Top Locations How Much Will Investing in Texas Real Estate Cost in 2019? by Hamza Abdul-Samad September 6, 2019September 6, 2019 by Hamza Abdul-Samad September 6, 2019September 6, 2019 When investing in Texas real estate, or any real estate for that matter, there are many costs to consider. The costs associated with owning a rental property can be vast and varied, but there are a number of universal costs and fees. These include: Property prices Property taxes Property insurance Property registration Property permits How do these costs factor into a Texas real estate investment? Keep reading to find out! Related: A Comprehensive List of Rental Property Expenses for Investors The Costs of Investing in Texas Real Estate Of the many costs of investing in Texas real estate, property prices and taxes remain consistent in the long-term. Property Prices The Texas housing market is known for its affordable real estate. As the second-largest state by land area, there are plenty of opportunities for a Texas real estate investment. Historically, the Texas real estate market has been in-line with or slightly below the US median. So far in 2019, the national median has ranged from $305,400 to $339,000, with the most recent price at $312,800. At the moment, the Lone Star State’s median property price is $321,957, according to Mashvisor’s rental property calculator. If you’re interested in how our investment property calculator computes this data, be sure to click here! Many Texan cities have property prices that are near the state median. And in others, you’ll find a Texas investment property priced below or above the median. Some notable cities that are above the Texas median property price include: Houston: $397,904 Dallas: $405,282 Austin: $523,224 Some notable cities that are below the state median include: Fort Worth: $286,202 San Antonio: $282,135 El Paso: $211,625 Here are the median property prices of other notable cities in the Texas housing market: Amarillo: $263,473 Arlington: $273,162 College Station: $331,407 Corpus Christi: $303,143 Frisco: $443,309 Lubbock: $255,129 Property Taxes Whether you are investing in real estate to buy a home or a rental property, property taxes are a natural component of the investment. Texas has a reputation for high property taxes. However, the overall tax burden is not too severe for a Texas real estate investor, since Texas does not have a sales income tax, among other tax considerations. According to Tax-Rates.org, Texas has the third-highest effective property tax rate, as a percentage of property value, in the US at 1.86 percent. This equates to a median property tax of $2,275 per year for a property with a median value of $125,800. Texas is also ranked the 12th highest US state for property taxes as a percentage of median income. Similar to property prices, Texas property taxes differ from one location to another within the state. Here are the property tax rates, as a percentage and value, of the most populous Texas counties based on the median property price of each county. Harris County: 2.31%, $3,040 Bexar County: 2.12%, $2,484 Tarrant County: 2.37%, $3,193 Collin County: 2.19%, $4,351 Fort Bend County: 2.48%, $4,260 Dallas County: 2.18%, $2,827 Montgomery County: 1.99%, $3,123 Unlike property prices and taxes, property insurance, registration, and permits tend to vary widely across the state and over time. As with any real estate information, it’s vital for property investors to be up-to-date when it comes to these aspects when investing in Texas real estate. Property Insurance Like any real estate market, property insurance is a requirement when investing in the Texas housing market. As of late, it has become more of a necessity than ever when investing in Texas real estate due to the hurricanes, storms, and floods often troubling the region. Overall, Texas is the seventh most expensive state for property insurance. According to Insurance.com, the average cost of property insurance in Texas is $1,945. Compared to the national average of $1,288, the average property insurance cost in Texas is $717 more for the coverage level of $200,000 dwelling coverage, $1,000 deductible, and $100,000 liability. Property insurance costs in Texas vary widely. Areas in Galveston, for instance, are among the most expensive places to insure a property, with averages around $7,000. Some areas are in the opposite direction, however, with the average property insurance cost in some neighborhoods in El Paso capping at $1,000. Here are the average insurance rates for the largest cities in the state based on a policy of $200,000 dwelling coverage, $1,000 deductible, and $100,000 liability protection: Houston: $2,787 San Antonio: $1,258 Dallas: $1,802 Austin: $1,185 El Paso: $823 Fort Worth: $1,893 Arlington: $1,913 Related: 10 Types of Insurance for Real Estate Investors Rental Property Registration When investing in Texas real estate, some cities and counties require specific types of rental property registration. Two common examples of the various types of property registration are present in Dallas and Houston. Dallas real estate investors are required to register non-owner occupied properties, such as single-family homes, duplex units, and condominium units. The registration entails a registration application, an annual $43 fee, an annual Owner’s Self Inspection Checklist, and a comprehensive inspection by the City of Dallas every 5 years. Multi-family investment properties in Houston, specifically, are required to be registered. The registration includes a $40 fee per unit or $100 total, whichever is greater, and an administrative fee of $10. For more information on multi-family registration in Houston, check out this link. The requirements for rental property registration in the Texas housing market range considerably from city to city. When deciding to invest in any market in the state, be sure to learn about its registration requirements. Short-Term Rental Permits When investing in Texas real estate, there are multiple rental strategies to choose from. In some cities like Austin and San Antonio, Airbnb vacation rentals are fully legalized and come with short-term rental permit requirements. Related: 13 US Cities with the Least Airbnb Legal Issues in 2019 As part of the city’s Airbnb regulations, Austin Airbnb hosts are required to obtain an operating license for short-term rentals, which are defined as the rental of a residential unit or accessory building for less than 30 consecutive days. Hosts are required to apply for the license, pay a $500 non-refundable fee, provide proof of property insurance, among other requirements which you can learn about here. If a San Antonio Airbnb rental property is located within city limits, a permit is needed. Like Austin short-term rentals, San Antonio defines a short-term rental as an entire or partial residential unit rented for a period of less than 30 consecutive days. San Antonio has two types of short-term rental permits. A Type 1 permit applies to an owner-occupied rental, whereas a Type 2 permit applies to a non-owner occupied rental. For more information on San Antonio’s Airbnb permit requirements, be sure to check out Airbnb’s help page. How Will These Texas Rental Property Costs Affect Your ROI? As you can see, investing in Texas real estate, like any other market, requires many costs and fees. Listing and calculating these fees can easily discombobulate any investor. And figuring out how all of these costs will affect your return on investment (ROI) can get complicated. However, by using Mashvisor’s rental property calculator, you can list, calculate, and adjust the expenses associated with your rental property and determine its profitability. To get started investing in Texas real estate and calculating rental expenses, click here to start your 14-day FREE trial with Mashvisor! Start Your Investment Property Search! START FREE TRIAL Airbnb RegulationsCostsInsuranceProperty PricesProperty TaxTexas 0 FacebookTwitterGoogle +PinterestLinkedin Hamza Abdul-Samad Hamza is a long-time writer at Mashvisor. With a focus on real estate investing tips, concepts, and top investing locations, he aims to help all aspiring investors who come across his blogs to hit the bank with their investment property. Previous Post Mashvisor: The Only Real Estate Database You Need Next Post The Ultimate Property Manager’s Guide to the Eviction Process Related Posts Invest in Real Estate in the 5 Most Landlord Friendly States 4 Reasons to Invest in Airbnb Chicago Real Estate in 2018 Best Places to Buy an Investment Property on a Budget Colorado Springs Real Estate Market 2019: Where to Invest Is 2018 the Time to Invest in the San Jose Real Estate Market? Is the San Diego Housing Market a Good Investment Location in 2020? Is Dallas Investment Property a Smart Investment Choice Right Now? What Cash on Cash Return by City Should Real Estate Investors Expect in 2022? 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