Austin Property Management Blog

3 Numbers to Know Before Purchasing an Austin Rental Property

System - Tuesday, January 21, 2020

Have you ever wanted or considered investing in Austin’s real estate market? With a booming population and the crazy growth Austin has been experiencing over the last decade it has become a hot destination for real estate investors to park their cash. 51.3% of Austin, Texas residents rent their homes meaning the majority of the population is filling rental properties owned by investors across the nation and even the world.  This has made Austin’s rental property investment market a competitive one where investors are competing for great deals on property. Now more than ever you need to make sure the deal makes financial sense and below we go over 3 numbers that need to be evaluated before you buy a rental property in Austin, Texas.  

Capitalization Rate

Capitalization Rate, or cap rate, is the rate of return that should be expected on your investment. The cap rate can be used to quickly compare to deals you may be looking at and can be calculated by subtracting annual expenses from the annual rent and dividing that number by the total cost of the property. You’d then multiply that number by 100 to receive a percentage. If you calculated the cap rate and found out your investment’s cap rate is about 20% you should expect to have your initial investment back from the property after 5 years.  

Mortgage Payment

When purchasing a home that you plan on living in you have access to loans, such as FHA, that can get you in a property for as little as 3.5% down. When purchasing a rental property, most lenders will require you to put down a 15-20% down payment. To qualify for the lower 15% would require you to have a credit score above 720. In the event you are looking to acquire a multi-family property, you are looking at a down payment closer to 25%. Another thing to consider is your debt-to-income ratio. When purchasing a rental property, most lenders say the maximum debt-to-income ratio you want to have is 45%. What happens when you experience a slow period where no one is renting this property? Do you have the means to and cash on hand to cover any expenses and the mortgage during this time? Like any investment, there is always risk involved and minimizing your risk is key. 

The Property’s Cash Flow

In the end, you want your rental property to be an asset, not a liability. If you can cover the operating costs of your rental property with the monthly rent you are in great shape as a landlord. Of course, any unexpected speed bumps with your property, such as repairs or unexpected vacancies, can have you dipping into your own pockets for cash to cover your property’s expenses. Be wary of how much money you borrow on your investment property. Borrowing too much can put you in a hole where your property runs a negative cash flow and you could end up defaulting on your loan.

While these numbers are important to factor into your decision when buying rental property in Austin they aren’t the only things you need to consider before pulling the trigger on your purchase. Due diligence is an important step of any investment acquisition so be sure to run the numbers once, twice and even a third time to make sure you know exactly what you are getting into. 

Want to discuss acquiring properties with a team that's been in the Austin rental market for over a decade? Contact our Austin property management team today to speak with an investment real estate specialist. 

1601 E 5th Street #213 for rent in Downtown Austin, Texas

System - Thursday, January 16, 2020

1601 E 5th Street #213, Austin, TX 78602

1,225 SF | 2 Bed | 1.5 Bath

View this and more rental properties in downtown Austin, Texas

171 Salt Fork Drive for rent in Liberty Hill, Texas

System - Tuesday, January 14, 2020

171 Salt Fork Drive for lease in Liberty Hill, Texas.

Check out this and other homes for rent in the Austin area!

1122 Sussex Place for rent in Round Rock, Texas

System - Thursday, December 19, 2019

1122 Sussex Place, Round Rock, TX 78665

Learn more or apply today for this Round Rock Rental Home!

Should You Raise the Rent on Your Austin Rental Property Every Year?

System - Tuesday, December 10, 2019

Raising the rent on your Austin, Texas rental home can be a delicate art. If your rents rise too much you could force tenants out and could have trouble finding new occupants on the open market. If you don’t raise it enough you could be stuck with a property that doesn’t turn a profit for the duration of the lease. So how do know how much your rent should increase every year?

