Real estate investors from across the country are increasingly drawn to investment properties in Texas to develop their rental portfolios. The Lone Star State is a current favorite among real estate investors for several compelling reasons, including a robust economy, attractive pricing, and stable rental market conditions. Easy Street Capital is thrilled to be at the forefront as a premier provider of investment property loans for real estate investors seeking to establish rental portfolios in Texas!
Types of Investment Property Loans in Texas
When it comes to real estate investing in Texas, there are a variety of markets and types of investment property loans to choose from. Texas has plenty of older properties in need of renovators to restore them to rent-ready status. For investors adept at rehabbing older properties, hard money renovation loans are a perfect choice! These investment property loans allow you to buy a property quickly and finance your rehab costs as well! Once you are done, you can either “flip” the property for a quick return or pursue the BRRRR Strategy by renting it out and then refinancing into a long-term, low-rate DSCR loan!
Long-term DSCR Loans are also great for investing in turnkey rental properties. Turnkey refers to properties that are already rent-ready and require no renovations. Move-in ready single family homes and multi-unit properties (such as duplexes or triplexes) are great for cash flow and price appreciation. Most DSCR Loans are fixed rate for thirty years, locking you into a fixed interest rate for the long-term. While, if historical patterns continue, rents and appreciation increase steadily each year. Bottom line, debt costs stay the same while cash flow increases!
Texas: Landlord-Friendly State
In terms of regulation, Texas is considered a landlord-friendly state. Owners of rental properties, such as typical DSCR Loan borrowers, are secure investing in the state. Unlike some other states, Texas does not have any form of rent control. This means rental property owners are free to set rents at whatever level the market will bear, giving them the flexibility to maximize rents and cash flow.
In addition, if a tenant fails to pay rent or violates the terms of their lease, Texas rental property owners can begin the eviction process relatively quickly. For example, landlords can serve a tenant with a “3-day notice to quit” if they fail to pay rent. After just three days, the landlord can file a complaint for eviction in court. This provides landlords with a legal recourse to promptly address tenant issues, ensuring they can maintain the profitability of their investment.
Overall, Texas is a landlord-friendly state that offers many advantages for investors interested in rental properties. With its favorable rental market conditions, landlords can enjoy the freedom to set rents at market rates and take necessary actions to protect their investment.
Where To Invest In Real Estate In Texas
Texas is a favored market among real estate investors due to its vast options and diverse landscapes. As the second largest state in the country by both area and population, there are markets and opportunities for many different types of real estate investors. The cities highlighted in this article are a mixture of broadly recognized metropolises and smaller, emerging markets.
Houston is the largest city in Texas and the sixth-largest city in all of North America. Austin exudes an electrifying blend of creativity, live music, and outdoor adventure, making it a unique and captivating city for all to enjoy. Dallas is boasts a thriving cosmopolitan atmosphere, blending modern innovation with Southern hospitality to create a dynamic urban experience. A quick drive west brings you to Fort Worth, a city with a charming Texan identity that makes up the other half of the DFW megaplex. San Antonio enchants visitors with its rich history and a cultural tapestry that beautifully weaves together the past and the present.
There are plenty of opportunities outside the state’s major cities. Galveston is an excellent STR market, offering a coastal haven that captures the heart and soothes the soul. El Paso, nestled against the rugged beauty of the Franklin Mountains, is a vibrant border city where Mexican and American cultures harmoniously blend. Corpus Christi a city known for its maritime charm, is home to a lively harbor that tempts anglers and sailors alike. South Padre Island is a captivating vacation destination with and a lively beachfront scene that ensures an unforgettable and rejuvenating getaway by the Gulf’s sparkling waters. Lubbock, known as the “Hub City” is a close-knit community in the heart of West Texas known for its music scene and thought-provoking museums.
Houston
Houston, the largest city in the state, boasts a population of over 2.3 million people. Houston’s diverse economy in energy, healthcare, aerospace offers employment and stability, benefiting renters. The city is home to numerous Fortune 500 companies, including ExxonMobil, Chevron, and Phillips 66, attracting a skilled workforce in need of rental properties.
As a major international hub, Houston attracts visitors from around the world. Attractions like NASA Center, Museum District, and culinary scene make it an appealing tourist destination, known for its charm. Tourism fuels short-term rental growth, especially in hotspots like Downtown, the Galleria, and the Energy Corridor.
