The Texas Housing Market: A Great Place to Invest?

There are some big real estate investment opportunities in the Texas housing market, and it’s time you get in on the action. To some, this comes as a no-brainer. You may have heard that it’s the best state to invest in real estate, but what makes it such an attractive prospect? Texas has been one of the fastest growing markets in the nation, and to this day, remains an investment-friendly state. Here are a couple of reasons why investing in Texas real estate is a smart move.

1) Affordable Market with Strong Rental Rates

Although home prices have been steadily rising in recent years, buying rental property in Texas still comes at a reasonable price. Lower cost of living, specifically lower living expenses and taxes compared with the rest of the nation, are key factors behind an affordable real estate market in Texas. This hasn’t just garnered the attention of Texas real estate investors; many people have realized these attractions.

Just consider the population growth in Texas. Since 2010, the population has gone up by 3.5 million (which is a million more than other popular states like Florida and California). The Texas housing market has definitely benefited over the years with all of these Americans relocating. Demand for single-family homes has been on the rise, and owning Texas rental properties becomes even more attractive when you know that most residents of the housing market in Texas are looking to rent rather than buy.

To get a better idea of what you’d be getting with a Texas investment property right now, take a look at Mashvisor’s data. Our investment property calculator crunches the numbers and gives you the most accurate and reliable data so that you can confidently make a Texas real estate investment. Here’s the state-level data regarding rental property investment in the Texas housing market.

Overview of the Texas Real Estate Market

Median Property Price: $321,836
Price per Square Foot: $143
Average Days on Market: 99
Price to Rent Ratio: 17
Monthly Traditional Rental Income: $1,544
Traditional Cash on Cash Return: 1%
Monthly Airbnb Rental Income: $2,523
Airbnb Cash on Cash Return: 3%
Airbnb Occupancy Rate: 43%

So you’re probably thinking these numbers are good, but they’re not the best. That’s fine. This is to be expected when looking at average rental property performance in the second largest state in the country. It’s important to remember that real estate investing is local. There are different market trends from one city to the next. Many times you’ll even find different investment conditions between neighborhoods in the same area. This is why it’s important to get more narrow market data before investing anywhere, even the Texas housing market. We will be listing a couple of the best cities in Texas for real estate investment, but if you want to analyze any other markets, start out your 14-day free trial with Mashvisor now.

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2) Strong Economy

What else is drawing people to relocate to Texas? The same thing that always draws people’s attention: job opportunities and Texas has got a lot of that. The Texas economy is strong and is supported by a wide variety of industries and leading colleges and universities. The rate of job growth is nearly 4 percent (twice the national average) in the three biggest markets in Texas: Houston, Dallas, and Austin.

Texas has got a lot of business-friendly factors and favorable tax laws which have motivated many large companies to move their headquarters there (over 50 Fortune 500 Companies). The presence of these companies definitely boosts the economy with an increase in jobs. This is a critical factor which affects housing and real estate investment. So although local economies perform at different scales, they all play an important role in fueling the massive economy of the state, keeping the Texas housing market strong.

3) Texas Rental Property Laws

It’s always important to consider the legal aspects involved when deciding where to invest in real estate. Residential real estate investing is a rewarding, but tough business that requires preparation. You need to prepare for any future scenarios which are bound to come up when dealing with tenants. When it comes to rental property laws in the Texas housing market, there are two aspects to consider, depending on your rental strategy. The basic landlord-tenant laws and Airbnb laws and regulations.

Landlord-Tenant Laws

These are laws intended to protect the interests of both parties of the rental agreement. Although they will vary depending on the state, city, and municipality, Texas is known to be a landlord-friendly state. This is mainly because laws favor the preservation of the property owner’s rights when lease conditions are violated. If you’re a real estate investor and you have problematic tenants who aren’t in compliance with their lease, the legal system in Texas makes it easy for you to gain relief, compensation or repossession of the rental unit.

Airbnb Texas

Over the years, regulators and lawmakers have been trying to place some control on the booming industry of the online short term rental market. Platforms like Airbnb and VRBO have had quite the impact, and not everyone is as happy about it as investors and property owners. So is Airbnb legal in Texas?

Texas lawmakers haven’t yet figured out how to regulate Airbnb properties. However, there are multiple bills which have been filed this session to clear up any confusion. The first bill is to collect hotel occupancy taxes; these proposals would set up a statewide system for taxing short-term rentals, so cities don’t have to go through it alone. The second bill is a bit more controversial, and it’s about stopping cities (like Austin and San Antonio) from restricting short term rentals. It’s basically a bill to stop the bans on short term rentals in Texas. Supporters of the bill believe that property owners should have the freedom to do whatever they want with their property, whether it’s owner-occupied or not. Although these bills haven’t yet passed, it’s definitely a good sign in the right direction.

Where to Invest in the Texas Housing Market

Where to invest in the Texas housing market

Again using our investment property calculator, we will tell you exactly where to invest in the Texas housing market for your best shot at a profitable rental property. Because of the unsure state of Airbnb legality in certain parts of Texas, we will only be listing data for traditional long term rentals. However, we do have Airbnb data and if you have a certain area in mind which has been cleared of Airbnb regulations, sign up for Mashvisor to use our tool yourself and get any data you need.

Odessa- Ector County

Median Property Price: $320,059
Price per Square Foot: $133
Monthly Traditional Rental Income: $2,306
Traditional Cash on Cash Return: 6%

Laredo- Webb County

Median Property Price: $229,992
Price per Square Foot: $109
Monthly Traditional Rental Income: $1,558
Traditional Cash on Cash Return: 4%

Pampa- Grey County

Median Property Price: $141,574
Price per Square Foot: $74
Monthly Traditional Rental Income: $1,315
Traditional Cash on Cash Return: 6%

These are just a couple of cities out of the long list of profitable areas for investment in the Texas housing market. To start your search for an investment property, click here.

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What Makes the Texas Housing Market a Great Place to Invest?