Which are Best Austin Areas -- vs. Best to Buy? (Clarksville: city hall, rental)

[FrozenCucumber]

Hi folks,

I am new to Austin and part of the Austin "bubble" that is happening right now!

I've been doing a bit of research, but I have a head scratcher. Where is the best place to live vs. where is the best place to buy? This would be an investment property of $100-$400K, with the goal of renting out for yield + benefit from price appreciation (thank you Bernake!)

I see some real great areas to live -- Clarksville, for example. But is this the best place to buy? Prices here can be DOUBLE other seemingly interesting areas (East Side, Travis Heights.. even Allandale or Brentwood).

A lot of interesting neighborhoods.. but best places to live aren't necessarily the best places to buy for an investment property.

Any advice / pointers would be very helpful.

Thank you in advance.

[OpenD]

Hi there,

A lot of people ask the same broad, general questions, so your fastest access to a lot of good answers is to use the Search function here to dig into the archives about the aspects of relocation to Austin that are most of interest to you.

Then once you have some basic information under your belt, it will be a lot easier to ask more specific questions that are pertinent to your particular situation. And the more information you supply, the more likely people will be able to help you in a meaningful way.

That is, if your question is serious.

[Komeht]

Depends on how you want to make your money back: cashflow or appreciation?

Some houses just East of downtown have best potential right now to appreciate. But it's dicier as some areas may not gentrify as Quickly as you might hope. Risk v reward...

[buffettjr]

The best place to buy in your price range would be the east side between 1st street and 15th street, closer to the highway (which is to say closer to downtown). It's a formerly poor area that is rapidly gentrifying. The huge ugly power plant there is being taken down and turned into a park. You can still find houses below $400k. You'd have to put down a healthy down payment to be cash flow positive though, what with the property taxes and insurance and such. But as a general rule, the closer to downtown you are and the more gentrifying the neighborhood, the greater the prcie appreciation you usually see.

[sxrckr]

And, you should plan to keep it at least a few years if not more, before wanting to sell.

[FrozenCucumber]

Thank you for all of this. This is all great advice. I plan on putting 20-25% down and hold for 20+ years and not flip. I've read a lot of the board, and generally I find it tough isolating which areas are best to LIVE, and which areas are best to INVEST. I hope to identify both, and then the intersection of the two is where my dollars will go.

"Depends on how you want to make your money back: cashflow or appreciation?"
If possible-- BOTH! I would like to focus on cash flow to minimize downside, and and then by picking well, I will benefit from the appreciation upside. As Warren Buffet said... or said along the lines of... why buy a cheap bad company, when you can buy a cheap good company?

Unfortunately, I am still new to the market and am no Warren Buffet. Areas that jumped out to me as being interesting were areas in close proximity to downtown and gentrifying. A lot of areas jumped out to me.. East Side, Travis Heights, Clarksdale, etc.

But again I have a tough time sorting which areas will be good areas to live, vs. invest. How to rank East Side vs. say Travis Heights, or even Allandale...

Thank you again. I'm excited.

[FrozenCucumber]

Originally Posted by buffettjr

The best place to buy in your price range would be the east side between 1st street and 15th street, closer to the highway (which is to say closer to downtown). It's a formerly poor area that is rapidly gentrifying. The huge ugly power plant there is being taken down and turned into a park. You can still find houses below $400k. You'd have to put down a healthy down payment to be cash flow positive though, what with the property taxes and insurance and such. But as a general rule, the closer to downtown you are and the more gentrifying the neighborhood, the greater the prcie appreciation you usually see.

Thank you for this advice. Very, very helpful. Is there any more advice you can share about this particular area?

[Komeht]

Originally Posted by FrozenCucumber

Thank you for all of this. This is all great advice. I plan on putting 20-25% down and hold for 20+ years and not flip. I've read a lot of the board, and generally I find it tough isolating which areas are best to LIVE, and which areas are best to INVEST. I hope to identify both, and then the intersection of the two is where my dollars will go.

"Depends on how you want to make your money back: cashflow or appreciation?"
If possible-- BOTH! I would like to focus on cash flow to minimize downside, and and then by picking well, I will benefit from the appreciation upside. As Warren Buffet said... or said along the lines of... why buy a cheap bad company, when you can buy a cheap good company?

Unfortunately, I am still new to the market and am no Warren Buffet. Areas that jumped out to me as being interesting were areas in close proximity to downtown and gentrifying. A lot of areas jumped out to me.. East Side, Travis Heights, Clarksdale, etc.

But again I have a tough time sorting which areas will be good areas to live, vs. invest. How to rank East Side vs. say Travis Heights, or even Allandale...

Thank you again. I'm excited.

The best chance of appreciation is central. The lowest cost of entry central is the East side. The East side stands to appreciate the most as it gentrifies. The outer suburbs are bad areas for investment as there is unlikely to be much if any appreciation. Housing in central Austin except for the CBD is somewhat capped due to some amazingly backwards ordinances which will keep prices high for the foreseeable future. Mind you, it's possible one day city hall will come to it's senses and stop paying attention to the NIMBY's and neighborhood crazies, but as this is unlikely to happen anytime soon, there won't be a great deal of new stock centrally to offset ever increasing demand.

If I were looking to invest for cash flow and appreciation I would look into the closer in neighborhoods on the east side (French Place, Cherrywood) and stay away from further away east side neighborhoods (University Hills, Windsor Park).

If you had a bunch of money, Mueller could be a very good play for appreciation - but your outlook would have to be very long term as it's still developing and new stock will compete with resale for some time to come. But the new amenities coming in this year, and the coming years will make this close in development very very attractive and not a bad place for cashflow while you wait out the development.

[buffettjr]

Originally Posted by FrozenCucumber

Thank you for this advice. Very, very helpful. Is there any more advice you can share about this particular area?

It was largely a poor urban Hispanic community, and there is still a lot of that. If you drive down Cesar Chavez, you will see mostly businesses with signs in Spanish, including car dealerships flying Mexican flags, several pinata stores, and the famous Don Juan's restaurant.

Yet you turn down another street (such as Holly) and it is entirely filled with brand new homes with a modern design aesthetic and Range Rovers in the driveway. Gentrification to the extreme.

The city is spending lots of money there due to political pressure. They completely renovated 7th street. They remodeled the under highway parking at 6th and the highway. They're tearing down the Holly power plant to make a city park on the water, and they installed several MetroRail stops.

The one thing that will hold you back here is that the schools are very, very terrible. I would have bought a fixer upper in the location myself, but at that time I thought I might be starting a family instead and therefore bought a fixer upper in the Zilker neighborhood instead. The quality of life is higher in the west neighborhoods such as Zilker, but the investment potential is higher in the east neighborhoods. It is easy to see the future of that area. An urban neighborhood right downtown and on the water? It will soon be filled with rich white people. They can either be yuppies with no kids, gay couples, rich families that send their children to private schools at additional cost, or perhaps over time the schools in that area will improve as a richer base moves in. Those are basically the four possibilities.

[FrozenCucumber]

Very helpful again. A few questions.

East Side
* What type of gross rental yields can one obtain in East Side today?
* Are there any brokers you would recommend specializing in East Side investment properties?
* Any other East Side neighborhood recommendations?

Other Neighborhoods
* It seems like brokers are also pushing Southwest Austin -- anything of interest to say here vis a vis East Side?
* Any comments on Travis Heights vs. East Side?


Thank you