Investors in Houston can capitalize on the city’s steady rental market. According to Zillow, the average market rent in Houston is $1,888 per month as of April 2024, offering favorable returns on investment. Additionally, the average price of an SFR, per Redfin, is $339,000 – relatively affordable considering Houston’s the largest city in Texas. Houston’s affordability and business-friendly reputation enhance its attraction for real estate investors among major cities.
Houston offers a range of attractions, including the Space Center Houston, Museum of Fine Arts, and Houston Livestock Show and Rodeo. Houston’s proximity to Galveston Bay adds allure for visitors, fueling a short-term rental market, reflecting the city’s vibrant appeal.
Considering Houston’s strong economy, diverse attractions, and continuous population growth, it presents an excellent opportunity for real estate investors interested in single-family and multifamily properties.
Austin
Austin is the state’s capital with a population of over 970,000. This lively city, famous for music and diversity, presents diverse real estate investment chances.
As a popular destination for tourists and business travelers, Austin attracts visitors from all over. The city’s famous festivals, like SXSW and Austin City Limits, contribute to a flourishing market for short-term rentals. Additionally, Austin has many beautiful outdoor spots for nature enthusiasts such as Lady Bird Lake and Zilker Park. The wide variety of demand drivers this city has to offer has lead to its success as an STR destination. This trend is particularly notable in trendy neighborhoods like Downtown, South Congress, and East Austin. Aside from events and landmarks, Austin’s is also known as the “Live Music Capital of the World” and for its vibrant culinary scene.
Austin’s position as a leading technology and innovation hub, with major companies like Dell, IBM, and a booming startup ecosystem, draws a steady stream of students, professionals, and researchers. We would be remiss to not also mention that this city is home to Easy Street Capital’s headquarters.
Austin is home to the flagship university, The University of Texas at Austin, known for its academic excellence and rich campus life. It stands as a premier institution with a student population of approximately 51,000. This significant presence of students creates a consistent and strong demand for rental properties in close to the university. Investors who strategically select properties near UT can tap into a specialized market that offers numerous advantages. UT Austin’s strong alumni network often return for football games, creating steady demand for short-term rentals in the fall. Investors can expect a consistent income stream if they are able to serve alumni and visitors during events.
Dallas
Dallas, located in northern Texas boasts a population of over 1.3 million people. With an established economy focused on industries such as finance, technology, and healthcare, Dallas provides a strong employment base and stability for renters. Fortune 500 companies such as AT&T, ExxonMobil, and Southwest Airlines operate in the city, attracting a skilled workforce in need of rental properties.
As a major cultural and commercial hub, Dallas attracts visitors from around the world. Its renowned attractions, such as the Dallas Arts District, Dallas World Aquarium, and vibrant dining scene, make it an appealing destination for tourists. These factors fuel a lively short-term rental market, especially in Downtown, Uptown, and Design District.
Investors in Dallas can capitalize on the city’s steady rental market. According to Zillow, the average market rent in April of 2024 is $1,995 per month, offering favorable returns on investment. Additionally, the average price of a single-family home, according to Redfin, is $450,000. Business-friendly and affordable, Dallas is an attractive market for real estate investors.
Dallas offers a range of attractions, including the Dallas Arboretum and Botanical Garden, Dallas Museum of Art, and numerous professional sports teams. Outdoor spots like White Rock Lake and entertainment at American Airlines Center further enhance demand for a lively STR market. That being said, the STR market is an ever-changing sector. Keeping up with local regulations is of the utmost importance. A new set of Dallas STR laws went into effect in June 2023 and will be enforced beginning in December.
San Antonio
San Antonio, located in the southern region of Texas, is a thriving city with a population of over 1.5 million. The city offers a diverse and robust economy with notable contributions from industries such as healthcare, military, tourism, and technology. It is home to major employers including USAA, Valero Energy, and H-E-B.
Cultural attractions are abundant in San Antonio, with its rich history and vibrant arts scene. The city’s iconic landmarks attract millions of visitors annually. Some of the key attractions include the Alamo, the River Walk, and the San Antonio Missions National Historical Park. Additionally, San Antonio hosts a variety of festivals and events celebrating its multicultural heritage.
