Should you keep renting or make the jump to buying along Northeast I-35 in Austin? With prices, taxes, and construction in the mix, the math can feel messy. You want clarity, not guesswork. In this guide, you will learn a simple way to find your break-even point, the key local variables to watch on the corridor, and how to adjust the math for your timeline. Let’s dive in.
What “break-even” really means
Your break-even point is the time it takes for buying to cost the same as renting when you add up all cash flows, upfront costs, and the value you keep when you sell. There are two useful ways to look at it.
- Monthly cash flow comparison: Is your monthly cost to own higher or lower than renting today?
- Full wealth comparison: Over T years, does buying leave you better or worse off than renting after you include appreciation, selling costs, and principal paydown?
Here are the core formulas you will use:
- Monthly cost to own = Mortgage payment (principal + interest) + Property tax/12 + Homeowner’s insurance/12 + Maintenance reserve/12 + HOA (if any) − Monthly tax benefits (if itemizing)
- Monthly net = Monthly rent − Monthly cost to own
- Full break-even over T years compares cumulative costs of renting vs. buying, including upfront cash, ongoing costs, sale proceeds, and opportunity cost on your down payment.
Step-by-step: calculate your break-even
Step 1: Pick a price and a rent comp
Choose a realistic purchase price for the specific neighborhood along the Northeast I-35 corridor and a comparable rental for a similar home or condo. Use neighborhood-level comps and current rental listings to anchor apples-to-apples inputs.
Step 2: Estimate your upfront cash
- Down payment (percent of price)
- Buyer closing costs (often 2–5% of price, depending on lender fees and credits)
- Points or credits, if any
Keep this number handy. It matters for both your opportunity cost and your overall return when you sell.
Step 3: Add monthly ownership costs
- Mortgage payment: based on loan amount, rate, and term
- Property taxes: combined local rate × assessed value, divided by 12
- Homeowner’s insurance: annual premium divided by 12
- Maintenance: a common rule of thumb is 1% of home value per year, divided by 12
- HOA dues: if a condo or planned community
- Tax effects: many owners do not itemize federal deductions after 2018, so monthly tax savings may be zero
Step 4: Compare monthly cash flow
Monthly net = Rent − Monthly cost to own. If the result is positive, renting costs more per month. If negative, owning costs more per month. This is a helpful snapshot, but it ignores appreciation, principal paydown, and selling costs.
Step 5: Estimate your full break-even timeline
To find the holding period T where buying equals renting:
- Compute total owning cost over T years:
- Initial outlay (down payment + closing costs)
- Plus sum of monthly ownership costs over T years
- Minus net sale proceeds after selling costs and loan payoff
- Optionally add an opportunity cost on your down payment
- Compute total renting cost over T years:
- Sum of rent over T years, escalated by rent growth
- Optionally add the opportunity cost if you invest money you did not use for a down payment
- Solve for T where the totals are equal. You can try 3, 5, 7, and 10 years to see where the lines cross.
Local inputs along Northeast I-35
Neighborhood scope and housing types
The Northeast I-35 corridor commonly includes parts of East Austin and neighborhoods near the highway such as St. Johns, Windsor Park, Mueller-adjacent areas, Govalle, Cherrywood, and segments near Highland and Brentwood, extending toward the Travis County line. You will find a mix of older single-family homes on smaller lots, newer infill construction and ADUs, townhomes, condominiums, and multifamily communities.
Prices and rents to watch
Use recent closed sales and active listings for on-the-ground pricing near your target blocks. For rents, check similar home or condo sizes, not just apartments. Austin saw rapid appreciation in 2019–2022 and some cooling in parts of 2023–2024, so use current figures when you run your numbers.
Demand and supply cues
Proximity to Downtown, the University of Texas area, and tech employment centers supports steady demand. Infill and new mixed-use projects add supply in select pockets. Both factors can influence your assumptions for price appreciation and rent growth.
Taxes, exemptions, and insurance that impact break-even
Property taxes and the homestead exemption
Texas has no state income tax. Property taxes are a key carrying cost in Travis County. Your combined tax rate comes from several taxing entities. If the home is your primary residence and you qualify, the Texas homestead exemption reduces your taxable value. Your annual property tax is typically assessed value × applicable exemption × combined tax rate.
Insurance and flood considerations
Homeowner insurance costs in Texas can be higher than national averages. Some properties in east and northeast Austin fall within mapped floodplains, which can require flood insurance and increase annual costs. Always check flood maps for a specific address before you set your budget.
Infrastructure and mobility along I-35
Major I-35 Capital Express construction in Austin can affect noise, access, and short-term convenience for homes near the corridor. Over the long term, improved mobility can support values in well-connected areas. Transit investments like Project Connect may shape commute options and walkability over time. If your home is close to active construction, plan your holding period carefully.
What changes your break-even the most
- Home price appreciation: Faster appreciation reduces the time to break-even.
- Rent growth: Faster rent growth makes owning look better sooner.
- Mortgage rate: Higher rates raise monthly ownership cost and slow break-even.
