Pranshu:

Paul said it best. It doesn't matter where the property is as long as there is good positive cash flow. I'd pick Austin over Dallas and San Antonio. If you want reasonable appreciation, stick with single family homes.

Carol Ann Pease

Dear Pranshu,
I would stay in central or south central Austin. There are some pockets along 183 and MOPac that are good bets, as there are many employers and lots of shopping in this area so people want to live there. The thing is to make sure you get a reasonable price and that the property will create positive cash flow for you. Good luck!
Betina

To be truthful, it doesn't matter where you look; it's always about the numbers. Don't look to appreciation to make your money, look for the opportunity! A simple rule that many of my investors use when considering a property is the 1 to 1 ratio, i.e. 190k leases for $1900 / month, if the answer is yes, then it's worth considering. We have just listed 3/2/2 town homes for 190k @ 2k per month. Cash flow of $237.00 per month, this figure includes insurances, management, taxes, etc. It makes me wonder why anyone would settle for barely breaking even.....

I concur with Danny and add that I think the portion of area 2N close to 183 (as close as you can get to area 2 but across 183) is an area of $130k - $150k single family homes that can rent for $1100. So with 20% down you're at least breaking even. I personally purchased a rental property in this neighborhood this spring with just slight positive cash flow and am banking on the coolness and trendiness jumping 183 from Crestview and Wooten into Jamestown. I am keeping a close eye on this neighborhood for the first investors to come in and do urban moderately upscale rehab on these 1960's - 1970's single family homes. I cannot speak on SA or Dallas.

I agree with Ki- this is a possiblity in Austin, provided you put 20% down. South Central and Southeast Austin should provide both cash flow and good appreciation. Look in MLS area 10n specifically- it is reasonably close to town and has a good rental percentage. Some portions of area 2 and area 4, around the intersections of Guadalupe and Lamar may also provide cash flow.

Stick with single-family homes for the best appreciation possibilities.

Steer clear of areas that have new development very close by: these could hurt your rental property's potential appreciation.

I would look in south Austin south of Ben White or southeast Austin.