Austin Real Estate

June 28, 2016 By Mary Lynne Gibbs

Advantages of Real Estate Investing for Savvy Entrepreneurs

I’ve had numerous conversations with entrepreneurs lately who have come to the conclusion that they need to start diversifying their business profits into more than just a savings account. If this is you – pay close attention.

Being a real estate investor isn’t always glamorous but it is one of the best ways to build wealth over the long-haul, especially for the entrepreneurial-minded. Here are six reasons why you should consider investing in rental properties.

1. Cash flow.
Many people invest in rental properties simply because of the cash flow – the extra money that is left after all the bills have been paid. The cash flow can provide ongoing, monthly income that is mostly passive, allowing you to spend your time building a business, traveling or reinvesting in more real estate.

Cash flow from real estate is stable and far more predictable than most other businesses. That’s great for entrepreneurs enduring the ups and downs of start-up life. The cash flow can help float you though the bad times and live well during the good times.

2. Tax benefits.
Let me ask you a quick question: if you earn $100,000 at your own business and I earn $100,000 through rental properties, who get’s to keep more?

That’s right: I do. Because the government rewards rental property owners.

Not only is the cash flow received from your rentals not subject to self-employment tax, the government offers tax benefits including depreciation and significantly lower tax-rates for long-term profits.

3. The loan pay down.
When you buy a rental property using a mortgage, your tenant is actually the one paying the mortgage payment, thus increasing your net worth each month. Because of the loan pay down a rental property is essentially a savings account that grows automatically, without you depositing money each month.

Today you might owe $200,000 on a rental property, but next year you might only owe $195,000 because the tenant is making the payment for you, making you $5,000 richer. Thirty years down the road, or whatever the term of your loan, it’s paid down to $0. You own a significant asset that you can sell or continue renting, all thanks to your tenant paying the mortgage.

Related: Looking for Stable Business Ideas? Here Are 12 Types of Companies With Healthy Cash Flow.

4. Appreciation.
While the loan is being paid down the value of real estate, generally, goes up. Yes, I know, recessions do happen. Values do go up and down. People buy at the wrong time of the market. I get it.

However…

Over time, values do climb higher and higher. That’s why I’m not in this real estate game just for a year or even a decade. I’m in this for life. I know my properties will continue to climb so that 30 years from now, everything will be worth far more than I’m paying for it today.

5. A hedge against inflation.
Can you imagine paying ten dollars for a gallon of milk? Or five dollars for a candy bar? While those prices seem exorbitant to you, this is the future because of inflation. Inflation is the process by which prices increase due to the value of money decreasing.

While most people fear inflation, as a rental property owner, I look forward to it!

When the price of a gallon of milk hits ten bucks a gallon, guess what else is going to shoot through the roof? Everything, including rents and property values! The one thing that won’t increase, however, is my fixed-rate mortgage payment. As inflation pushes the cost of living higher and higher, my cash flow will only increase. This is why real estate is often called “a hedge against inflation.” When inflation hits – I’m ready!

6. Control.
I don’t like my destiny tied to a board room on Wall Street or a nervous CEO in Silicon Valley.

This is why I choose to invest most of my income in real estate, knowing that I am the one who is responsible for my success or failure.

If I want a better deal, I need to hustle to find it.
If the rental market gets more competitive, I can compensate by increasing my advertising.
If values drop, I can choose to wait it out or improve the property to drive the value back up.
In other words, I get to control the situation, and my financial future, with my own two hands. And that suits me just fine.

Don’t think that just by owning some rentals you are instantly going to begin building wealth. Real estate is powerful – but only if you work it right.

You must learn how to find great deals, how to evaluate a real estate investment, and how to finance any properties you want to buy. Additionally, you must treat it like a business and nurture it as it matures. It’s likely not going to be totally passive up front, but as millions of individuals throughout history have discovered, the payoff is well worth the journey.

Source: Brandon Turner, entreprenuer.com

May 20, 2016 By Mary Lynne Gibbs

April 2016 Austin Real Estate Review

Rising home sales throughout Central Texas highlight growing urban sprawl, Austin affordability challenges

May 19, 2016 – Single-family home sales increased in the Austin-Round Rock Metropolitan Statistical Area (MSA) in April 2016, highlighting growing urban sprawl as rising housing costs exacerbate affordability challenges, according to the April 2016 Central Texas Housing Market Report released today by the Austin Board of REALTORS®.

