The process of learning to think like an investor is a difficult, multilayered phenomenon. As we’ve discussed before, a distinguishing feature of successful investors is the ability to be receptive to trends and recognize the likely impact current changes will have on future outcomes.
Beyond just recognizing trends, it’s also important that you learn to take action when circumstances demand it. It’s not enough to simply see what’s around you, you have to know when to act on the facts you’ve gathered. Seeing and catching on are important things, but only through action can you really capitalize on trends and make your knowledge pay dividends for you.
The influx of people moving to the suburban areas of Austin, Texas is exactly the sort of trend that should catch your attention as an ambitious investor. We’ve talked about the importance of population growth before: Whenever you see large numbers of people moving to a specific area, this is a highly significant indicator. People do not simply pack up and move for no reason. Usually, there are multiple compelling reasons to justify moving from one place to another. Employment opportunities, housing, family unification, tax benefits—these are the sorts of reasons people pack up and relocate.
In this article, we will direct our investor skill set to Austin’s suburban population growth and give a sense of what this growth means for you as an investor. But before we do that, let’s briefly discuss the causes behind Austin’s impressive development.
Suburban Austin Is a Hotspot for Ambitious Millennials
The magnitude of Austin’s growth is truly striking: Since 2011, about 60,000 people have moved to the greater Austin area every year. This means that Austin is growing at a rate that is near the top for the whole country.
The growth has been fed by a few distinct factors. For one, Austin has a growing tech sector, and a number of big tech employers have moved to the area in recent years—Dell, Inc., for instance, is currently headquartered in Round Rock. What’s more, the city’s progressive culture has done well to attract millennials to the region, and the pleasant climate has also played a role in drawing newcomers.
The suburban towns of Hutto, Leander, Georgetown, and Buda have all shown impressive growth and all signs indicate that they should continue to grow well into the future. Buda’s growth outpaced all other suburban towns: between 2010 and 2015, the city grew by an astounding 64.1 percent! Hutto grew by a comparable 62.9 percent during that same time period. The figures for this time period for Leander and Georgetown were 37.6 percent and 27.2 percent, respectively.
Austin is currently groping for ways to cope with the stress placed on its infrastructure caused by the population increase. Suburban areas allow residents to commute to well-paying urban jobs and enjoy the perks of an urban lifestyle but also have a measure of tranquility at the same time. This is perfectly natural: People always try to have the best of both worlds, and in the eyes of many, living in the suburbs is one means to achieve this.
Suburban Austin Presents Opportunities for Multifamily Real Estate Investment
Austin’s growth in its suburban areas opens up special investment opportunities. Because suburban Austin has been able to attract and retain millennials so effectively, it should come as no surprise that investing in multifamily apartment communities in this area may be highly desirable. Given their age and preferences, we know that millennials tend to be drawn to renting (link to rent rather than own post when live) (though this is not true everywhere and in all instances). And this tendency is strong enough that multifamily apartment community investments should strike you as a very reasonable option.
As we pointed out, Austin’s growth is very impressive, and these newcomers to the Lone Star state will need to find adequate housing. Given the good employment opportunities offered in central Austin and neighboring areas, there’s an excellent probability that your investment will house tenants with well-paying jobs. And, ultimately, this translates into a financially profitable investment.
The real estate market of the greater Austin area is quite robust at the moment, and multifamily complexes play a key role in this competitive marketplace. According to the Emerging Trends in Real Estate report from PricewaterhouseCoopers (PwC), Austin is the most attractive real estate market for investors in the entire country for 2017.
Dallas-Fort Worth placed second in PwC’s list and edged out Austin along certain metrics, such as housing conditions and the office market. Austin’s supreme position comes about through its high-tech environment and economic diversity. And even though Dallas beat Austin this year in office development, Austin is no slouch in this area: Austin currently has about 1.7 million square feet of office space under construction, and approximately 75 percent of this is pre-leased!
Even though the multifamily market of Austin showed signs of slowing a bit during the third quarter of 2016, the evidence still points to Austin as a healthy multifamily market. According to Austin Investor Interests, LLC, even older multifamily properties (i.e. Class C properties) that have been upgraded have yielded good returns for investors. The lesson is clear: If your multifamily complex can offer the sort of things that are required to retain tenants—such as competitive prices, desirable amenities, and good location—then it has a great chance of succeeding in such an environment.
The migration to the suburbs of Austin, Texas presents plenty of opportunities for you as an investor. Now is the time to step up and take advantage of this important trend. Many signs point to Austin’s continual growth and development. As an investor, you want to understand how this fact can be financially beneficial to you. At CWS Capital Partners, we have a wonderful supply of experience dealing with multifamily apartment investments and would be delighted to discuss investment opportunities in the Austin area with you.
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The information provided here is for your general informational purposes only. It should not be considered a recommendation or personalized advisory advice. CWS has made this third party information available from authors it believes are knowledgeable and reliable resources. However, its accuracy or completeness cannot be guaranteed and sentiment may change due to legal or economic conditions.
All investments involve risk including the possible loss of principal. You should familiarize yourself with all risks associated with any investment product before investing.
Advisory services are provided by CWS Capital Partners LLC, a registered investment advisor.
Securities offered by CWS Capital Partners LLC are through an affiliated entity, CWS Investments. CWS Investments is a registered Broker Dealer, member FINRA, SIPC.