Real estate investors in San Antonio have experienced favorable returns on their investments. According to data from Redfin, the median sales price in San Antonio has shown steady appreciation over time. For instance, the median sales price in March 2021 was $233,000, and by March 2024, it had increased to $269,000, representing a notable 15.5% appreciation.
Galveston
Galveston, located on the Gulf Coast of Texas, is a captivating blend of historical charm and coastal beauty. Known for its sandy beaches, vibrant maritime culture, and Victorian architecture, Galveston offers a unique escape for visitors. The city’s rich history is evident in its numerous museums, including the Galveston Railroad Museum and the Moody Mansion. The Strand Historic District charms visitors with its quaint shops, art galleries, and lively restaurants. Outdoor enthusiasts can revel in activities like fishing, boating, and exploring the scenic Galveston Island State Park. The real estate market in this city continues to showcase its unique and alluring appeal, offering a range of opportunities for both residents and investors. Galveston’s average home value of $352,228 as of April 2024 (Zillow) highlights the overall stability and desirability of the city’s real estate offerings.
One significant factor contributing to Galveston’s real estate strength is its surging tourism industry. The city’s thriving tourism sector has a direct positive impact on the real estate market. In 2022, there were 8.1 million visitors as reported by the Galveston Park Board with visitor spending totaling to $1.2 billion. The substantial growth in total visitor spending underscores the city’s appeal as a sought-after destination; this influx of visitors creates a steady demand for short-term rentals. According to 2024 AirDNA data, Galveston has an “investability” score of 83/100 with average annual revenues currently projecting at roughly $48,500. Galveston’s unique charm, coupled with its steadily growing number of visitors, position the city as an exciting and promising destination for those looking to invest in a market with a multifaceted appeal.
Fort Worth
Fort Worth, located in the northern region of Texas, is a thriving city with a population of over 900,000. This city is located extremely close to Dallas and is normally referred to as part of Dallas-Fort Worth (DFW). The city offers a diverse and robust economy with notable contributions from industries such as manufacturing, energy, aviation, and healthcare. Major employers in Fort Worth include Lockheed Martin, and Texas Health Resources. Fort Worth’s advantageous location near the highly acclaimed DFW International Airport further enhances its appeal for real estate investors. As a top global airport hub, DFW draws many travelers needing overnight stays and easy airport access.
Texas Christian University in Fort Worth energizes the city and offers real estate investors fresh opportunities. Investors specializing in student housing can find success in catering to the city’s diverse and dynamic student population.
Fort Worth presents a favorable opportunity for investors to take advantage of its stable rental market. As of April 2024, the average market rent in Dallas stands at $2,0100 per month, offering promising returns on investment, per Zillow. Moreover, the average price of a single-family home, as reported by Redfin, is $334,000. Given the city’s economic opportunities and size, it is quite affordable. A business-friendly environment and cost-effectiveness attract investors eager to profit from the Fort Worth’s real estate potential.
El Paso
El Paso, located in the western region of Texas, is a thriving city with a population of over 680,000. The city offers a diverse and growing economy with significant contributions from industries such as healthcare, education, and international trade. Major employers in El Paso include Fort Bliss, The University of Texas at El Paso, and Del Sol Medical Center.
El Paso boasts an array of cultural attractions, reflecting its rich history and vibrant arts scene. The city is renowned for iconic landmarks such as the Chamizal National Memorial, El Paso Museum of Art, and Plaza Theatre, attracting visitors from near and far. Additionally, El Paso hosts various festivals and events that celebrate its multicultural heritage, showcasing a wide range of cuisines, shopping experiences, and entertainment options.
Real estate investors in El Paso have experienced favorable returns on their investments. According to data from Redfin, the median sales price in El Paso has shown consistent appreciation over time. For instance, the median sales price in March 2021 was $186,695, and by March 2024, it had increased to $240,000, representing a notable 28.5% appreciation.
With its growing population, diverse economy, and cultural attractions, El Paso presents a promising market for real estate investors. The city’s strong job market, proximity to the U.S.-Mexico border, and ongoing development contribute to its appeal. Whether investing in residential properties, commercial ventures, or rental properties, El Paso offers opportunities for investors looking to capitalize on its vibrant real estate market.
