Texas has long been considered a hot real estate market, with cities like Austin, Dallas and Houston seeing tremendous growth. The state’s business-friendly policies, lack of income tax and abundance of land make it attractive to companies and workers. For real estate investors, Texas offers many benefits and strategies to capitalize on. This article will explore the advantages of investing in Texas real estate and provide tips on how to succeed.
Strong job and population growth driving housing demand
Texas has seen strong job growth in recent years, especially in major metro areas like Dallas-Fort Worth and Houston. Major companies like Tesla, HP and Charles Schwab have relocated their headquarters to Texas. This job growth is driving inbound migration, with over 500,000 people moving to Texas from other states between 2018-2019. All this new population needs housing, so demand is robust across rental apartments, single-family homes, etc. By focusing on high-growth cities and suburbs, investors can find the best areas to buy rental properties.
Relatively affordable housing prices and rents
Despite the strong growth, home prices in Texas are still relatively affordable compared to other states. The median home price in Dallas is around $300,000, while in Austin it’s $465,000. Rents are also cheaper than other major metros, with Dallas and Houston having median rents around $1,100-$1,200 per month. Investors can more easily cashflow properties in Texas versus other markets. Focusing on neighborhoods with solid school districts can maximize rental demand.
Favorable taxes and regulations for real estate investors
Texas does not have a state income tax, which helps keep housing affordable. Property taxes are higher, but overall the tax structure favors real estate investing. Texas also has flexible landlord-tenant laws that favor property owners. Outside of cities with rent control, there are generally fewer regulations on rental properties versus states like California. Real estate investors have more flexibility in Texas, a key advantage.
Strong value-add opportunities in secondary markets
While Austin and Dallas have experienced huge price growth, secondary markets like San Antonio, El Paso and Corpus Christi offer more value-add opportunities. Investors can still find relatively distressed properties in these markets to fix up and rent out. Focusing on blue collar, working class neighborhoods near major employers can provide options for buying affordable homes and cashflowing them.
Texas offers many benefits for real estate investors, from strong job and population growth, relatively affordable home prices and rents, and lower taxes and regulations. By targeting high-demand markets like Austin and secondary cities with value-add potential, investors can capitalize on Texas real estate.