Texas has long been one of the hottest real estate markets in the US. With its strong economic growth, increasing population and relatively affordable housing prices, Texas provides great opportunities for investment property purchases. In this article, we will analyze the key factors that make Texas a prime location for real estate investors and what investors need to consider when buying investment properties in Texas.
Robust job growth and economic expansion fuel real estate demand in Texas
Texas has experienced tremendous job growth across diverse industries like energy, technology and manufacturing over the past decade. Major companies and talented workers continue flocking to its major metro areas. With corporations like Tesla, Samsung, Oracle and Hewlett Packard Enterprise relocating headquarters to Texas, real estate demand will likely remain strong for years to come. This steady influx of workers and job creation catalyzes housing and commercial real estate demand growth.
Surging population increase the urgency to acquire investment property in Texas
According to US census data, Texas grew by over 4 million people over the last decade, more than any other state. It continues to experience strong domestic migration as Americans seek better employment prospects, lower taxes and affordable living. The Dallas-Fort Worth metro welcomed over 1.1 million new residents since 2010 while Houston added another 1 million. With housing supply lagging far behind population growth in major metros, real estate prices are expected to appreciate over the long run. Investors should act quickly to purchase investment properties while Texas home prices are still relatively reasonable compared to other high-growth states.
Focus on neighborhoods with stable tenant demand when buying Texas investment property
When evaluating investment properties in Texas, investors need to carefully assess neighborhood amenities, school ratings, job growth and transportation access. Suburbs near employment hubs with highly-ranked schools generally have the most tenant demand and best rent stability. Established neighborhoods in Northwest Austin, North Dallas and Sugarland often make excellent investment property locations. Investors should drive around potential neighborhoods, research market trends and connect with savvy local real estate professionals to find the best deals.
Factor in property taxes and insurance when calculating returns on Texas investment property
While Texas does not have a state income tax, its property tax rates are higher than the national average. Investors must account for significant property tax and home insurance expenses when estimating returns on rental properties in Texas. Focus on tourist cities and suburbs in East Texas tend to have lower tax rates. Investors may also qualify for homestead exemptions on properties they occupy.
With its business-friendly environment, expanding job market and domestic migration influx, Texas provides promising real estate investment opportunities now and into the future. Investors need to carefully research market conditions and utilize local expertise when identifying and acquiring properties.