Why Austin Area Residential Rentals are a Great Idea!

First, the Austin area has always been a good place to own residential rent properties and that is in part what moved me and my family to Austin in 1981. Over the years, “good” has moved to “great” as the Austin area has continued to grow by attracting new business, especially high-tech business to the area. This plus the fact that Austin is the state capitol of a very large state, has a very large learning institution (UT) and other fine colleges in the area, coupled with a favorable climate and favorable tax rate, makes investing in local residential rentals a no-brainer. Fact is, over 50% of the citizenry of Austin rent housing. And that figure is poised to increase.

In 2016 Forbes published an article stating that in 2015 that nationwide that 36.3% of all households were rentals. The article went on to state that homeownership in this time period fell from 69% to 63.6%. This trend was NOT attributed to millenarians as we so often hear but to those in their 30’s and 40’s who prefer to rent vs. buy which is the opposite of what the standard was ten years ago.

A CNBC report in 2015 stated that the homeownership rate peaked in 2004 at 69.2% but now is close to the lowest it’s been since 1965. Meanwhile household formations are increasing meaning that rents continue to rise.

As businesses continue to expand and to relocate to our area one should expect to see further demand for rent housing. Consider this recent headline this week from the Austin American Statesman. The paper reported that California based JRS, a sign manufacturing company, will be relocating their Corvina HQ to Hutto Texas. They will be bringing with them 25 employees and will hire 40 more. Not a large company, but a company that sees that the Austin area is a good place to do business. And of course the new employees have to live somewhere and many of the new hires may move as well.

Reviewing all of the above and piecing it together, one can easily see that Austin with all of the vibrancy the area has to offer coupled with business growth and a young growing population, is an area where it makes sense to own residential rental real estate

Rick Ebert / Austin, Texas / 9 Feb 18

Gold in Leander?

A recent article in the Austin American Statesman stated that a gold depository is coming to Leander, Texas.  Lone Star Tangible Assets will build the facility, estimated to be less than 50,000 square feet, on ten acres of land but have not disclosed the location (I wonder why that may be).  To land this business the city of Leander has agreed to 1.5 million dollars in infrastructure improvements and further agreed to pay Lone Star Tangible Assets a $100,000 grant for six years if the company employs 100 people within three years of operation.  Sounds like a lot that the city is giving up but in return these 100 people will have a base salary of $50,000 a year.  The article was silent about providing free samples.  These employees in turn will generate sales tax revenue, stimulate the local economy by purchasing products and services, and oh yes, renting and buying houses in Leander.

Just another good reason to own Austin area (Leander) residential rentals.

Rick Ebert / Austin, Texas / 4 Nov 17

Congratulations Mike Gonzales TRPM TRLS

This week Mike Gonzales celebrates his 15th year with Austin Landmark Property Services, Inc. CRMC.  When Mike started with the company his role was something like a “Man Friday” and one of his first jobs was to paint an office that we had leased out.  Today Mike occupies that very office and looks at that very paint job.  Good work Mike as the office has required repainting!  Over the years Mike showed an interest in real estate surpassing his then duties and inquired about obtaining his real estate license so he could advance his career.  Classes taken and passed, Mike soon showed his skills in managing residential properties.  Always wanting to expand his knowledge and expand his expertise, Mike has earned the Residential Property Manager (RPM) designation from the National Association of Residential REALTORS.  Most recently, Mike has earned both the Texas Residential Leasing Specialist (TRLS) and the Texas Residential Property Manager (TRPM) designations from the Texas Association of REALTORS.

ALPS is proud to have Mike as a valued team member for so many years.

Rick Ebert / Austin, Texas / 1 Nov 17

Austin is the Most Changed City

According to MagnifyMoney, a subsidiary of Lending Tree, Austin Texas is the most changed city in the country over the last ten years.  The changes cited were the dynamic transformations in the housing market, incomes, crime rate, and overall economy when compared to similar sized cities and larger cities.  The ten year study was from 2006 to 2016.  The report stated that increased home prices and commute times can be negative but can be reflective of positive developments such as job growth and income growth.