Corpus Christi
Corpus Christi, nestled along the picturesque Gulf of Mexico, captivates visitors with its stunning coastal charm and abundant natural beauty. The city’s pristine beaches and mesmerizing sunsets create a warm atmosphere for residents and tourists to be at peace. Furthermore, the city offers a myriad of outdoor activities, including boating, kayaking, and birdwatching in its wildlife-rich areas. With a range of beachfront homes and vacation rentals, Corpus Christi presents an irresistible opportunity for real estate investors looking to explore the lucrative short-term rental market.
Corpus Christi garners an impressive “investability” score of 99/100 as recognized by AirDNA. This signifies the city’s immense potential for real estate investors seeking lucrative opportunities. By investing in properties in Corpus Christi, investors have the potential to generate a substantial average annual income of $33,000. This signifies the potential for vacation rental investors to achieve favorable returns on their investments, given the city’s affordable purchase prices (median sale price of $260,000) and positive market outlook. Short-term rentals in Corpus Christi are likely to cash flow, benefiting from solid occupancy rates and attractive average daily rates. Corpus Christi presents an enticing prospect for real estate investors seeking to capitalize on a thriving vacation rental market.
South Padre Island
South Padre Island is located in southern Texas, close to Mexico, and enchants visitors with its breathtaking coastal charm and abundant natural beauty. The island boasts pristine beaches and captivating sunsets, inviting residents and tourists alike to immerse themselves in its idyllic surroundings. South Padre Island allures fishermen from near and far with access to prime spots and annual fishing tournaments. Additionally, the island offers a plethora of outdoor activities, including boating, kayaking, and birdwatching in its surrounding wildlife-rich areas. With its beachfront properties, South Padre Island presents an irresistible opportunity for investors looking to venture into the short-term rental market. The island’s magnetic appeal as a coastal retreat is undeniable. With its vibrant fishing and outdoor recreation scene, South Padre is truly a highly coveted destination for vacationers.
According to AirDNA, South Padre boasts a solid “investability” score of 90/100. Furthermore, investors have the potential to generate an impressive average annual revenue of $55,400! This reflects the potential for vacation rental investors to obtain favorable returns on their investments, thanks to affordable purchase prices. Short-term rentals are likely to cash flow given the solid occupancy projections and average daily rates in the market. South Padre Island offers an appealing opportunity for real estate investors seeking to capitalize on the city’s coastal appeal and thriving STR market.
Lubbock
Lubbock, situated in the expansive West Texas landscape, is a vibrant city with a distinctive character. Recognized as the birthplace of legendary musician Buddy Holly, Lubbock’s music scene continues to thrive. The city’s Texas Tech University adds a youthful energy, contributing to a lively arts and cultural scene. Visitors discover regional history at museums like the National Ranching Heritage Center and the Silent Wings Museum.
Lubbock real estate balances affordability, demand, attracting visitors and enticing investors with promising opportunities. With a median selling price of $161,000 in March 2024, as reported by Redfin, the market offers an accessible entry point for new investors. This affordability, coupled with the city’s enduring charm and growing amenities, contributes to Lubbock’s overall appeal.
One notable aspect of Lubbock’s real estate market is its low seasonality of demand. Despite fluctuations in various real estate markets, Lubbock maintains a steady demand throughout the year. With a market score of 96/100, this stability is further echoed in the average monthly revenue estimate, which hovers around $2,200 per month according to AirDNA. This resilience underscores the city’s consistent allure for visitors, and reaffirms the strength of the STR market.
Furthermore, the consistent demand for short-term rentals, with an average revenue of around $1,119 per month, as well as the stable single-family rental rate of $1,466, indicates a balanced market where investors can find opportunities that match their preferences and goals. This harmonious equilibrium extends from Lubbock’s low seasonality of demand to the allure of Texas Tech University, a beacon for potential student housing investments. With an array of options to cater to tourists, students, and long-term residents, Lubbock’s real estate market is well-rounded. Lubbock is a promising city known for affordability, community spirit, and consistent demand for rental properties.
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Ready to invest in real estate in Texas? Easy Street Capital is top lender for rental loans in Texas, both hard money rehabs and long-term or short-term rental properties.
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