As the rest of the US and global markets remain uncertain, Austin Texas is looking as bright as ever according to economist Angelos Angelou. “We will have a healthy economy, the envy of many cities around the country, Austin today leads the charts on every measure of economic growth one can think of.”
Angelos is generally very conservative when making employment forecasts. He predicted 19,000 new jobs in 2012 however; we ended 26,000, which is a welcome sight!
The areas already booming population will expand another 7 percent by 2014, Angelou said, coming just shy of 2 million. Meanwhile, Austin employers will add 29,000 jobs next year and another 30,000 in 2014
Unemployment lowered to 5.3%, which is well below the 7.8% national average spurred by a business and tax friendly environment.
The country and large employers are noticing, he stated, pointing to Apple, Facebook, GM, Visa and Samsung, which call Austin home. Furthermore, Apple is on-track to double its workforce in the coming years, which may make it the largest employer in Austin.
Austin hosted its first Formula One race which was a huge hit and brought millions in tax revenue to the city. South by Southwest and ACL also continue to grow. This positive impact has been seen with the low occupancy rate in the hospitality and increasing wages.
Real estate values and rents remain strong. Continued population growth has the potential to create a lasting and severe shortage of residential real estate in the near future, Angelou said.
Savvy investors know that real estate is a great way to build real wealth. With rental property you have multiple income streams that are increasing your wealth:
- Cash on cash return (ROI from rental income)
- Property appreciation (wealth increases)
- Tenants paying mortgage builds equity/wealth for you!
- Tax benefits (Write-offs, deprecation, etc)
- Purchase equity
The Austin TX rental property market offers great cash flow whether you are investing in single family homes, multi-units or apartment complexes. Each has its advantage and disadvantage. We personally focus on single family and up to 4plexes as opposed to apartments. This is due to the ease of obtaining traditional financing and the amount of foreclosures on the market. Furthermore we see huge upside on home values as the markets continue to normalize. Apartment complexes do tend to offer better cash on cash returns but the financing is harder to obtain and the value of the property is tied more to rental prices rather than comparables.