No doubt about it, Austin has changed and it looks like it will continue to change for the foreseeable future.

And for those of us that provide residential rentals for all these folks coming to our area, the future looks good, real good.

Rick Ebert / Austin, Texas / 22 Oct 17

Amazon is Expanding in Austin

Giant online retailer Amazon has expanded its Austin workforce from 350 employees to over 900 employees, according to a recent article in the Austin American Statesman. And word on the street has it that they aren’t finished with their Austin expansion.  Fact is that Amazon currently has 100 positions that they are trying to fill.  Their facility is located in the Domain, a regional upscale shopping hub located in north Austin (site of the former IBM plant that moved across the street).

Amazon apparently isn’t finished with Austin yet as they have tentative plans to keep expanding.  And oh yes, Austin is one of the cities being considered for what Amazon dubs HQ2, a second home office.  Stay tuned for future developments.

And by the way, all of these hires have to live somewhere and many are millennials who prefer to rent vs. buy.  Now is a great time to own Austin area real estate.  I’m glad I do!

Rick Ebert / Austin, Texas / 4 Oct 17

Merck Coming to Austin

Austin is now home to the Dell Medical School a teaching hospital that has replaced the old Brackenridge Hospital.  This development has caught the eye of Merck a giant in the world of pharmaceuticals and who now plans to develop an innovative technology center in our fair city with an investment of over $29 million in sticks and bricks near the hospital. This will also create over 600 new jobs with an average pay over $85,000 a year.  A Merck spokesman stated that their presence will likely spur an innovative zone drawing similar businesses to the area and assumingly with similar pay.

This is great news for us investors having Austin area residential rentals.  Yes most of these folks drawing that kind of pay will probably become homeowners.  But many of them will rent first and buy later.  Also, each firm will have others on staff that won’t be drawing that kind of pay and who will be renters.  And of course there are always ancillary services needed by these companies and they too will have persons who need to have a place to live.  And that folks is where we come into the picture.

Paul Hilgers, CEO of the Austin Board of REALTORS spoke at a luncheon this week and stated (and this is about right) that the average rent in Austin has increased about 40% over the last 7 years.  The average wage in Austin has increased about 4% of the same time.  The point, regardless of the figures, is that it is becoming exceedingly difficult for people to buy a home in the Austin area because of the increase in home prices which in turn means a larger down payment. It is becoming difficult to save for the down payment because that figure has been moving upward.  So this means that leasing a home is becoming the option of necessity if not by choice.

Rick Ebert/Austin, Texas/20 July 17

Austin Based Home Away Adding 2,000 Jobs

It was reported in today’s Austin American Statesman that Austin based Home Away will be adding an additional 2,000 new jobs starting in 2019.  For those of you that are not familiar with Home Away, they are a company that lists short term rentals for owners and has recently been purchased by Expedia.  The location of the new headquarters will be a new 315,000 square foot office tower located in the Domain.  The Domain is the site of the former IBM plant located at Braker Lane and Burnet Road.  The Domain has it all, Tiffany’s, Whole Foods, lots of top scale restaurants and top notch apartments.  Very first class indeed.   When you consider that Expedia is located in Bellevue, Washington, but that the expansion is taking place in Austin, it says a lot about what corporate America this of Austin.  I think that the cost of construction had a lot to do with it.  It’s been a while since I visited friends living in Bellevue, but as I recall, there isn’t much of a place to build there, and if you tried to build, it would empty your pockets.  Then too, there is cost of living, Austin is much cheaper than many high tech areas.

All the more reasons for owning Austin area residential real estate.

