5 Reasons Tech Professionals Should Rent Instead of Buy in Austin

It’s hard to deny it: Austin is an awesome place to call Home, Sweet Home. 🏠

But for tech professionals, is it the smartest move to buy a House, Sweet House?

Maybe you’ve just come from selling a house in Cali. It only makes sense to use that money to buy a new house in Austin, right? After all, costs seem low in comparison. The Austin housing market is booming. Real estate here is looking mighty nice right now.

I’m here to advise you to slow your roll. For many people—tech professionals in particular—renting may be the way to go.

Why? Most of the reasons on this list relate to one simple equation:

More Cash = More Freedom

We’ll dig into that in more detail. First, let’s look at some pitfalls to homeownership that sometimes get neglected…

1. SURPRISE! HOUSE COSTS WILL SURPRISE YOU

Buying a house saddles you with much more than a monthly mortgage. There’s property taxes and insurance premiums, and either could go up at any time. There’s furnishing, maintenance and upkeep.And then… there’s the unpredictable.                                                                                                                                                                                              

No matter how ready you think you are, when you face something like tree roots bursting into your sewer line… That literally stinks. And it’s a drain—the financial, physical, and mental kind—you don’t need.

Here are some other eye-opening numbers for you: Research by Zillow and Thumbtack found the average U.S. house faced about $9,400 in hidden costs per year. 

                                                                      For houses in Austin, that number is $12,457.

$9,727 in “necessary” costs (taxes, insurance, and utility bills) plus $2,730 in maintenance costs. That’s the 9th highest of all cities in the study. (1)  

Meanwhile, monthly rents in Austin haven’t risen as sharply as real estate prices have. You can get a lot more house for your money by renting, and you know how much you’ll be paying throughout the year.

Plus, being able to call a landlord to take care of that plumbing disaster? Priceless.

2. RENTING LEAVES YOU MORE CASH FOR MORE FLEXIBILITY

Now let’s talk cash. 💸 Namely, how much more of it you’ll have if you don’t throw it into a down payment for real estate. 
In the tech world, some of the most exciting jobs are in startups. Maybe that’s what brought you to Austin. A hot new business that’s primed to explode, but you have to take a major salary cut now to get in on it.
If you’re counting on that cash for buying a house, you might not be able to afford to take a hit now for the prospect of a big payout down the line.

But if you rent and save that cash, you’ll not only be in a better position to take the equity. You’ll also have the flexibility to be more strategic and profitable with what you do with it.

Here’s one example:If you’ve received stock grants, a Section 83(b) election lets you pay taxes on them now, when the stock is granted to you, rather than years later when the stock is vested—and potentially worth a lot more.
(For details, read my post going into all the nitty-gritty of a Section 83(b) election.)

3. HOUSES HAVE GRAVITY

One thing I’ve learned about tech professionals is they love a challenge. New problems to solve, new mountains to climb. Bring it on.

But that also means you might be drawn to what seems like a dream job at first, only to start feeling bored when things get stale or easy or repetitive. That can mean more job changes—and location changes—than other professions.

And that’s fine! I won’t be offended if you have to leave this great city. I support you in your next challenge. 🙌

But if your new dream job calls out to you from San Fran or Seattle or New York or wherever and you already have a house here in Austin, you may find that house holding you back. It becomes an albatross around your neck, one so big it has its own gravitational pull, keeping you from launching off to the job you really want.

And let’s keep it real: the tech industry can be brutal. Big company-wide layoffs can send you into an escape pod whether you’re ready to leave or not. Having a cash cushion available by not putting it into a house can make a huge difference in easing the stress.

4. MORE FREEDOM FOR JOURNEYING AND LEARNING

The sky’s the limit on what you can do with the extra cash and extra freedom that comes with renting. That’s the best part about freedom!

But here are a couple ways that renting may offer an extra-enticing advantage. One is if you want to literally take to the skies! ✈️

Whether it’s to visit family or just explore the wild world out there, many of the tech professionals I work with love to have a large travel budget! Instead of putting a whole bunch of cash into one very stationary house, you can spend it on roaming the world as you wish.

Plus, you won’t have to worry about what might be happening to your house or yard or plumbing while you’re away.

5. YOU DON’T KNOW HOW YOUR KID WILL GROW UP YET

Not being tied down by a house also gives you valuable freedom in terms of education for your kids. If you’re new to Austin, you might not know where you to settle based your family’s educational priorities. You might not know what schools offer or where their district boundaries are.                                                                                                                                                            And you probably can’t predict what your kids will be like in the future, either. Will they show a knack for certain subjects, interest in certain careers, or talent in certain lucrative sports?  
You may end up wanting to move to a different school system that has the programs and opportunities to best help your future superstars thrive. 📚 If your family is renting, both the decision and the move itself will be much easier on you.

SO… WHAT’S YOUR NEXT MOVE?

Has this helped open your mind to renting instead of buying a house in Austin? That’s just the start. There are a lot of factors to consider, a lot of specific financial strategies that may help in your situation.
Or maybe you’re a tech professional that these reasons don’t apply to. Or maybe you’re not in the tech industry at all, but still find yourself thinking, “I need to start getting my financial life in order and have a second opinion on important decisions like this!”
That’s what we’re here for. Whether you rent or buy, we’re here to help you make the best call for you and your family in all of your financial choices. Schedule a call.

About Richard

Richard Archer is a financial advisor and the President of Archer Investment Management with more than twenty years of industry experience. He specializes in providing comprehensive financial planning and investment guidance and personalized care and attention to professionals with complex compensation and families pursuing financial freedom. Along with holding a Wharton Bachelor of Science in Economics and a Texas MBA, he is a CERTIFIED FINANCIAL PLANNER™ and a Chartered Financial Analyst®. He combines his advanced industry education and knowledge with his genuine care for people to provide clients with an exceptional experience. To learn more about Richard, connect with him on LinkedIn, Facebook, Twitter or visit www.archerim.com.