For those of you who aren’t familiar with the area, Apache Shores is located off 620 in the Lake Travis area near Lakeway. In the 1960’s a successful oil-man from Houston purchased a large tract of land including what is now Apache Shores. His vision was for this to be a resort community for people to enjoy the lake in the summers. However, the resort never really took off. It existed for about a decade and then began transitioning to a residential community. Today, Apache Shores still features some of the original resort amenities, and other neighborhood facilities have been added and restored since its conception. There’s a pool, tennis courts, a disc golf course, basketball and volleyball courts, walking trails, and a lakefront park. Homes in Apache Shores are also relatively economical compared to homes in other neighborhoods in the vicinity. All of these sound like attractive reasons to purchase a property to use as a short term rental in Apache Shores, yet I remain opposed for a few reasons.
The vast amenities at Apache Shores are certainly attractive to those looking for a lucrative vacation rental. However, they come at a cost. In this case, that cost is required membership in the Apache Shores Property Owners Association. Now, the POA fees are not actually the problem in this situation. My qualm lies in the fact that membership in the POA is mandatory for all Apache Shores homeowners. While there may be benefits associated with this membership, membership also requires compliance with the POA’s rules and regulations. Currently, there are no restrictions explicitly prohibiting STR use in the Apache Shores Declaration of Restrictions; however, this could change at any time. Homeowners associations and POA’s can vote to amend their rules with a vote and majority approval. In Apache Shores, quorum is required too and quorum is defined as 10% of the members. So, if an amendment to restrict or prohibit short term rental use in Apache Shores comes to the table, it would be relatively easy for such an amendment to pass. In layman's terms, buying a property in Apache Shores for the sole purpose of a vacation rental investment is risky. Buying any property in a mandatory homeowners association for the primary purpose of STR investing leaves you somewhat exposed to future risk.
Furthermore, competition is fierce in Apache Shores. There are a ton of STR properties in the surrounding area. Using airdna, we can’t get so granular as to say exactly how many airbnbs there are in Apache Shores, but we can assess the 78734 zip code which encompasses Apache Shores, Lakeway and Hudson Bend. Lakeway severely limits STR use so the vast majority of this data comes from STRs in either Apache Shores or Hudson Bend. There are 368 active vacation rental listings in 78734, that’s up 18% compared to last year. Occupancy Rate is a mere 43%, down 12% compared to last year. In summary, there are a plethora of listings, and it appears that with excess supply, revenue is going down for STR investors in 78734.
Lastly, I don’t love the prospect of Apache Shores as an investment market due to limited appreciation potential. Homes in the greater Austin area have historically appreciated well. And, while appreciation is generally not the primary investment metric my client’s value (it’s usually cash on cash) appreciation is a metric investors care about. Most people want high cash on cash returns in the short term and potential for long-term appreciation. Homes in Apache Shores will likely appreciate in the long-term, but I don’t think they will appreciate as well as other homes in the vicinity. My philosophy on this is purely anecdotal so take it for what it is, but my theory is as follows. Apache Shores is one of the least desirable neighborhoods in the Lake Travis area. Homes in the Lake Travis area retain resale value fairly well due to their location in the Lake Travis Independent School District. While this isn’t a primary factor in determining where to pick a short term rental investment, school districts do come into play when considering resale value. When you eventually sell, you're not limiting yourself to one small sub-sector of investors, you’re marketing to a much wider audience which is beneficial for resale value. While owners in Apache Shores do benefit from being located in a favorable school district, this is arguably one of the worst neighborhoods feeding into this school district. When the real estate market is high like what we saw in 2021, home sales volume and prices will also rise in neighborhoods such as Apache Shores. However, when the market is low, i.e. similar to current conditions. It will be harder to sell, and homes will sell for less in the less desirable neighborhoods such as Apache Shores. All in all, appreciation rates in Apache Shores over the past decade-ish have not been too shabby. Check out the table below, but do note that I wouldn’t value the 2024 stats too heavily as they are only using a partial data set.
All in all, Apache Shores isn’t a horrible place to invest in a short term rental. In fact, waterfront homes in Apache do quite well as vacation rentals. However, overall it’s not my favorite Austin neighborhood for an STR investment. I could easily envision a circumstance in which the POA suddenly prohibited STRS, interest rates are at historic highs and buyer interest is propelled to unprecedented lows. This would be a pretty catastrophic cacophony of synchronous events that simply wouldn’t be ideal for your investment journey. Wondering where to buy a short term rental investment property in Austin? Contact us today.
