13 Austin Zip Codes with High-Performing Cap Rates in 2025
Published | Posted by Dan Price
13 Austin Zip Codes with High-Performing Cap Rates in 2025
The Austin real estate market has consistently been a hub of activity, attracting investors and homeowners alike. An analysis of cap rates across various zip codes in the Austin area provides valuable insights into current investment opportunities, especially when compared to the 6-month Treasury Bill rate. This report delves into the details, highlighting 13 zip codes where cap rates exceed the 6-month Treasury yield, offering potentially higher returns for property investors.
Cap rates, a critical measure for real estate investors, are calculated using the median sold price and median leased price of properties, with adjustments made for taxes, maintenance costs, and other expenses. Currently, the Austin area has an average cap rate of 3.73%, while the 6-month Treasury Bill yield stands at 4.25%. Although the overall average cap rate falls below the Treasury yield, specific zip codes present opportunities where real estate investments outperform risk-free alternatives.
Among the high-performing zip codes, 78725 in Austin leads with a cap rate of 6.45%. This area benefits from relatively low property values combined with steady rental demand, creating an attractive scenario for investors. Similarly, Lockhart’s 78644 features a cap rate of 4.90%, driven by strong rental yields and manageable maintenance costs. Jarrell, located in 76537, boasts a cap rate of 4.66%, emphasizing its value as a growing market for real estate investments.
Marble Falls, represented by zip code 78654, also stands out with a cap rate of 5.44%. This area combines moderate property prices with consistent rental income, making it an appealing option for investors. Driftwood’s 78619 offers a cap rate of 5.87%, highlighting its potential for delivering strong net operating income (NOI) relative to property values.
A closer look at the data reveals that rental yields and property values play significant roles in determining cap rates. For instance, areas like 78725 and 78644 benefit from lower median property values, which, when combined with stable lease prices, result in higher returns. In contrast, other zip codes with higher property values but moderate rental income may present less favorable cap rates, emphasizing the importance of market selection for investors.
Net operating income (NOI) across the Austin area fluctuates due to varying property taxes, maintenance expenses, and rental income. For example, properties in 78644 generate an NOI that aligns well with investment expectations, while other areas may experience challenges due to higher costs or lower rental income.
Despite the broader trend of cap rates falling below Treasury yields, the 13 identified zip codes demonstrate that strategic investments can still yield competitive returns. Investors seeking opportunities in the Austin area should pay close attention to these locations, where favorable price-to-rent ratios and strong market demand create promising conditions for real estate.
The data highlights the dynamic nature of the Austin real estate market, where careful analysis and informed decision-making are essential. As cap rates continue to fluctuate with market conditions, staying updated on these trends is crucial for maximizing investment potential. With specific zip codes outperforming traditional benchmarks, the Austin market remains a compelling option for those looking to capitalize on its growth and rental demand
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