What You Should Know About Investing in Texas Real Estate
You know what they say: everything is bigger in Texas. While this rings true for many aspects of life in the Lone Star state, it’s particularly applicable to the real estate investment world. The opportunities to create a profitable business are booming, and the investors with big ideas are dominating the market. So how do you get in on the housing boom? Take a look at some of the key things to keep in mind as you jump into the realm of Texas real estate.
Target Cities with Growth in Tech, Health care, and Energy
In the last several years, two thirds of new jobs in Texas have been in three industries: tech, health care, and energy. As if the vast amount of land available in the Lone Star state wasn’t a big enough advantage, the state also offers plenty of tax incentives for businesses to open up shop. This means the economy in Texas will continue to grow as companies look for more affordable ways to keep production costs low. Not to mention that tech, healthcare, and energy are stable industries that will continue to grow as innovations are made. That’s why it’s smart to invest in real estate in cities where these businesses are booming.
Workers in these industries are likely to be paid well. They’re also likely to be single and without kids. That makes these cities prime for real estate investors. The constant demand for rental units will supply a steady stream of business, and there’s a low probability of that demand slowing down. Dallas-Fort Worth is always a safe bet for investors who are just starting their real estate journey, but study which other cities have tech, healthcare, and energy growth.
College Towns Provide Steady Rental Business
The amount of college towns in Texas make the Lone Star state a real estate investor’s dream. Waco, College Station, and Lubbock all have a constant stream of students who are looking to rent. It’s likely you’ll have a higher turnover rate in these towns compared to larger cities that have more families. But your property will always be in demand. If you don’t like the idea of renting to college students, you could always target the staff and faculty of the many universities throughout the state. Austin provides a large population of professors who are looking for affordable homes. The large tourism industry of Austin also makes it possible for investors who are interested in Airbnb properties to make a substantial living.
Finance Your Project Like a Local
Whether you’re born and raised in Dallas or are a transplant from the East Coast, it’s important to understand how to work the Texas real estate business to your advantage. If you’re venturing into rental property ownership for the first time, the Texas Department of Housing and Community Affairs offers special homeownership programs for first time buyers that have lower down payments than traditional mortgages. Because Texas is such a booming market, prime real estate can get snapped up quickly.
If you have your eye on a property that you think will go fast, a traditional loan might take too long to secure. Luckily, the Lone Star state has plenty of other options. For example, if you’re looking to flip a house in Houston, look for hard money loans in Houston to get your financing in a much more timely manner. Depending on your property, the city you’re targeting, and your personal finances, there are plenty of standard and unconventional financing options for real estate projects.
Understand State Taxes
Texas has one of the lowest state tax burdens in the United States. No personal income taxes or inheritance taxes are imposed, making it a desirable place to live. However, real estate investors should know that local taxing units, such as counties and cities, determine and collect property taxes on all income-producing property. Because of this, tax rates can vary drastically by location. Make sure to do some research into the local property tax before investing in a project since there isn’t just one blanket state tax.
Full of unique culture, delicious cuisine, and a growing economy, Texas is the ideal state for your next real estate investment. Once you know the basic ins and outs of the market, you’ll be good to go—now watch your profits grow