Leasing a Home in Austin TX – Then and Now

When Sylvia and I started leasing and managing rentals in Austin in the early 1990s, the business operation was phone-based. I had a phone, answering machine, and spiral pad on a desk in our kitchen nook. All business happened there. I also had a Windows PC, a 386 with a dot matrix printer which ran the DOS version of my property management software. If you don’t know what 386, DOS or “dot matrix printer” means, you’re probably less than 40 years old. Oh, it probably had a 2400 baud modem as well, and a 50 meg hard drive. It wasn’t until 1996 that I put up my first website and started using email for business.

All rental inquiries thus originated with a phone call to that one phone. It was a “single channel” communication system. Those callers either saw a yard sign or a 3-line ad in the Rentals section of the Sunday newspaper, and called to inquire. That was the extent of the entire communication system with regard to advertising a rental listing and taking inquiries. We did also have the Austin MLS, so Realtors could show our homes for lease, same as today, but if they called, it came through that same 1-phone system.

Today leasing inquiries come through multiple channels. So much so, it’s difficult to control, and impossible to manage manually.

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How to Find and Lease a Rent House in Austin TX

Austin Rental MarketAs the listing agent for a lot of rental homes in Austin (for over 20 years), I’ve been dealing lately with a lot of really angry, frustrated renters and agents.

The reason for the upset is primarily the renter losing a home to other (multiple) applicants who applied quicker and/or had their act more together. Then thinking it was unfair that they lost out.

I’ve dealt with some applicants who have lost out on 3 or 4 homes in a row and who have to be out of their current house in 1 week, and have nowhere to go. Understandably, in this tight rental market, that sucks. Big time.

But that’s the “landlord’s” rental market we have in Austin at present, so you better become more prepared and more competitive if you want to avoid this angst. This is no market for slug footed, unprepared renters who don’t take the rental home search process seriously. You have to bring your “A Game”, or you may experience great frustration.

This article is written to help those searching for a home to rent in Austin TX to avoid that unfortunate circumstance where you lose out on a home to those better prepared. It’s a step by step guide to help you become the most awesome rental applicant out there. So read this and you’ll be a step ahead of others. You will become the winner, not the loser, in this competitive Austin rental market, and hopefully find the house you want.

Determine Your Specific Move Date Window
This sounds like a no brainer, but it’s hard to believe how many renter prospects I talk to who can’t answer the simple questions “when do you need to move”. You need to know, with certainty, the soonest and latest dates you can start a new lease. The larger window of time you can create for yourself, the better.

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Austin Rental Market Update – Nov 2011

Rents continue to rise in Austin as more buyers opt to be renters and the supply of homes shrinks relative to demand. See the graph below for a snap shot of the wild ride Austin rental rates have taken since 1999.

Austin Rental Market 1999 thru Nov 2011
Austin Rental Market 1999 thru Nov 2011

It took over a decade for Austin’s rental rates to return to their 2001 peaks. Good for renters but it’s been a rough 10 years for landlords. And not all homes are back to pre-2001 rates, these are just the averages.

For November 2011 compared to a year ago, let’s take a look at the chart below.

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Austin Rental Home Search – Zillow and Hotpads Worthless

If you’re looking for a home for rent in Austin TX, you are no doubt looking online. And a lot of you are using sites such as Zillow.com and Hotpads.com to browse Austin rental listings. I receive info requests from these two sites more than any other. There are approximately 30+ internet sites to which our listings are automatically fed. Most of the requests I receive are for rental homes (and sales listings) that are already leased or under contract for sale. But as a web searcher, you have no way of knowing status based on what these internet sites show you in the listing details.

For example, if you look at the current Crossland listings displayed on Hotpads.com, there are 10 listings total. Of these 10, half of them currently have a status of “Pending” in the Austin MLS, meaning they are under contract waiting to close (for sales listings) or have an accepted/approved application. We mark these listings “Pending” in the Austin MLS, so agents will stop showing them, but internet searchers don’t know the status and keep inquiring.

So, for the entire 30+ days a home is under contract, or the days that a homes is Pending with an accepted application but awaiting tenant move-in, these listings appear as “Active” or “Available” on the most popular internet search sites, when in fact they are not. In fact, ¬†half the Austin Rental listings that you see on Zillow and Hotpads are already leased, yet you’ll waste your time inquiring about these Austin rental listings because those sites show them as “Available” or “Active”.

What should agents and searchers do about this?

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Austin Rental Values vs. Zillow Zestimates

Zillow now offers “Zestimates” for rental properties in Austin. Want to see how much a home might rent for? Just look it up on Zillow the same way you would the value of a home in Austin. Let’s see how accurate it is.

I took a look at some actual homes I manage, from all areas of Austin, and compared the actual rented value to the Rent Zestimates for Austin.

Area Zillow Actual Difference
SW Austin 78736 $1,260.00 $1,295.00 -2.70%
South Austin 78745 $1,276.00 $1,195.00 6.78%
South Austin 78748 $1,394.00 $1,395.00 -0.07%
SE Austin 78741 $1,195.00 $995.00 20.10%
Central Austin 78704 $1,539.00 $1,795.00 -14.26%
Central Austin 78705 $1,332.00 $1,650.00 -19.27%
Central Austin 78756 $1,319.00 $1,595.00 -17.30%
NW Austin 78759 $2,429.00 $2,495.00 -2.65%
NW Austin 78729 $1,417.00 $1,395.00 1.58%
Cedar Park 78613 $1,252.00 $1,300.00 -3.69%

 

Looks like Zillow Rental “Zestimates” either get it pretty close or way off. Of the 10 homes reviewed, 4 are incorrect by 14% or more with three of the four underestimating the rent, and one over estimating by 20%.

Five out of the remaining six were within a margin of error less than 5%. Not bad, actually. These were mostly underestimated as well.

So how do you know “for sure” the rental market value for a house in Austin? There are some simple rules of thumb.

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Austin Rental Market – 2010 Update

Average and median rents for homes in Austin continued to rise in 2010, but still remain lower then the peak in 2001. Hard to believe, but rents in Austin are still lower than 10 years ago.


As indicated by the graph above, rental rates in Austin topped out in 2001 with the Tech bubble and a surge in growth in Austin and companies hired and expanded. Immediately thereafter, when the Tech bubble popped and 9/11 followed, Austin lost jobs, homes were hard to sell, and rental demand decreased as the inventory of available homes increased.

Below is a chart of the year over year stats comparing the 2010 Austin rental market to 2009.

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