Online commercial real estate investment market leader CrowdStreet recently unveiled its 2022 list of the best places to invest in real estate. The report looks at the top 20 private equity real estate investment markets, led by Austin, Texas.
Here’s a closer look at why real estate investors should consider purchasing an investment property in Austin.
CrowdStreet evaluated multiple data points from leading industry sources to compile its list of the top 20 markets for real estate investors. These markets are best positioned to benefit from the continued strength in real estate. They should generate above-average rental growth, solid absorption rates, a resumption of employment growth and strong growth in median household income. These factors are expected to lead to continued appreciation of property prices in 2022 in these markets.
Austin has led the way as it continues to enjoy strong population and job growth. That’s because businesses – especially in the tech sector – continue to relocate and expand into the city. For example, the e-commerce giant Amazon recently announced plans to create another 2,000 business and technology jobs at its Austin Tech Hub. This is in addition to the 3,000 jobs he has already brought to the city and the more than 1,000 jobs he has currently opened. Meanwhile, electric vehicle giant You’re here recently moved its headquarters to Austin and built a $1.1 billion manufacturing facility that will eventually employ 10,000 workers. Overall, economists expect Austin to add 50,000 more jobs this year.
This stimulates the demand for housing. CrowdStreet ranked Austin as its third favorite market for multi-family housing and its number one market for single-family homes to be built. He noted that the influx of people and available land make Austin a great market for single-family home rentals.
Meanwhile, corporate relocations and expansions are benefiting Austin’s office market, which CrowdStreet ranked as the second-best in the nation. For example, Amazon recently signed a 330,000 square foot lease in Austin to occupy all of the space in Domain 9, a new office building being developed by Cousin properties ( BECAUSE -2.32% ). Amazon already occupies three properties owned by the REIT (REITs) in the city.
Finally, the influx of people is also benefiting Austin’s retail market. CrowdStreet ranked it as its second-best retail market in the country, thanks in part to rising occupancy, which reached 95.9% in the fourth quarter.
How to Invest in the Austin Real Estate Market
There are many ways to invest in real estate in Austin. Those who have the financial means can consider buying a property in the city directly. You would need to do a lot of due diligence to find the right property and hire the right company to handle the investment, but it would give you direct exposure to the growth potential of the city.
A similar option is to invest in a syndicated real estate deal offered through an online marketplace like CrowdStreet. While you must be a accredited investor to participate in most of these transactions, you do not have to invest as much as you would to buy an entire property. For example, CrowdStreet currently has an office investment opportunity with a minimum investment of $25,000.
Meanwhile, other online marketplaces have offered Austin-specific real estate investment fund opportunities, some of which are open to unaccredited investors at much lower minimums. For example, Republic has provided two Austin-specific residential real estate investment opportunities in recent years with minimums as low as $500.
Another less direct approach is to invest in a REIT with significant exposure to the Austin market. For example, Austin is the second largest market for Office REITs Cousins Property Trust and Brandywine Estate Trust. It comprises 29% of Cousin’s portfolio and 22% of Brandywine’s revenue. This at least gives investors some exposure to the upside of the Austin office market.
Many Residential REITs also own properties in Austin. For example, Austin is one of the top five markets for apartment REITs Half-American apartment communities. Company Expands Presence in Austin; it has invested $63 million to add 350 new apartments that residents will begin to occupy this year. Meanwhile, it’s one of the top 20 markets for single-family rental REITs American Homes 4 Rental. Finally, the direct-to-consumer investment platform Fundrise has invested in both stabilized apartments and build communities for rent in the Austin area. These companies offer investors some exposure to Austin’s hot residential real estate market.
The best real estate investment location for 2022
Real estate is all about location, and there’s nothing better than Austin for 2022. It’s enjoying constant migration of businesses and people due to its business-friendly policies, affordability overall and its warmer weather. For this reason, real estate investors should seriously consider investing in Austin this year.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.