. Another item to consider is the plumbing. Water heaters only live for so long and then they start to leak. Small leaks can develop overnight that can cause extensive damage if left unrepaired.
Benjamin Franklin once said: “For lack of a nail, the shoe was lost. For lack of a shoe the horse was lost. For lack of a horse the rider was lost. And for lack of a rider the war was lost”.
The take away is to have your rent home surveyed yearly so that minor items don’t become large expenses. Did I mention that these annual property surveys also let the tenants know that you care about the property and that they need to know that you are observing their care of it?