Relocating to Austin and want your next home to pull double duty as an investment? Central Austin gives you rare access to jobs, culture and transit while offering multiple ways to generate income. In this guide, you’ll learn which property types perform, how to run quick numbers, and the local rules that can make or break a deal. Let’s dive in.
Why Central Austin attracts renters
Central Austin sits roughly between MoPac on the west, I-35 on the east, Ben White/US‑290 on the south and RM‑2222/Koenig on the north. This ring covers downtown, the University of Texas area and nearby neighborhoods that renters target for convenience. Proximity to major employers, UT, and entertainment corridors keeps demand steady, and planned transit and mobility investments support long-term rental interest. You can review the City’s central planning context in the Austin bicycle plan materials.
Market snapshot at a glance
MLS data from January 2026 shows a regional median sales price near $400,495 and a median monthly rent of about $2,000, with roughly 4.0 months of inventory for sales and 3.5 for leases. Use these as a baseline, then underwrite block-by-block. Central ZIP codes vary widely by building type and street. For current market visuals and stats, visit the Unlock MLS Central Texas Housing Report.
Neighborhood example: In 78704, the January 2026 Zillow index shows a median home value near $709,000 and a rent index around $1,795 per month. Central ZIPs like 78701, 78702, 78705 and 78704 can differ materially even within a few blocks, so work from hyper-local comps when pricing offers or rents.
What you can buy in Central Austin
Condos and downtown high-rise units
- What works: Young professionals and downtown employees often prefer amenity-rich buildings.
- Pros: Walkability, security, and lower yard work.
- Watch-outs: HOA dues and special assessments can shift net returns. Review HOA financials, rental caps and reserve studies. Short-term use may be limited by building rules and City licensing. See the City’s Short-Term Rental program.
Single-family infill homes
- What works: Long-term renters who want a near-downtown lifestyle.
- Pros: Solid appreciation potential and flexibility to add income, including an ADU if allowed.
- Watch-outs: Older central lots can have expansive-soil foundation movement. Verify lot coverage, parking and ADU feasibility under the City’s HOME changes. Learn more about HOME amendments and ADUs on the City’s HOME initiative page.
Duplexes, triplexes and small multifamily
- What works: Stable, long-term renters and roommate setups.
- Pros: Economies of scale can improve cash flow versus a single unit.
- Watch-outs: Lending terms may differ from primary homes. STRs in multi-unit buildings are licensed differently and density caps can apply. Review the City’s STR licensing guidance.
Townhomes and rowhomes
- Pros: Often newer construction and lower exterior maintenance.
- Watch-outs: HOA rules and fees. Confirm rental allowances and any short-term limits in CCRs and bylaws.
ADUs and garage apartments
- Pros: A powerful owner-occupied strategy. Live in one unit and rent the other for income.
- Watch-outs: Even with HOME changes, each lot’s setbacks, utilities and site conditions matter. Confirm feasibility with City plan reviewers before you buy. Review the HOME amendments for current allowances.
Student-oriented rentals near UT
- Pros: High per-bed demand can support strong gross income.
- Watch-outs: Turnover and management intensity are higher. Underwrite using per-bed comps from purpose-built properties, not citywide medians.
Short-term rentals
- Pros: Potentially higher gross revenue in select corridors.
- Watch-outs: You must license the use, meet occupancy and posting standards, and follow Hotel Occupancy Tax rules. Platforms began collecting City HOT on April 1, 2025, and Austin updated STR code effective October 1, 2025. Confirm eligibility early via the City’s STR overview and the application portal.
How to run the numbers fast
Core metrics you will use
- Gross Rent Multiplier (GRM) = Purchase Price divided by Annual Gross Rent.
- Net Operating Income (NOI) = Effective Gross Income minus Operating Expenses.
- Cap Rate = NOI divided by Purchase Price.
- Cash-on-Cash = Annual Cash Flow after debt divided by Cash invested.
A simple Central Texas baseline example
Using January 2026 MLS medians for illustration only: price about $400,495 and rent about $2,000 per month. Annual gross rent equals $24,000, which gives a GRM near 16.7. With 5 percent vacancy, EGI is about $22,800. If operating expenses run about 35 percent of EGI, NOI is near $14,820 and the cap rate is roughly 3.7 percent. These figures suggest you may need a different product type, sharper purchase pricing or an appreciation-forward plan to reach target returns. Always replace the medians with property-specific comps, taxes, insurance and capital expense estimates. See current MLS trends via Unlock MLS.