“Much of Central Texas’ home sales activity is now taking place outside of Austin’s city limits, with housing demand driving growth in surrounding counties,” said Aaron Farmer, 2016 President of the Austin Board of REALTORS®. “The City of Austin’s housing market is drastically different than surrounding areas. In Austin, home sales growth is suppressed, inventory is more constrained and home prices are much higher.”

In April 2016, single-family home sales increased 12.5 percent year-over-year to 3,863 home sales in the Central Texas region. Nearly 80 percent of those homes were sold outside of Austin’s city limits. In the five-county MSA, single-family home sales rose 5.1 percent year-over-year to 2,600 home sales during the same time frame.

Hays County experienced the largest annual gain in home sales in April 2016, with single-family home sales jumping 17.8 percent year-over-year to 338 home sales. Williamson County was the only county in the Austin-Round Rock MSA to experience a decline in home sales in April 2016, with single-family home sales dropping 5.1 percent year-over-year to 816 home sales.

In the City of Austin, single-family home sales held steady at 829 home sales, a 1.7 percent increase from April 2015 and nearly equivalent to the home sales volume in all of Williamson County in April 2016.

“Hays County is one of Austin’s few surrounding areas with entry-level homes priced less than $200,000, a price point with high demand,” said Mark Sprague, State Director of Information Capital for Independence Title. “In Williamson County, demand is highest for homes priced between $200,000 and $400,000, but there is not sufficient housing stock to meet demand, particularly in Round Rock and Pflugerville.”

The rate of growing home prices also slowed in Williamson County in April 2016, with the median price for single-family homes increasing only two percent year-over-year to $255,000. Conversely, the median price in Travis County increased 7.8 percent from April 2015 to $339,500, while median price within the City of Austin jumped 10.6 percent during the same time frame to $359,450.

Despite small gains across the region in April 2016, monthly housing inventory in the Austin-Round Rock MSA remained low at 2.3 months. This is nearly two-thirds less than the 6.5 month-level the Real Estate Center at Texas A&M University cites as a market in which supply and demand for homes is balanced. In Austin, housing inventory remained at near-critical levels of 1.8 months, an increase of 0.3 months from April 2015.

“Housing affordability includes not only a home’s sale price, but the homeowner’s ability to continue to afford the home as property values rise from year to year,” concluded Farmer. “The Austin Board of REALTORS® encourages homeowners to learn how their home is being appraised and all property tax exemptions they might qualify for. A Central Texas REALTOR® can help homeowners contest their assessment by identifying comparable properties and gathering the necessary background information to formulate an appeal.”

April 21, 2016 By Mary Lynne Gibbs

March 2016 Austin Real Estate Review

ABoR calls attention to housing diversity issues in Central Texas amidst rising home prices

March 2016 Statistics

• 2,552 – Single-family homes sold, 9.3% more than March 2015
• $278,000 – Median price for single-family homes, 7.8% more than March 2015
• $347,734 – Average price for single-family homes, 4.5% more than March 2015
• 54 – Average number of days single-family homes spent on the market, unchanged compared to March 2015
• 3,633 – New single-family home listings on the market, 12.2% more than March 2015
• 4,669 – Active single-family home listings on the market, 12.2% more than March 2015
• 2,811 – Pending sales for single-family homes, 7.2% more than March 2015
• 2.0 – Months of inventory of single-family homes, 0.2 months less than March 2015
• $887,419,074 – Total dollar volume of single-family properties sold, 14.1% more than March 2015

April 21, 2016 – According to the Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS®, Austin-area single-family home sales increased 9.3 percent to 2,552 home sales in March 2016 compared to the same month the year prior. Median single-family home price also increased 7.8 percent year-over-year, reaching $278,000 in March 2016.

“Home sales continue to rise throughout the region, but for many Austin-area residents, homeownership is just not a feasible option,” said Aaron Farmer, 2016 President of the Austin Board of REALTORS^®. “Longtime Austin residents are being priced out of their homes and many are unable to live close to their work or school. As a city, we have to start being mindful of how our property development, appraisal and code enforcement decisions impact not only housing affordability, but also the diversity of our neighborhoods and communities.”

