I’ve done my fair share of real estate investing in the Lone Star State, which has provided me with much insight into the best cities in Texas to buy rental properties. With that said, this article was designed to help investors who are not familiar with the Texas rental market. My goal is to set interested investors on a path to buying lucrative single or multi-family homes in the best cities in Texas, so they can build great wealth, as well as quickly grow their real estate portfolio.
Let’s take a quick look at the question at hand:
What are the best cities in Texas to buy rental properties? Cities in Texas that are best for real estate investing are Lubbock, Dallas, Austin, and Houston. These areas provide a lucrative rental market for investors who deal in single and multi-family rental properties.
What Makes Texas Real Estate Attractive to Investors?
Smart investors seek out rental markets that meet certain criteria to ensure they land a profitable deal, and this is why they look to cities within Texas. The Lone Star State is known for being the ideal place to buy rental properties for more than a few reasons. Let’s find out what they are:
1. Landlord-Friendly: For starters, Texas is a landlord-friendly state. For some, this is one of the most important factors. If you buy a rental property in a hot rental market, but the law is not on your side, you can end up losing much money in legal fees, lost rental income, and so on, if an eviction were to occur. Believe me; it has happened to the best of us.
2. Population Continues to Grow: When you have a steady population growth, that means the need for rental properties is also steady, as well as in high demand. Texas has the second highest population in the United States. It’s a fact that millions of people have been moving to Texas – these people will need a place to live!
3. Texas has a Thriving Economy: This state has a booming economy, and it shows in the high demand for rental properties. Many Fortune 500 companies, colleges, along with its large healthcare sector, really fuel the economy within Texas. When the economy is doing this well, it means workers will need places to live, and they will have the money to reliably pay the rent. Additionally, a great economy means low unemployment rates.
4. No Income Tax: You will be happy to know that if you invest in rental property within Texas, that you won’t have to pay state income tax. This can save you large amounts of money that will ultimately increase your ROI. No matter how much money you save on taxes, you should think about incorporating as an LLC to maximize your savings. I always refer my clients to either Scott Smith from Royal Legal Solutions, or Garret Sutton from Corporate Direct. They both have years of experience in incorporating, taxes, and real estate.
5. Properties are Affordable: Rental properties are more affordable in the Lone Star State for a few reasons – there is so much buildable land available that it drives the pricing down, and the cost of living in Texas is pretty low, which makes the price of building a house lower also.
Speaking of affordable properties, you may want to dive into this video that covers why investment properties in Texas are cheaper:
No matter how great a city or neighborhood looks, you should always ensure it’s a profitable deal before moving forward. You can easily do this with software that was designed for investors for this purpose, it’s called DealCheck and I have personally used it and was able to avoid some costly mistakes with it. View DealCheck’s website to see if it’s right for you.
Financing a Texas Rental Property
Before we dive into the best cities for real estate investing, I wanted to take a moment to touch on financing any deal you come across. If you need some advice on how to come up with the money, here are a few resources:
- Read through this article on investing in real estate utilizing a self-directed IRA.
- Take a look at our funding page that focuses on Fund & Grow. A company that has helped thousands of my clients come up with the money to fund their deals. If you’re interested in this company, you can also view our Fund & Grow review page for more information.
- Take a look at my personal favorite wealth-building site for additional ways to bring in money – www.justbuildwealth.com
Before we dive into cities in Texas that you might invest in, I wanted to mention that If your portfolio is growing, make sure you are covered in all ways by working with a reliable insurance company. I recommend taking a look at the National Real Estate Insurance Group website for more information.
Best Cities in Texas to Invest in Rental Real Estate
You know that Texas is a fantastic place to own rental real estate, but which cities within this state are considered a hot market for investors? I’ve narrowed down some of the top places to buy rental real estate in Texas, and here are my top picks:
This city within the Lone Star State is well known due to the fact that it houses NASA’s Mission Control Center. This may sound interesting, but I mention it only because it has an impact on Houston by positively contributing to the job market, and boosting the economy. Additionally, there are 41 Fortune 1000 companies in Houston, and it’s the home of The Texas Medical Center. All this together creates a thriving economy, brings many renters to the area, as well as has a big impact on the population growth. Lastly, Houston sports housing prices that are considered favorable to real estate investors.
Austin, the capital of Texas, is popular among real estate investors due to the fact that it has a high demand for rental properties. This is, in part, because Texas University is situated there, as well as many tech companies, successful startups, and a large millennial population that’s attracted to the area because of this. The bottom line is that Austin has a robust economy, a fast-growing population, a low unemployment rate, and affordable housing. Investors looking for a city in Texas to purchase buy and hold real estate will do well in this area.
This well-known city is a popular destination, with over 25 million tourists visiting each year. The economy is boosted by all the jobs needed to cater to tourism – more jobs equals more employees looking for rentals in the area. Along with this, Dallas is the home of almost ten large Fortune 500 companies, and many industries pertaining to healthcare, construction, tech, manufacturing, and more. This, altogether, makes for a thriving economy and hot rental market. Like Austin and Houston, you will find affordable houses, and a steady population growth that supports a prosperous rental real estate climate.
Lubbock – Best City in Texas to Buy Rental Properties
In my opinion, as well as many other investors, Lubbock is one of the best cities in Texas to buy rental properties. It has all the criteria for allowing investors to purchase lucrative properties, and is known for consistently being a hot rental market. Lubbock is in West Texas, a location where I was personally able to successfully and quickly grow my portfolio with profitable real estate deals.