- Holding period: Short horizons favor renting because of transaction costs.
- Property taxes and insurance: These are sizable annual costs in Austin, so model them explicitly.
- Down payment amount: A larger down payment lowers your mortgage but raises your opportunity cost.
Example: a simple monthly cash-flow check
Here is a clear illustration of the math using round numbers. Adjust the inputs to match your target property and lender quotes.
- Purchase price: $425,000
- Down payment: 10% ($42,500)
- Loan amount: $382,500
- Mortgage rate and term: 7% at 30 years
- Estimated property tax: 2.0% of value per year ($8,500), divided by 12
- Homeowner’s insurance: $2,200 per year, divided by 12
- Maintenance reserve: 1% of value per year ($4,250), divided by 12
- HOA: $0 for a non-HOA single-family example
- Comparable rent today: $2,400 per month
- Tax benefit: $0 per month if you do not itemize
Now compute:
- Monthly mortgage payment (principal + interest): about $2,553
- Property tax per month: $708
- Insurance per month: $183
- Maintenance per month: $354
- Total monthly cost to own: $3,798
- Monthly net = Rent − Own = $2,400 − $3,798 = −$1,398
In this example, owning costs about $1,400 more per month than renting. That does not mean buying is “bad.” It means your break-even depends on how long you stay, how much principal you pay down over time, and what happens to prices and rents. If appreciation and rent growth are modest, many buyers find the full break-even falls around 5–7 years, depending on the exact inputs.
Tip: If your price is lower, your rate is lower, your taxes are reduced by a homestead exemption, or your rent is higher, the gap narrows quickly.
Renting vs. buying on Northeast I-35
When renting may be better
- You need flexibility within 3–5 years due to work or lifestyle changes.
- You want to avoid near-term I-35 construction impacts before settling on a block.
- You prefer to invest your down payment and keep fixed housing costs off your balance sheet.
When buying can make sense
- You plan a 5–10+ year hold and value stability and customization.
- You find a well-located home where long-term demand is solid and maintenance needs are clear.
- You can claim a homestead exemption and carry the annual taxes comfortably.
Quick worksheet: plug in your numbers
Use these lines to run your own scenario.
- Price: $____ and Down payment: ____%
- Buyer closing costs: ____% (estimate lender fees, title, escrow)
- Loan: $____ at % for ____ years; Monthly P&I: $
- Property tax: % of assessed value = $ per year; per month: $____
- Insurance: $____ per year; per month: $____
- Maintenance: % of value per year; per month: $
- HOA: $____ per month
- Tax benefit: $____ per month (often $0 if you do not itemize)
- Total monthly cost to own: $____
- Comparable rent today: $____; Expected rent growth: ____% annually
- Appreciation scenarios: ____% low, ____% base, ____% high
- Selling costs: ____% of sale price
- Opportunity cost return (optional): ____% annually
Run 3, 5, 7, and 10-year comparisons to see where your lines meet.
Where to get local numbers
- Austin Board of REALTORS (ABoR) market reports for current pricing and days on market
- Travis Central Appraisal District (TCAD) for assessed values and homestead exemption details
- Travis County Tax Office for combined property tax rates by parcel
- Freddie Mac mortgage rate surveys and local lender quotes for current rates and points
- City of Austin and TxDOT I-35 Capital Express resources for project timelines and maps
- Capital Metro and Project Connect for transit plans and station locations
- FEMA and City of Austin floodplain maps for flood risk and insurance requirements
- Texas Department of Insurance for homeowner and flood insurance context
- Consumer Financial Protection Bureau and IRS publications for rent vs. buy and tax rules
Your next step
If Northeast I-35 fits your lifestyle, the right next move is to run the numbers on a specific property and your timeline. A focused break-even review can clarify whether to rent a bit longer or buy with confidence. When you are ready, get local guidance, pricing comps, and a tailored plan with Bruce X Forey.
FAQs
What is a rent vs. buy break-even in Northeast I-35 Austin?
- It is the holding period where the total cost of owning equals renting after you count upfront costs, monthly costs, appreciation, principal paydown, and selling costs.
How do Texas property taxes affect Austin break-even math?
- Property taxes are a major annual cost, so they raise the monthly cost to own and can push break-even farther out unless offset by appreciation and rent growth.
Will I-35 construction near my home change the decision?
- Short term, construction can add noise and access challenges; long term, mobility upgrades can support values, so consider proximity and your planned hold time.
Do I need to model flood insurance along Northeast I-35?
- Yes, if a property is in a mapped floodplain or low-lying area, flood coverage may be required and premiums can materially change your monthly budget.
Is the mortgage interest deduction still a big factor in Texas?
- After 2018, many households take the standard deduction, so monthly tax savings can be limited; run the numbers both with and without itemizing to be sure.
How long should I plan to stay before buying in this corridor?
- Many analyses point to 5–7 years as a common benchmark, but your exact break-even depends on price, rate, taxes, appreciation, rent growth, and selling costs.