Rick Ebert / Austin, Texas  / 23 June 17

1 Million Fewer Homeowners today than 10 Years Ago

At a recent conference held in Berkeley California, Ken Rosen president of the National Association of REALTORS, and University of California economist Ken Rosen gave their views on why there are fewer homeowners today verses ten years ago.  It is something of a mystery but the speakers did a good job of unrevealing it for us.  One reason is that many people still remember the bad times of all of the nations’ foreclosures and how long it took to get back on our feet.  So these folks are shell shocked and avoid buying a home.  That is good news for us investors in residential real estate as we can provide good housing for those that are risk avoiders.  Reasons also cited included:

  1. The shortage of single family homes.  Production of single family homes simply hasn’t kept up with demand.  Nationwide there is an estimated 3.7 million deficit over the last eight years.  And in the Austin area, the cost of acquiring land has increased dramatically.
  2. The price of buying a home has increased due to the lack of inventory (see #1).
  3. Student loan debt is high and this keeps many young families from buying a home.  They simply can’t save for the down payment while paying off this debt.  And as they continue to pay down student loans the cost of buying a home increases.  It seems for many to be a moving target.
  4. Mortgages are harder to come by today than yesteryear with stricter qualifying standards in place.  I think this is a good thing.  As we investors know only too well, there is more to owning a house than just making the mortgage payment.  Those window treatments and plants really start to eat into the pocket book.  Then comes the maintenance expenses.

So folks for the foreseeable future owning a well-placed piece residential rental in a growing area like Austin is a good investment.

Rick Ebert Austin, Texas / 12 June 17

How much cheaper is Austin Compared to ???

A recent article in the Austin Relocation Guide compared living in Austin to other major cities.  Specifically, how much money does it take to have a decent lifestyle in Austin when moving away from these cities?  The study assumed that the person was making $60,000 a year.

For instance it you make $60,000 in Detroit you only need to make $59,440 in Austin.  The plus side here is our winters are the envy of the nation.

Moving from here to Austin you only to make this much to have the same lifestyle:

San Francisco:                    $32,173
Boston:                                $39,397
Denver:                                $51,996
Seattle:                                 $39,381
New York City:                   $33,431
Los Angles:                         $39,819
Chicago:                              $48,354
Portland:                             $45,225

Why such a large gap in wages to sustain the lifestyle?  Because Texas does not have a state income tax and is frugal in spending tax dollars.  These reasons coupled with a favorable climate, good roads, and a can-do business attitude that attracts employers and thus creates jobs, means that you can live here for less than similar size cities.  And since these new arrivals need housing, coupled with the fact that the demographic of the typical renter and homeowner are changing, it means that landlords are in a great position.

Rick Ebert/ Austin, Texas / 29 April 17


What Renters Say About Renting

A recent article in the “Daily Real Estate News” quoted a survey from Freddie Mac of renters about how they view renting.  The information is pretty much on target with other information I have gleaned from other sources, so I consider the information in the survey to be more of a confirmation of trends that I have seen in the Austin area and with our managed properties.  Here it is:

  • Renters are not likely to move even if there is a rental increase
    • Overall percentage was 55% plan to stay
    • Those who stated that they plan to move within the next 2 years dropped from 38% to 33%
    • 60% of those aged between 35 to 49 stated that they plan on staying put vs. leaving even if there is a rental increase
  • Generally, renters like where they live and feel good about renting
  • Fewer renters are working towards home ownership
  • Fewer renters are planning to buy a home within the next few years
  • Of those surveyed who plan to move 59% plan on renting vs. buying a home
    • This is a 55% increase over September 2016
  • Tenants who expressed an interest in owning a home in the future dropped to 41% from 45% in September 2016.

So what does this tell us?  Answer:  That owning a residential rental that is in good repair and well maintained and located in a desirable area is a product that will have a tenant.  Reading between the lines, it also tells me that the tenant will take some pride in residing in the property which should translate to taking care of it.  All the while as home prices continue to rise in our area we have a tenant who is helping us increase our equity position in the property and provides cash flow.

How sweet it is!

~Rick Ebert