Pay up or trickle down: Austin landlords grapple with tax appraisal increases in strained rental market
Travis County landlords are facing sharp increases in inflation-driven costs this year, leaving rental property owners with unappealing choices: absorbing these expenses or passing some of that on to their already-strained tenants.
A record 167,869 property owners filed protests against their appraisal notices, including rental property owner Matt Matza. Matza is doubly affected by the city's latest valuations: he's president of rental home financing company Visio Lending and owns two properties in the metro himself.
Unlike other homeowners, landlords are not eligible for property tax discounts through the Homestead Act. One-bedroom rents are up 112% this year, even as some landlords, like Matza, charge below market value.
“A lot of renters today are probably at their threshold of what they can afford as it is, and having any sort of incremental price increase beyond 3-5%,” Matza said. “And I think most landlords are probably pushing rents much further than that to accommodate the increase in expense load that landlords are experiencing.”
Matt Matza rents out properties in Austin. (Matt Matza)
For his high-demand downtown property, Matza said he’s shifted to short-term leases, attracting the large pool of migrating remote workers and new arrivals flocking to the city. He’s also working to keep rent down for his single-family property that’s been home to the same family for two years.
“For a lot of good landlords, and I'd like to think of myself as one, you want to have low turn-and-churn,” Matza said. “We're trying to help with the housing systems in Austin while making an appropriate return on our investment. You need to be cognizant of what your tenant can pay candidly… if your property taxes went up 40%, you can't push all that through to your tenant.”
Matza said there’s some “natural tension” that could arise between landlord and tenant as prices rise. But instead of losing tenants who can’t afford higher rent, he said many are choosing to stay: renewal rent increases grew at only one-third the rate of new leases in 2021, and many potential homeowners have been priced out of buying a house.
“Every year, it becomes more and more difficult for (my tenants) to buy a house,” Matza said. “And so they’ve stayed in there, and we’ve moved rents on them but less than probably what the market is… because it’s a great family and we’d like to keep them.”
The Austin metro's median home prices have risen hand-in-hand with rent and rose by nearly $100,000 in just a year. Matza said he’s seen clients take advantage of their home’s sky-high valuations and sell their properties, especially as rental property profit margins get slimmer.
“Your return on your investment may be lower than it was in the past, and that's due to housing prices being higher and obviously part of that is their tax burden on those," Matza said. "And some of the larger single-family real estate investment trusts... they're not really buying at the same pace they were buying over the last 2-5 years because the entry point has gone up so much that the rental yield isn't as high as it was in the past."
With more single- and multi-family properties cropping up in Austin than anywhere else, the city's inventory is slowly creeping back up, though it's far from healthy. If he had a crystal ball, Matza said he would expect to see a bit of a post-pandemic slowdown that could provide a welcome relief to strained landlords and renters alike.
"It's just hard to keep going up 30 or 40% and expect that to continue," Matza said. "I wouldn't anticipate a broad negative home price depreciation in Austin per se, because there's still going to be more people moving here than leaving here, but I think (the market) was just turbocharged through remote work and the pandemic and people coming here for tax reasons from the coasts."
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Elon Musk has placed an order for a new, top-of-the-line private jet: a Gulfstream G700, Austonia has learned. Delivery is expected in early 2023.
Billed as offering “the most spacious cabin in history,” the aircraft seats 19 and soars above the rest of us at up to 51,000 feet. Base price: $78 million.
The Gulfstream G700 was awarded the 2022 International Yacht & Aviation Award for excellence in cabin design this year. (Gulfstream)
According to the Gulfstream website, the G700 can fly up to 7,500 nautical miles without refueling, enough range to fly nonstop from Austin to Hong Kong. Powered by two Rolls-Royce engines, it has its own Wi-Fi system, 20 oval windows measuring 28” x 21”, and two lavatories.
The sweet new ride will replace his current top-of-line private jet: a 2015 Gulfstream G650, the aircraft that has been made somewhat famous by the automated @elonjet Twitter account, which tracks and reports his personal aircraft’s movements using public data.
Landed in Austin, Texas, US. Apx. flt. time 44 Mins. pic.twitter.com/jZ7HI0i4iV
— ElonJet (@ElonJet) June 24, 2022
Musk has repeatedly championed “free speech” as a guiding ethic in his planned purchase of Twitter. Last December, Musk offered the teenager who built the @elonjet tracker $50,000 to shut it down, citing security concerns. It’s still up.
According to the @elonjet account, Musk’s jet last traveled to Austin, where it’s been since June 23. The associated data says that his flight to Austin burned $2,573 worth of aviation fuel and discharged 4 tons of carbon dioxide.
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