Holding strategies that fit relocating buyers
- Live-in first with income: Use owner-occupant financing and add an ADU or rent a room to offset the payment, if allowed by code and HOA.
- Classic buy-and-hold: A single-family rental can be simple to run, though cap rates in the core are often tighter.
- Small multifamily: Duplex to fourplex assets can improve yield through scale but require investor or portfolio financing.
- STR-forward plan: Only if licensing is feasible and you budget for higher turnover, compliance and neighbor communication.
Central Austin due diligence checklist
Local rules and risk items
- Short-term rentals: Licensing is required and City code applies, including occupancy and HOT reporting. Review updates on the City’s STR program page.
- ADUs and HOME: The HOME Initiative expanded options for smaller lots and ADUs. Verify site-specific feasibility on the HOME amendments page.
- Property taxes and exemptions: Check appraisals, exemptions and deadlines with the Travis Central Appraisal District’s toolkit. Remember that the appraisal is not the final tax bill.
- Flood risk: Pull parcel maps and consider an elevation certificate if near a mapped flood zone at the FEMA Map Service Center.
- Soils and foundations: Expansive clay soils in Central Texas can affect slabs, especially in older homes. When you see cracking or settlement, get an engineer’s opinion. See the State’s hazard context in the Texas Hazard Mitigation Plan excerpt.
Documents and numbers to collect
- Twelve months of rent roll or current rent comps, plus 3 to 6 recent sales comps.
- Property tax bill and TCAD account history, HOA bylaws and financials.
- Seller’s disclosure, permits and warranty history, and a full inspection with foundation review.
- Insurance quotes, including flood if applicable.
- A pro forma with 5 to 10 percent vacancy, realistic management and maintenance, and capital reserves for roof, HVAC and structure.
Build your local team
- Buyer’s agent: Pulls MLS comps, surfaces deed restrictions and HOA rules, and negotiates contingencies tied to inspections and permits.
- Lender: Pre-qualifies you for owner-occupied or investor loans, and provides rate and DSCR scenarios.
- Property manager: Confirms market rent, average vacancy and turn costs for the exact unit type and block.
- CPA or tax advisor: Models depreciation, local tax exposure, and 1031 exchange steps if relevant.
- Inspector and structural engineer: Evaluate systems and foundation risk common to Central Texas soils.
- Title company: Clears title, verifies easements and HOA enforcement history.
Ask pointed questions. For example, request three closed comps that anchor pricing, confirm any CCRs that limit rentals, and ask your lender how terms change if you shift from owner-occupied to investor financing. With rentals, have your manager quote average days-to-lease and typical turn expenses for similar nearby units.
Next steps for a smooth relocation
- Narrow your Central Austin focus by lifestyle and commute. Then review 3 to 6 recent MLS comps per property type for those blocks. Start with the current Unlock MLS trends and refine from there.
- If you plan to live in the property, evaluate ADU potential early and confirm permitting basics with the City’s HOME guidance.
- If yield is the priority, build a conservative NOI model and run sensitivity to mortgage rate changes and a 5 to 10 percent rent swing.
When you are ready for block-level comps, virtual tours and a deal-by-deal game plan, reach out to Allison Winkler for a calm, expert consultation tailored to your move.
FAQs
What counts as “Central Austin” for investment decisions?
- The commonly used ring spans MoPac to I-35 and Ben White/US‑290 to RM‑2222/Koenig. Always verify the exact address context and use neighborhood comps for pricing.
Are short-term rentals allowed in Central Austin?
- Yes, with a City license and compliance with occupancy, posting and Hotel Occupancy Tax rules. Start with the City’s STR overview and confirm eligibility before you bid.
How do ADU rules affect my purchase?
- The HOME amendments expanded ADU options on many single-family lots. Confirm site-specific feasibility and costs with City reviewers before you close.
What cap rate should I expect near downtown?
- Using January 2026 MLS medians as a simple example produces a cap rate near 3.7 percent. Actual returns vary by block, property type, price and operating costs.
How do I estimate my tax bill in Travis County?
- Check your appraisal, exemptions and timelines with TCAD, then model taxes using current rates from local taxing units. The TCAD toolkit is a good starting point.