Demonstrating the need for additional housing supply, Austin-area monthly housing inventory was 2.0 months in March 2016, a decrease of 0.2 months from March 2015. This figure is still well below the 6.5 month level the Real Estate Center at Texas A&M University estimates as a balanced housing market. Homes spent 54 days on market in March 2016, unchanged from the year prior.

Farmer adds, “The City of Austin’s ineffective code enforcement and land development code are immediate barriers to achieving more diverse, affordable housing options throughout our city, both by failing to preserve existing housing stock through proper code enforcement and restricting infill and further development where additional housing options are needed most.”

Blanca Garcia, Owner and Broker with Casa Blanca Realty, specializes in rapid re-housing and serving traditionally underserved populations. She connects her clients with the financial education they need to get preapproved for a home purchase through groups that offer homebuyer education classes, such as those offered through Habitat for Humanity.

“Working families and young professionals have been priced out of the city for years and these affordability issues are now extending to surrounding areas of Central Texas like Manor and Kyle, with some current Austin residents looking as far out as Lockhart to find an affordable home” said Garcia. “We need creative and collaborative solutions to provide more housing inventory and help homeowners continue to call Central Texas home.”

New listings increased by 12.2 percent to 3,633 listings and active listings increased 1.5 percent year-over-year to 4,669 listings in March 2016. During the same time frame, pending sales increased 7.2 percent to 2,811 sales.

“The Austin Board of REALTORS® is taking action to encourage greater housing diversity in Central Texas by providing enhanced REALTOR® education on fair housing and diversity issues. We want homebuyers and sellers to know that REALTORS® can help them take advantage of homebuyer assistance programs and pre-purchase counseling to find their future home,” concludes Farmer.

January 27, 2016 By Mary Lynne Gibbs

Don’t Forget To File Your Homestead Exemption!

Did you purchase a home in 2015? Is this new home your primary residence? If so, congratulations! It is now time to file for your Homestead Exemption, a tax exemption for primary home owners. The exemption is free to obtain and can save you up to 20% on your property taxes. In addition to submitting the exemption application, you may also need to provide a copy of your driver’s license showing the address of your new property and a copy of your vehicle registration with the same address. The deadline for filing your Texas Homestead Exemption is April 30th.

There is no fee to file your homestead exemption. But, please beware that you might receive an official looking letter asking for $25+ to file this exemption for you. This is not necessary.

Please see the contact information below for Travis, Williamson, Hays and Bastrop counties for the Homestead Exemption forms and instructions on filing.

Travis County – http://www.traviscad.org

Williamson County – http://www.wcad.org

Hays County – http://www.hayscad.com

Bastrop County – Call 512-303-1930 ext. 22

To qualify for the Homestead Exemption in the state of Texas, you must own your home on January 1, 2015 and it must be your principle residence.

Additionally, if you are older than 65 or a disabled veteran, you may also qualify for other exemptions. Please go to http://www.window.state.tx.us/taxinfo for more information and what exemptions you might be eligible for.

If you have any questions or need help filing your Homestead Exemption form, don’t hesitate to call or email us. We are always happy to help!

January 21, 2016 By Mary Lynne Gibbs

December 2015 Austin Real Estate Review

Austin Board of REALTORS^® releases real estate statistics for December 2015 and 2015 Year-End Totals

AUSTIN, Texas – Jan. 21, 2016 – Austin-area single-family home sales and prices set all-time records in 2015, as well as records for the month of December 2015, according to the December 2015 and Year-End 2015 Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS^®.

Aaron Farmer, 2016 President of the Austin Board of REALTORS®, explained, “Demand for Austin-area real estate was stronger than ever in 2015, primarily due to our region’s job and ongoing population growth. However, low housing inventory levels, rising home prices and high housing development costs have brought Austin’s housing affordability issues to critical levels. Median price for single-family homes in the Austin area increased nearly $30,000 in the last year alone.”

According to the report, 29,068 single-family homes were sold in the Austin area in 2015, a five percent increase from 2014 and an all-time high for Austin-area home sales. Single-family home sales for the Austin area also set a monthly record in December 2015, increasing five percent year-over-year to 2,390 home sales.

Over the course of 2015, median price for Austin-area single-family homes increased nine percent from 2014 to $263,900. In December 2015, the median price for Austin-area homes was $270,000, 10 percent higher than December 2014. As a result, the total sales dollar volume for single-family homes in 2015 topped $9.6 billion, an increase of more than $1 billion from 2014.

