February 13, 2023 | By: Trey Werner
No doubt you’ve heard about the recent real estate boom trending across the country. Texas is no exception.
For those thinking about where to buy investment property in Texas, whether as a potential inflation edge, for rural land development, as a recreational property, or to rent, you have several opportunities.
To help you decide where to put your investment dollars, here’s a look at a few booming metro areas and suburban and rural communities in East Texas.
Why is real estate investing growing in Texas?
While no property investment is guaranteed to earn a return, many signs point to sustained growth throughout Texas in the coming years.
Texas is a popular destination for real estate and land investors for a few key reasons.
- High economic growth. Texas’ gross domestic product (GDP) grew by over 8% in the third quarter of 2022. When adjusted for inflation, it has the second-highest growth rate in the country.
- Increasing population. Since July 2021, no state has seen more population growth than Texas, with more than 450,000 new residents.
- Low unemployment. Texas has an unemployment rate of 4% and has gained back nearly all jobs lost during the early stages of the COVID-19 pandemic.
- Tech job gains. Texas metro areas, especially Austin and Houston, are becoming popular destinations for tech industry relocations, bringing more people to the region.
These factors add up to a positive economic outlook in the state — and for real estate investors.
How can you use investment properties in Texas?
Because Texas has a lot of diverse landscapes, from city centers to open plains, investors can take advantage of a wealth of opportunities.
These are a few of the more common options:
- Home rentals. With more people moving to Texas and home prices rising, there’s an opportunity for more rental options, both multi-and single-family.
- Land. Investors can purchase acreage to lease to other businesses, create more farm or ranch land, or hold vacant as a long-term asset for potential future value.
- Recreation. Investors may purchase land for recreational use, build vacation rental properties, or rent the land to hunters and outdoor enthusiasts.
- Timber. Texas’ plentiful wooded land may be an attractive option for investors who plan to sell timber or diversify their investments.
Popular markets for property investment in Texas
According to a recent report on emerging trends in real estate by PwC and the Urban Land Institute, Austin, Dallas-Fort Worth, San Antonio, and Houston all rank in the top 14 for investors’ real estate prospects due to economic and population growth, housing affordability, and lower costs of doing business.
So, if you’re wondering where to buy investment property in Texas, there are plenty of places to look. But here are a few to start.
Construction is booming in the Dallas-Fort Worth region, with dozens of industrial, multi-use, and new housing builds underway. Like much of Texas, this area saw a boost in population growth during COVID-19, which drove the median home price up 14.4% from 2021. The median home now costs $406,000.
One thing for investors to watch is the Dallas-Fort Worth metro region’s population growth, especially among younger workers and families. Estimates are that by the 2030s, Dallas will become the third-biggest city in the country.
The region attracts Millennials and younger families, including those from the Midwest and coastal cities seeking a high quality of life with more affordable living. As a result, Dallas was on the National Association of Realtors’ (NAR) Top Markets list in a post-COVID environment.
For investors or builders who want to expand or diversify their portfolios, the Dallas-Fort Worth region provides plenty of options for potential growth over the long term.
While the massive real estate land grab of 2022 is coming back down to earth, plenty of opportunities still exist for investors.
Austin is one place to watch. In the recent PwC Emerging Trends in Real Estate report, Austin is the number two city for real estate investors to explore for growth potential.
With high population growth over the last few years and many new technology-based businesses moving to or creating more jobs in the region (including Tesla, Apple, and Amazon), there’s a demand for housing — especially rentals.
Currently, the median home price is up 6.8% in Austin over the same time last year, with the median home costing nearly $500,000. And according to data from CrowdStreet, Austin is first in the U.S. for build-to-rent opportunities and third for multi-family growth.
Keep an eye on Austin if you’re an investor looking to capitalize on the surging rental market.
Houston’s real estate boom has been among the largest in the state, with median home prices up 11.8% over last year. But the median home cost is still more affordable than Dallas-Fort Worth and Austin at $341,000.
That makes Houston and the surrounding regions an attractive spot for those wondering where to buy investment property in Texas. The Houston-The Woodlands-Sugar Land Metropolitan Statistical Area (MSA) is home to over 7 million people.
Houston is a critical industrial hub for not only Texas but the U.S. as a whole. The Port of Houston is the country’s seventh busiest port and handles 70% of all container traffic through the Gulf of Mexico.
The region could be attractive for investors interested in buying land as a long-term investment. In addition, as expansion projects continue around the port, plenty of land parcels are ideal for future development.
The median price per acre in the Northeast region of Texas, which includes the Houston metro area, was up 18% from 2020 to 2021, costing $12,431 for a median tract size of 17 acres.
In the recent PwC Emerging Trends in Real Estate report, San Antonio is at or near the top of the list in many categories. The city ranks twelfth in overall real estate prospects, first in homebuilding prospects, and seventh in development/redevelopment opportunities.
That information may interest Texas real estate investors. As with Houston, San Antonio housing saw significant growth over the past year, with the median home price up 11.2%. However, the median home price remains more affordable than in other cities at approximately $325,000.
San Antonio is also one of the hottest rental markets in the state. With increased competition, rentals go more quickly, even though more listings were added in 2022.
The NAR also listed the San Antonio-New Braunfels region as a 2022 housing market ”hidden gem.”
If you’re an investor looking for recreational or rural land opportunities, East Texas may be an area to concentrate your efforts.
If there’s one thing in limited supply in Texas, it’s land. During 2021, the land grab surged to record highs, with land sales up nearly 45% over the previous year. Market pricing has cooled since then, though demand remains strong.
East Texas is home to attractive rural acreage. From timberland to rural spots perfect for recreation, such as hunting, fishing, ATV rides, and camping, savvy property investors can acres as long-term holdings or rentals to outdoorsmen.
For investors looking to buy land for home building, one area to focus on is McAllen, Texas. According to recent data, it’s the second-most competitive rental market in the state, beating out Dallas-Fort Worth, Houston, San Antonio, and Austin. It also has the highest lease renewal rates in the state.
Learn more about buying investment property in Texas
With so many opportunities, investing in real estate may seem daunting. If you’re beginning the process and want to estimate your mortgage or financing payments, try out our local calculator.
And if you already have your eye on an investment property and are ready to purchase, Texas Farm Credit can help you finance the deal. Get in touch with us for more information.