Austin · Investment property
Austin investment property: the numbers, honestly.
Austin at the median does not cash-flow on a financed purchase. That is not a reason to avoid it — it is a reason to underwrite it as what it actually is. Here is the arithmetic, with the sources, before anyone shows you a listing.
The starting point
What Austin actually costs and rents for.
| Median sale price, Austin–Round Rock–San Marcos | $439,000 |
| Sales volume, year over year | +9.03% |
| Months of inventory | 5.6 |
| Days on market | 101 |
| Average rent, all types | $1,995 |
| Average rent, three bedroom | $2,300 |
| Effective property tax rate, Austin | 1.52% |
Sale price, inventory and days on market: Texas Real Estate Research Center at Texas A&M University, July 2026. Rents: Zillow Rental Manager market data, September 2026. Tax rate: published Austin effective rate for 2026.
Put the first and last rows next to each other and the shape of this market is already visible. A $439,000 house renting for $2,300 produces a monthly rent equal to 0.52% of the purchase price. The old “1% rule” would require $4,390 a month. Nothing in Austin rents for that against its price.
The math
A median Austin rental, line by line.
One year, a $439,000 purchase, leased at $2,300 a month.
| Gross annual rent | $27,600 |
| Vacancy at 5% | −$1,380 |
| Property tax at 1.52% | −$6,673 |
| Insurance | −$2,400 |
| Maintenance and capital reserve at 10% | −$2,760 |
| Property management at 8% | −$2,208 |
| Net operating income | $12,179 |
| Cap rate | 2.77% |
That net operating income is what the property produces before any mortgage. It works out to about $1,015 a month available for debt service.
The number most Austin investors have not run
At a 7% investor rate on a 30-year loan, $1,015 a month supports a mortgage of roughly $152,500. On a $439,000 purchase that means putting down about $286,500 — around 65% — just to break even on cash flow.
Rates move and the assumptions above are conservative, not universal. But the order of magnitude does not change: at the Austin median, a conventionally financed rental is negative cash flow, and the gap is measured in hundreds of dollars a month, not tens.
This is the honest version of the Austin pitch. Austin is an appreciation and equity market with a strong long-run demand story — it is not a yield market, and anyone presenting it as one is either using different numbers or leaving out the tax line.
What moves the number
Where an Austin deal actually gets made.
If the median does not work, the deal has to come from somewhere specific. There are only a few real levers.
Buy below the median, not at it
The rent curve in Austin is far flatter than the price curve. A $300,000 house does not rent for two-thirds of what a $450,000 house rents for — it rents for closer to three-quarters. That gap is the entire arbitrage, and it is why the screen starts at the bottom of the price range and works up, not the other way around.
Check the tax rate at the parcel, not the city
Combined rates vary street by street depending on school district, MUD and PID. A difference of half a point on a $400,000 property is $2,000 a year — roughly a sixth of the net operating income in the table above. This is checked before an offer, not after closing.
Know that there is no appraisal cap on a rental
Texas caps annual taxable value increases at 10% for homesteads. Investment property has no cap. It is reassessed to market, and your purchase itself is evidence of market value. Underwriting next year’s taxes off this year’s tax bill is one of the most common and most expensive mistakes in Texas investing.
Read the HOA and the short-term rental rules first
Many Austin-area HOAs cap the share of homes that can be leased or set minimum lease terms, and a waiting list is not a theoretical problem. Austin also regulates short-term rentals through a licensing regime that has been repeatedly litigated and revised — short-term income should never be underwritten without confirming the current rules for that specific address.
Protest the assessment, every year
A successful protest is a permanent reduction in the largest single operating expense in the table. On the numbers above, a 10% reduction in assessed value is about $667 a year — more than 5% of net operating income, every year, for the cost of filing.
Acquisition cost
What a flat fee is worth on an investment purchase.
