Every year a handful of my buyers aren’t looking for a place to live. They’re looking for a property that will pay them back. That’s a different transaction than buying a home for yourself, starting with how the loan gets underwritten and continuing all the way through to the day a tenant calls about a broken water heater. If you’re weighing whether to buy a home in the Austin area specifically to rent it out, here’s what actually matters before you write an offer.
I’m Robbie English, REALTOR, Broker at Uncommon Realty, and most of what’s below comes from walking investor clients through this exact decision.
How financing a rental differs from financing a home you’ll live in
Lenders treat a non-owner-occupied purchase as a bigger risk than a primary residence, and the loan terms reflect that. Expect a larger down payment, generally in the 15-20% range for a conventional investment property loan, well above the 3-5% that’s common for owner-occupant financing. Interest rates typically run somewhat higher than a primary-residence rate as well, and lenders usually look for a stronger credit profile and cash reserves left over after closing, not just enough for the down payment and closing costs.
The other thing that catches first-time investors off guard: lenders don’t automatically count the rent you expect to collect as income that helps you qualify. They usually want a signed lease or a market rent schedule from an appraiser before they’ll give you credit for it, and even then they tend to be conservative about how much of it they’ll count. If you’re planning to use rental income to qualify for the loan, talk to your lender about how they’ll treat it before you go shopping for a property, not after you’re under contract.
What to underwrite before you buy, not after
The mortgage payment and the rent you expect to collect are the two numbers every buyer runs. They’re also the two numbers that tell you the least about whether a property will actually work as a rental. Before you make an offer, pencil out:
- Vacancy. No rental stays occupied every month forever. Build in some vacancy time each year rather than assuming the unit rents the day the last tenant leaves.
- Maintenance and capital reserves. Roofs, HVAC systems, and water heaters don’t ask permission before they fail. Set aside a portion of the rent every month specifically for repairs and replacements, separate from your regular cash flow.
- Property management, whether or not you plan to use it. Even if you intend to self-manage, run the numbers as if you might hire it out someday. If the deal only works when your own labor is free, it’s a thinner deal than it looks.
- Insurance and property taxes. Both tend to run higher on a non-owner-occupied property than they would on the same house as a primary residence, and Texas property taxes in particular can shift after a sale.
None of this is meant to talk anyone out of buying. It’s meant to make sure the numbers you’re underwriting are the real ones, not the optimistic version.
Texas landlord basics, and whether to self-manage or hire it out
Texas doesn’t cap how much you can charge for a security deposit, but the law is specific about what happens when the tenant moves out. You generally have to return the deposit, with an itemized list of any deductions, within a set window after the lease ends. Entry into an occupied unit isn’t spelled out with a specific notice period in the statute, but a solid lease will specify one, and giving advance written notice before non-emergency entry is standard practice and good for the relationship regardless. Eviction procedure in Texas also changed for 2026: a new law now requires landlords to give tenants a short grace period to cure a missed payment before eviction proceedings can start if the tenant has never been late before, so it’s worth having a lease and a process that already account for it.
That’s the short version of a longer body of law, and it’s worth having your lease and your process reviewed rather than relying on a blog post to get it right.
On the self-manage versus hire-out question, there’s no universally correct answer. Managing a rental yourself saves the management fee, which typically runs somewhere in the high single digits to low double digits as a percentage of collected rent, plus a separate fee when a new tenant is placed. What it costs you instead is time, the occasional 10 p.m. phone call, and the legal exposure that comes with handling notices, deposits, and habitability issues yourself. Some owners are well suited to that. Others would rather pay for it not to be their problem. Either can be the right call. It just needs to be a decision you make on purpose, not by default.
How I work with investor buyers
My job on a purchase like this is to help you evaluate the property the way a landlord would rather than the way a typical buyer would, and to make sure you’re looking at realistic numbers before you’re emotionally attached to a house. That means talking through what comparable properties are actually renting for in the area, what the financing side looks like with a lender who understands investment loans, and what ongoing costs to plan for so there aren’t surprises after closing. I don’t manage properties myself, but I can point you toward people who do if that’s the direction you want to go.
If you’re thinking about buying a home in the Austin area to rent out, I’m happy to talk through your specific numbers before you start looking. Get in touch and we’ll go through it together.