Rent increases are a part of life for both landlords and renters in Austin, TX. When expenses that owners have no control over raise so does the amount of rent they are charging. These types of unavoidable expenses include:

A rise in property taxes for your property

A rise in HOA fees in your neighborhood

Cost of utilities in your area rising

Austin property management fees

Costs for landlord insurance

If you aren’t raising the rents when your expenses go up you’re effectively giving yourself a pay cut. However, if the thought of raising the rent or asking for more money from your tenants makes you cautious your best bet is to run the numbers! You can receive a free rental market analysis for your Austin, TX rental property to learn how much your property should be renting for. These reports are done by someone with knowledge of the Austin rental market and all of the data is based on what the Austin rental market is currently offering!

Your personal expenses DO NOT determine your property’s rental rate.

One thing Landlords need to keep in mind when wanting to raise the rent of your Austin, Texas home for rent is that your expenses don’t set the market rent.  Let’s say you needed to replace your home’s roof this past year. This is an expensive project and can put a dent in anybody’s pocket. Some landlords may choose to set their rent amount higher to try and offset the cost of this repair. This is a no-no and it can result in your property sitting vacant if you’re charging more than the comparable properties in your area. If the costs of doing business (roof repair) outweigh your means to do the repair you may look at offloading your property!

As an Austin, TX landlord, you are allowed to make money!

Owning a rental property is a bit like owning your own little business and as a business owner, your first priority is turning a profit. Even if you haven’t experienced a rise in uncontrollable expenses on your end your property can still be subject to a rate increase! The best way to know how much you can raise your rent is to have a professional market analysis done for your rental property if you aren’t able to run the numbers yourself.

How much of an increase in the rent amount makes sense?

Let’s start this off by saying that most rental hikes are inflationary. Never will you be able to tack on $100 to your rate and not be harming yourself in the rental market (unless you were way below market rate to start with). An extra $1,200 a year is enough to help a tenant decide between your property and the next. Any increase in rental rate needs to be done so that it competitively positions your Austin rental home in the market and exposes your property to the largest pool of qualified tenants possible. An increase of 2-5% is more common and is more manageable for tenants compared to a hike of 10-20%! If you plan on making an increase to the rental rate you want to make sure you aren’t hurting yourself in the marketplace to do so.

Austin Property Management & Rental Increases

If you choose to partner with an Austin property management company on your rental home(s) they will typically increase your rent every year with what the market allows. Before the renewal of your lease every year your Austin property manager should be performing a market analysis to ensure you are receiving the max rental rate for your rental property.

Exceptions to the Rule

Is there ever a time you wouldn’t want to increase the rent even though the market allows you to do so? The answer is complicated and comes down to personal preference. Let’s imagine you’ve had a renter in your property for the past 2 years and they’ve been perfect – never missed their rent, on top of maintenance, easy to work with, etc. Some landlords choose to reward loyalty from their tenants with lower rent prices. Raising the rent could force those tenants to vacate and go elsewhere so some landlords trade-off the rent increase for keeping A+ tenants in their property. In the end, it’s up to you – the landlord.

For any questions about Austin rental home or property management services don’t hesitate to contact Stone Oak Property Management.



2427 McCook Drive Available for Lease in Georgetown, Texas!

Grant Williams - Monday, December 9, 2019


2427 McCook Drive available for lease from our Austin property management company!

You can learn more about this home and apply today by visiting our Austin homes for rent!

Do I Need a Cosigner to Rent a Home in Austin, Texas?

System - Tuesday, December 3, 2019

Do I need a cosigner to rent a home in Austin, Texas?

We've heard it here plenty of times from the tenants who inquire about our rental properties. So how do you determine if you will need a cosigner for your residential lease or not? There are several factors that can force an individual to obtain a cosigner to back their lease. Typically tenants are required to have a cosigner when they do not meet the landlord's requirements for the home by themselves. Some common reasons to have a cosigner are:

No Credit History / Poor Credit History

Tenants who have failed to establish a credit score or individuals who might have a poor credit score that doesn't meet the property's criteria can be required to have a cosigner if they wish to live in that property.  