So, what makes Lubbock my top pick for investing in real estate within Texas? Let’s take a look at just a few reasons:
Outstanding Economy and Job Market
Lubbock is on the list of the best cities in Texas, in part, because of its great economy, which goes hand in hand with an excellent job market. In fact, Lubbock was rated #10 Mid-Sized City for Economic Growth Potential. You can read the article by Business Facilities to learn more about it.
Let’s review a few factors that contribute to this booming economy:
1. Rated Top Recession-Proof City: You will always want to invest in an area that is known for being recession-proof. Lubbock is one of the best cities in Texas to buy rental properties because it is, indeed, a recession-proof city. In fact, Lubbock was rated and placed on the top 10 list of Most Recession Resistant Cities in America. You can read the article by CNBC for more details on this.
2. Fortune 500 Companies: It’s the home of some big Fortune 500 companies that keep the economy in this city thriving, as well as attract employees that need a place to live within Lubbock.
3. Texas Tech University: A big factor that pushed Lubbock to the top of the “best cities in Texas to buy rental properties” list, and what makes the economy a perfect climate for rental properties, is the fact that Texas Tech University is located within the city. This university has over 40,000 students, and many employees, which means thousands of people will need a place to live. In addition to this, Texas Tech alone is responsible for adding over a billion dollars to the Lubbock economy.
4. Health Care Hub: Lubbock houses Covenant Health, which is one of the largest health care systems that offers the most comprehensive medical services in the surrounding area, serving over 1.2 million people. This healthcare sector has an impact of millions of dollars on Lubbock’s economy. Additionally, thousands of people are employed in the health industry within this city, which boosts the job market beyond compare, brings in a need for more rentals, and keeps this city’s economy thriving.
5. Transportation Hub: Lubbock is conveniently surrounded by five major freeways, making it a great place to live while being able to easily commute to nearby cities for work. This makes Lubbock a prime area for rental properties.
6. Large Population with Steady Growth: In a review conducted on the largest city populations in Texas, Lubbock came up number 11, out of 500 cities, also placing it on the top of the list for the best place to buy a rental property.
How to Easily Buy a Rental Property in Lubbock?
As you can see, not only is Lubbock on this list of the best cities to buy real estate in Texas, it has all the right elements that make it a top pick within that list. I have purchased many rental properties in Lubbock, and I can honestly say that I will buy, as well as build, many more in that area. My real estate company, Morris Invest, is making it possible for other investors to also own properties in Lubbock, no matter where they may live. We have designed our process so that it’s super simple for other investors to own a cash flowing rental property that already has a tenant in place, as well as a property manager. We take care of all the details, and all the investor has to do is sit back and receive their monthly rental checks.
We have many clients who have bought real estate in Lubbock. Take a moment to read our interview post with two of them – Exceptional Investment Experience – Interview with Norvella, and our article on Michael’s experience with buying real estate in Lubbock.
Example of Properties We Have Offered in Lubbock and the ROI Potential:
We have provided newly built homes with a tenant in place on a 12-month lease, with a professional property manager assigned. This type of property typically sees a cash flow of 9%+ from day one. Then you take into account principal reduction and appreciation, which allows you to see a 20%, or more, return on your investment. Once you include all the tax write-offs, along with the cost segregation (something we do for you at closing), you end up with almost a 50% return on investment in the first year.
We can explain all these numbers to you if you would like to schedule a complimentary call with Morris Invest, but in sum, these properties can set you on the path to financial independence. If you’re interested in learning about cost segregations, take a moment to look over our latest article on the topic – The Power of a New Construction Cost Segregation Study Can Save You Thousands.
Additional Rental Real Estate Articles by Morris Invest
Whether you are a seasoned professional looking for the best city in Texas to invest in real estate, or you are new to the game, you will want to dive into a few of the articles below to ensure you are on top of your game:
- Real Estate Investing Tools & Resources
- Best Strategies for Buying U.S. Real Estate if You’re a Foreign Investor
- 5 Most Landlord Friendly States
- How to Buy Properties with Multiple Investors
- Top Real Estate Podcasts for New Investors
- Are Turnkey Properties a Good Investment?
- How to Pay Yourself as a Real Estate Investor
If you do move forward with buying rental real estate in Lubbock, or anywhere else, I suggest taking a look at the Landlord Studio website. This company has made things easier for me, and for many of my clients. The Landlord Studio provides a rental income and expense tracking app that has bank account integration, essential tenant screening, and it also has a document upload feature. It’s important to be organized and make sure the rental process is streamlined as much as possible, and the Landlord Studio makes it possible.
Also, no matter where you buy property, make sure you are on top of your game with your taxes. You can pick up this book from Amazon, Tax-Free Wealth, it has everything you need to know to make sure you keep more money in your pocket. The person who wrote this book is the personal tax advisor to real estate tycoon, Robert Kiyosaki.
Build Great Wealth with Rental Real Estate within the Best City in Texas!
Now that you have a well-rounded view of the best cities within Texas to invest in rental real estate, I hope you dive into the next step by making it a reality. Texas has been known for having an excellent rental market, and just continues to proceed its expectations. If you would like to talk to one of our team members about how to move forward with owning a cash flowing rental property in Texas, feel free to schedule a complimentary call. We would love to set you on the path to financial independence.
For those of you that are interested in learning more about how to set yourself up to become financially free, check out our Financial Freedom Academy. It is here where you will find invaluable mentorship, as well as exceptional wealth-building tools. You can read more about it at our Financial Freedom Academy website.
Before you go, enjoy this awesome video that I put together on investing in real estate in Texas:
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