Farmer continued, “The Austin Board of REALTORS® plans to build upon the past year’s efforts to advocate for a more affordable Austin, which included supporting Mayor Adler’s Housing Our Heroes initiative and advocating for permanent tax relief for Austin homeowners at the polls last November. It’s crucial that Austin continues to make strides with pivotal policy issues in 2016 to improve the land development code through CodeNEXT and take next steps to achieve more stringent code enforcement.”

The Austin area’s housing affordability challenges were intensified by a continued shortage of housing inventory in 2015. Monthly housing inventory in December 2015 remained unchanged from 2014 at 2.2 months, less than half of what the Real Estate Center at Texas A&M University considers a balanced housing inventory level of approximately 6.5 months.

Austin-area homes spent two more days on the market in 2015 as the year prior, or an average of 49 days. In December 2015, the average amount of time homes spent on the market was 57 days, one day more than December 2014. Pending sales for single-family homes decreased one percent year-over-year to 1,601 pending sales, but pending sales for all of 2015 rose five percent from 2014 to 29,839 pending sales.

Active listings in December 2015 rose three percent year-over-year to 5,214 listings, while new listings increased six percent to 1,646 new listings from December 2014. Throughout the year, active listings rose five percent in 2015 to 6,044 listings and new listings increased four percent to 36,810 listings.

“There are many opportunities, as well as many challenges, ahead in 2016,” Farmer concluded. “Austin residents can count on the Austin Board of REALTORS® to continue to work with the community and city leaders to advocate for policies that ensure everyone in Austin’s communities have a safe, affordable place to live.”

December 2015 Statistics

2,390 – Single-family homes sold, five percent more than December 2014.
$270,000 – Median price for single-family homes, 10 percent more than December 2014.
$348,904 – Average price for single-family homes, 13 percent more than December 2014.
57 – Average number of days single-family homes spent on the market, one day more than December 2014.
1,646 – New single-family home listings on the market, six percent more than December 2014.
5,214 – Active single-family home listings on the market, three percent more than December 2014.
1,601 – Pending sales for single-family homes, one percent less than December 2014.
2 – Months of inventory* of single-family homes, unchanged compared to December 2014.
$833,880,560 – Total dollar volume of single-family properties sold, 19 percent more than December 2014.

2015 Year-End Totals

29,068 – Single-family homes sold, five percent more than 2014.
$263,900 – Median price for single-family homes, nine percent more than 2014.
$333,558 – Average price for single-family homes, eight percent more than 2014.
49 – Average number of days that single-family homes spent on the market, two days more than 2014.
36,810 – New single-family home listings on the market, four percent more than 2014.
6,044 – Active single-family home listings on the market, five percent more than 2014.
29,839 – Pending sales for single-family homes, five percent more than 2014.
$9,695,852,178 – Total dollar volume of single-family properties sold, 13 percent more than 2014.

The following sections describe trends in other sectors of the Austin-area real estate market.

Townhouses & Condominiums

The number of townhouses and condominiums (condos) sold in the Austin area in December 2015 was 230 properties, unchanged from December 2014. The median price for condos was $250,000, which is eight percent more than the same month of the prior year. These properties spent an average of 46 days on market, 10 days fewer than in December 2014.

In 2015, Austin-area condo sales dipped three percent from the year prior to 3,057 condo sales. Median price for Austin-area condos was $227,700, a six percent increase from 2014. Condos spent the same amount of time on the market in 2015 as 2014, or an average of 43 days.

Leasing

In December 2015, a total of 1,153 properties were leased in Austin, which is three percent less than December 2014. Properties spent an average of 47 days available for lease, or two fewer days than December 2014. The median rent for property leases was $1,500 per month, a three percent increase from December 2014. Active property listings increased three percent from December 2014 to 1,630 properties. In all of 2015, a total of 17,875 properties were leased in Austin, which is five percent more than 2014, and the median rent was $1,540 per month, or four percent more than 2014.

* The inventory of homes for a market can be measured in months, which is defined as the number of active listings divided by the average sales per month of the prior 12 months. The Real Estate Center at Texas A&M University cites that 6.5 months of inventory represents a market in which supply and demand for homes is balanced.

Source: Austin Board of REALTORS^®