Income 

Living in Austin, Texas is expensive depending on where you choose to live. A popular destination for renters is Downtown Austin or just South of the river. Sometimes the desire to live somewhere can outweigh the means to do so and tenants who might not produce enough income to live where they'd like can be required to have a cosigner back the term of their lease. 

Below is a video from our Austin property managers explaining the above!


Have more questions about renting a property in Austin, Texas? Visit our tenant FAQ.

1010 Taulbee Lane for rent in Austin, Texas

System - Tuesday, December 3, 2019

1010 Taulbee Lane, Austin, TX 78757

View this and more available Austin homes for rent on our website!

5 Tips for Keeping Great Tenants In Your Austin Rental Property

System - Tuesday, November 5, 2019

In the business of rental homes, tenants are #1. Without them, your property is earning no monthly rent and is instead costing you money during its vacancy. This is why resident retention is an important strategy for any successful Austin property manager

Not all tenants are created equally and as a rental homeowner, you probably know this! Replacing a tenant after a lease is up can cost you up to four times the cost of renewing with the current tenant when you begin to factor in expenses such as advertising, cleaning, commissions to any agents, etc. A long-term resident that continues to renew their lease and pay their rent can offset the cost of purchasing the property!

Here are some quick tips to retain your great tenants and drive renewals for your Austin rental property!

Show Your Appreciation

Have a tenant that you really like renting your Austin property? Let them know you appreciate them and their continued business! It can be as simple as providing holiday cards or surprising them with a gift card to their favorite restaurant in South Austin. Offering an incentive to renew such as a break on rent can even be worth it to keep a Grade A tenant in the property! If you like your tenants don’t be afraid to show them and let them know they are always welcome in your home!

Be a Proactive Landlord

Don’t underestimate the importance of the human connection when it comes to your tenants. They are just trying to live their lives and they’ve chosen to do so in your rental property. Lucky you!

When they experience a maintenance issue or emergency don’t brush it off to the side. Instead, be proactive and show them that it’s a priority for you that their situation is rectified as soon as possible. Don’t try and force appointments on your tenants and instead work alongside them and your contractors to find a time that works for everyone! Responsiveness to your tenant(s) plays a big part in whether or not they’ll renew once their lease expires. 

Respect Your Tenant’s Privacy

We’ve all heard horror stories of landlords who are always peering over their tenant’s shoulders. Don’t be this landlord. If you’re ever this worried about a tenant in your property you may reflect on your leasing and the criteria you set for your home. As long as you were firm with the rental criteria and properly vetted your tenants you shouldn’t have much to worry about. This is where an Austin property management company can come in handy if you're looking for a tough vetting process to ensure you find great tenants!

Offer a Pet-Friendly Home

We’d advise this in pretty much every locale in the nation, but when it comes to Austin, Texas you need to understand that you’re in one of the most pet-friendly cities in America. Most renters in our area have pets and they’ll always take priority over your rental home if you make them choose between their beloved pets and your rental property. We understand that pets can be a scary thing to have in your rental property because let’s face it, some pets just aren’t trained as well as others. However, as mentioned before highly-vetted tenants usually take better care of their animals so be sure you are firm with your rental criteria! 

Having a pet-friendly rental home in Austin, Texas is going net you better results than one that denies furry friends!




Upgrade Your Home as You Go

Typically, landlords will wait until they experience a vacancy to go into their property and begin to provide upgraded amenities & appliances. Instead, what if you provided these upgrades as you learn about them and while the tenant is in the home? Your tenant will think you’re great and will love that their home is being upgraded! Want a nest thermostat in your property? Contact your tenant and ask them what they think about it. This not only helps your property improve over time as you make upgrades, but your tenants will appreciate you thinking of them and providing these upgrades while they are in the home. That’s a win-win!