On an owner-occupied purchase the commission is a one-time cost. On an investment purchase it is capital that could have been part of the down payment.
| Purchase price | Buyer commission at 3% | Flat fee | Rebated to you |
|---|---|---|---|
| $300,000 | $9,000 | $4,999 | $4,001 |
| $350,000 | $10,500 | $4,999 | $5,501 |
| $439,000 (Austin median) | $13,170 | $4,999 | $8,171 |
| $600,000 | $18,000 | $4,999 | $13,001 |
At the Austin median that rebate is about 7.5% of a 25% down payment, returned at closing where your lender allows it. On a portfolio bought over several years it compounds into a meaningful difference in how many doors you can acquire.
Where the seller’s offered buyer-agent commission exceeds the flat fee and your lender permits it, the difference is credited to you at closing. Lenders set their own rules on how a credit may be applied, so the amount is confirmed with your loan officer before closing rather than promised up front.
Common questions
Austin investment property, answered.
Does Austin rental property cash flow in 2026?
At the median, not on a conventionally financed purchase. A $439,000 house leased at $2,300 produces roughly $12,200 of net operating income after vacancy, taxes, insurance, maintenance reserve and management — about $1,015 a month before any mortgage. At a 7% investor rate that supports a loan of around $152,500, which implies roughly 65% down just to break even. Deals that do cash-flow in Austin are generally below the median price, in lower-tax parcels, or self-managed.
What is a realistic cap rate in Austin?
On the figures above, about 2.77% at the median with professional management. Self-managing adds back roughly 8% of gross rent, which moves it to around 3.3%. Buying below the median generally improves it because rents fall more slowly than prices do. Anyone quoting a 6% cap rate on an Austin single-family rental is either using a much lower purchase price or has left the property tax line out.
How much are property taxes on an Austin rental?
Austin's effective rate is about 1.52%, and the exact combined rate depends on the parcel's school district, MUD and PID rather than on the city. The point investors miss is that Texas does not cap annual assessment increases on non-homestead property. Homesteads are capped at 10%; a rental is not, and your own purchase price becomes evidence of market value for the next assessment.
Is it better to buy in Austin or elsewhere in Texas?
It depends entirely on what you are buying for. Austin has the strongest long-run demand and appreciation story in Texas and among the weakest current yields, largely because prices ran ahead of rents. Houston and San Antonio generally produce better rent-to-price ratios at similar price points. That is a trade between yield now and equity later, and neither answer is universally right — this is market information, not investment advice.
What price range works best for Austin rentals?
Below the median, generally. The rent curve is flatter than the price curve, so the ratio improves as price falls. That is why a screen should start at the bottom of the viable range and work up, and why the important filters are the parcel tax rate, flood exposure, condition and verified leased-rent comparables rather than the listing photos.
Do you charge investors the same flat fee?
Yes. Buyer representation is a flat $4,999 regardless of whether the property is a primary residence or a rental, with published tier adjustments above $900,000. $600 is due at signing and the balance at closing, only if the purchase closes. On a $439,000 Austin purchase where the seller offers a 3% buyer-agent commission, roughly $8,171 is rebated to you at closing where your lender allows.
What should I check before making an offer on an Austin rental?
The combined tax rate for that exact parcel, the FEMA flood zone at the parcel, whether the HOA caps leasing or sets a minimum lease term, verified leased comparables rather than asking rents, the age of the roof and HVAC, and whether the property sits in a MUD or PID. Any one of those can move the annual return by more than the difference between two properties' asking prices.
The figures on this page are market information drawn from the sources cited, not investment advice, and not a projection of what any particular property will earn. Returns depend on the specific parcel, your financing and your management. KAT Realty Group is a licensed real estate service, not a licensed investment adviser or tax adviser — run the tax questions past your CPA.
Run the numbers before you tour.
A free consultation on a specific property or a target ZIP — tax rate, flood exposure, leased comparables and the actual return, before you write an offer.