AUSTIN (KXAN) — A local real estate company has been on a buying spree and isn’t showing any signs of slowing down.
In Austin, Rastegar Property purchased seven properties between July and November. They also struck deals in Dallas and Phoenix, Arizona.
Monday, its founder and CEO Ari Rastegar told KXAN they just bought another property.
Rastegar said, “We believe in the city, and aside from all the economic reasons why it makes a lot of sense to be here, big companies moving here, I’m from here. Born in Austin. My family’s here.”
The properties Rastegar acquired recently in Central Texas include:
- Highland Heights on Tirado Street in north central Austin
- The Escala Apartments in Clarksville
- Multifamily property at 902 Romeria Drive in Brentwood
- Former shopping center at 2209 S. 1st Street
- Property at 5402 South Congress Avenue
- Zilker Place Apartments at 2017 Bluebonnet Lane
- Redbud Bungalows at 1430 Redbud Cove in West Lake Hills
Some are older apartments or townhomes Rastegar’s company renovated. Others are locations where the developer plans on building mixed-use complexes or multifamily homes.
He said, “Our model has been to go around some of the new developments in Austin. Purchase older vintage multifamily that we can go do the work in. We can bring upgrades. Do some deferred maintenance and still be able to offer a pricing that’s below what new construction would be.”
When asked why he’s investing in apartments and townhomes, rather than single-family houses, Rastegar explained one reason has to do with financing, and another reason? “Rentals as a whole are highly attractive to millennials.”
As companies like Apple, Google, Amazon and Facebook expand in Austin, they’re adding jobs that often attract people in their 20’s or 30’s.
“If you look at it from the cultural perspective, millennials change jobs,” Rastegar said. “I can say this because I’m the oldest millennial. So I can talk about this. We’re changing jobs more frequently, and that necessitates not having your roots in the ground and being a homeowner, so we’re forecasting a deceleration in home ownership.”
He said that’s not unique to Austin. It’s a nationwide trend. He did emphasize, the Austin region still remains a seller’s market.
Renters vs. homeowners
In Austin, renters outnumber homeowners. According to the U.S. Census Bureau, about 45% of people living in Austin own their homes. That makes 55% renters.
“I think that you’re going to see a larger disparity,” Rastegar said. “I think you are going to see the renting market increase more. This is more a cultural thing. This is a generational issue.”
The investor added, “Just think about logically. You’re moving here from another state, another city, you’re not immediately jumping into buying a place. You’re getting your feet wet. You’re getting acclimated.”
New census data found that 691,000 people moved out of California in 2018. Their No. 1 destination was Texas.
Rastegar said that’s because the difference in the two states’ costs of living.
“You’re talking about areas in San Francisco where one bedroom could be $10,000,” he said. “In Austin, in downtown, some of these areas, one bedrooms, you can see them getting to $4,000, $5,000.”
KXAN asked, “Wouldn’t people look at that and say what if we turn into that five years down the road?”
He responded, “The truth of the matter is that is what we’re turning into. All the math points to Austin is what San Francisco, New York City were in the 1970’s.”
Rastegar went on to say, “So there’s no question prices are going to continue to escalate and that companies are going to continue to move here, but I don’t think that’s prohibitive. I think that’s also bringing in opportunities. We’re seeing over 35,000 jobs created in Austin during the same time.”
Austin’s average rent, according to RentCAFE, is now $1,442 a month. That’s $200 more than Dallas ($1,240) and $300 more than Houston ($1,111).