A long-term tenant is something that can ensure your investment property remains a profitable investment. As a landlord, if you have great tenants your goal should always be to retain them for as long as possible. Not only will it save you hundreds if not thousands in vacancy costs, but it will provide you with fewer headaches with your Austin rental home. If you have any questions about retaining tenants or need help finding excellent tenants for your rental property be sure to connect with our team at Stone Oak Property Management!

Should You Furnish Your Austin, Texas Rental Property?

System - Thursday, October 31, 2019

A question we receive somewhat regularly from property owners and investors is “Should I furnish my Austin rental home?

The answer is a bit more complicated than a simple yes or no and is completely dependent on the type of property, monthly rent amount, where the property is located & much more. In Austin’s rental market, an unfurnished unit will typically come standard with basic household appliances and sometimes larger ones. These can include a refrigerator, an oven, a microwave, a stove & occasionally they come with dishwashers & laundry machines. When we refer to furnished units we do not mean these types of items and instead are referring to items such as couches, beds, dressers, tables, chairs & more.

There are pros and cons to having a furnished rental property in Austin, Texas and in this quick article we’ll go over them.

A furnished rental property can offer a more complete package to potential renters. Some people don’t like the stress and hassle of moving furniture around from home to home with each move they make. Typically, renters searching for a rental property that comes furnished will be college students, first-time renters and professionals who are seeking short-term leases in an area that they are working. For these types of tenants your Austin rental home can be more of a desired product and can result in potential renters choosing your rental over other available options.

Furnishing your rental home can result in higher rents for your property. Landlords who choose to do so typically pass the cost of outfitting their home with furniture along to the tenants through their monthly rent. Some landlords may even elect to rent furniture if they believe a furnished unit will bring them better results. You’ll want to make sure that if you choose to lease furniture for your property that the tenant understands they are responsible for any damages at the end of their lease term. This can be noted in your lease under a personal property clause or special provisions clause. If you do choose to furnish your rental property be sure to check and see if you can take advantage of the tax benefits of furnishing your rental property.

Furnished rentals make great short-term rentals! Depending on your goals for renting your home in Austin, Texas, this may be what you are looking to accomplish. If so, that is great! You’d be hard pressed to find any short vacation rentals that don’t come pre-furnished and any that do probably aren’t doing great financially. On the other hand, pre-furnished units can be hard to find long-term occupants. Most people who opt into a long-term rental lease typically acquire bits of furniture for their home over the years. If you are furnishing a long-term rental be prepared to pay for a storage unit in the event your tenant doesn’t want your furniture. That or you may be forced to miss out on qualified, rent-paying tenants!

Providing an unfurnished rental home in Austin allows for the tenant to make the space their own. This allows someone to come in and turn your home into their (temporary) home that they could stay in for years. People get attached to certain things and a home is definitely one of them. By allowing tenants in your home to decorate as they please you open yourself up to a greater possibility of having long-term tenants and less downtime with your Austin rental property. With that said, you won’t be able to charge as much rent as you might like with an unfurnished rental property and you won’t be able to guarantee that a tenant’s furniture won’t damage your property. (Scratches on the floor, etc.)

So, is furnishing your home for lease in Austin, Texas a worthwhile idea?

It depends on what goals you've set for your Austin, TX rental property!

Consider the area in which your property is in and who the target demographic is. If you’re property is by UT and you’re dealing with mainly college students a furnished unit could be great idea! If you’re in more a suburban area renting to a family you might find that they have and will be providing their own furniture they’ve been able to acquire throughout the years.

If furnishing your rental property allows for more profitability in the long-run we say go for it, but most of our single-family homes come unfurnished for the tenants we work with here in Austin, Texas!

For questions about your Austin rental property, furnished units or to chat with our property management team feel free to contact us through our site or give us a call at 512.617.6766!


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Stone Oak Property Management
13497 N Highway 183, Ste. 700
Austin, TX 78750

Phone: 512.617.6766
Toll Free: 888.892.7940
Fax: 512.994.2300

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