Texas investment locations

10 Replies

We are looking to purchase another rental property and have been looking at different cities in TX (Dallas, Austin, San Antonio, Houston)... can anyone share their experiences on one over the other? Good and bad? Should specify: we are looking for a turn-key property. 

Thanks in advance! 

@Lauren Hay-Lavitt    Tough to get a valid answer I think as the cities are so far apart in a way, that probably few investors investor in all 4 and probably few invest in 2 of the 4....

I can tell you probably all 4 are on fire....lots of investors, not enough properties, prices and rents climbing so far.

One though in DFW area is to be very very careful with TK. We don't have many providers of TK here and from what I see they will often put you in the worst parts of the city. They know what numbers many investors want to hit, so they try to hit those numbers and to do so in this market, they often will be in the toughest areas. So that can hurt your appreciation and limit your rent increases. They tend to stay away from the popular cities, because at least initially the ROI might be lower.

If you are a long term buy and hold investor, I would look at where the growth is happening....buy in the areas of high growth....as Ross Perot used to say, you want to make a billion in real estate, buy in the path of progress....and he and now his family did quite well with this idea.

Austin prices are super high, but seem to be going higher.  Your rent may not match your mortgage, so minimum if not negative cash flow in many cases.  So more of an appreciation play right now.   Houston seems to have more weather problems, so do your best not to buy previously flooded properties, or properties that have the potential to flood in the future.   That leaves SA and DFW in my opinon.

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What returns metrics are you looking for? Below is the order to lowest cash flow to highest you can expect in each market. 

Austin 

Dallas

Houston/SA

You can find some new built homes in Conroe - north of Houston. They will have smaller cash flow, but the area is growing so much, and there's such a shortage of rentals here. You also need to lookout for the tax rates. It changes with each area of town. 

I'm partial to Austin, but largely because I live there and all my properties are there. For an appreciation play I think it's still a very strong market (probably the strongest of those mentioned), but if you're looking for immediate turn-key cash flow you can probably strike it off the list. You can still find fairly easy cashflow in the Austin suburbs, but you'll most likely need to factor in basic repairs and paint and flooring into your calculations.

Hi Lauren, I'm not really familiar with those cities. I started my real estate journey here in Indianapolis. I had my first turnkey. Now, I have almost a hundred doors. I would love to share my experiences and chat you more if you're interested.

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