Real Estate Investing in Texas: What You Need to Know

 

Like everything, real estate investing in Texas is big.

I just recently got home from a whirlwind multi-state trip for my lead gen business, which included a stop in Dallas. Wow! Major city sprawled out for miles and miles. Not only is Texas big – 801 miles north-to-south and 773 east-to-west miles, but the cities are massive. Massive cities mean mucho people, and mucho people mean many homes, businesses, and properties that someone has to own.

There are real estate opportunities in Texas

Texas has, since the recession started to reverse in 2010, been seen as a relatively safe and healthy real estate market to invest in. The state, up 3.5 million people in that 9 year stretch, has seen more growth than either Florida or California by nearly a million people. Those folks have to live somewhere, and Texas real estate investment firms would like you to believe it is in needed 1.5 million new houses. Housing, after all, has been relatively cheap compared to places like Seattle where the average house is over half a million, or San Francisco’s median 7 digits.

There is something for everyone in Texas

There is a lot to be said for the diversity and spread out nature of Texas. Whether you want German food and bluebells in Fredericksburg, a cutting edge music, arts, and clubbing scene in Austin, or the most diverse school district in the nation in Houston, Texas has something for everyone. Industry, fishing, hunting, coasts, canyons, sagebrush, and the holy grail – Friday Night Football. And food! It does not matter if you want barbeque, seafood, the biggest juicy steak you have ever seen, Tex-Mex or kolaches, you can get them in some part of Texas.

Don’t like what you see or have to do? Start driving. It might take you a while, though, to get there.

North Texas mixes desert and plains, as well as rivers and small towns. East Texas is full of agriculture, backwaters, and refineries. Central Texas ranges from hill country to flatlands with cattle, big towns, and more cattle. Coastal Texas has long barrier islands and fantastic seafood. And if you like wide open spaces for as far as you can drive, just head west out of Dallas.

West Texas has more abandoned towns than Nevada does ghost towns from the gold rush. The reasons are economics, and resources. No jobs, little water. But if solitude is what you want, you can buy your own small town for next to nothing in many parts of West Texas. Just make sure you have a way to support yourself. By mail. 3 days a week. ‘Cause that is as often as the postman gets out there.

Texas has something for everyone and every part of the state is as different as if you went to another planet. Texas is, after all, larger than a lot of countries. They have even tried to become their own country. More than once.

Texas national pride. There is a reason they say “Don’t mess with Texas!”

They mean it.

Texans are not only proud of Texas, but look after their own

One thing about Texas unlike some places, Texans pull together. For all the stories you hear about tough State Troopers (true) there is one thing – Texans are Texans when it comes to natural or other disasters. There is not a state that didn’t learn a thing or two about humanity, inclusion, and caring for your neighbor like Texans did during Hurricane Harvey. Heck, Texas even reached out and took in tons of folks during Katrina, and they do not even like Louisiana. Just the way they are.

So where is the hottest real estate in Texas?

Texas is so big and spread out, how do you know what is a good investment in Austin, or where to look in Dallas or Houston? Are neighborhoods important? And where are the arroyos (river washes), an important consideration during storms for flooding issues. Texas is the only place I have every driven where there are flood depth markers under nearly every overpass, and most show over 10’….wow.

It is really nice that in my virtual real estate business, lead generation sites, I do not have to worry about flooding, the neighborhood, or the local economy much. I own the sites and it is all on the internet, so I can help anyone in any neighborhood make more money for their business. I do it from the luxury of my comfortable office chair in my own home. I make a really strong rate of return with solid customers, too. Check out this no cost, no obligation link to learn what I am into:  https://www.bestrealestatedirectory.com/lead-gen/

Is using a real estate investment club or firm a good option in Texas?

Back to Texas property, one option is a real estate investment club, where people pool their resources. Not being there can be a hindrance, though, since you do not know anyone, and Texans can be a little leery of outsiders. A lot of people turn to the advice of a real estate investment firm due to that.

Ask a Texas real estate investment firm, and they will tell you everything is hot. According to Dale King, realtynewsreport.com, in an October 22, 2018 article Commercial real estate markets prosper; Texas metros follow suit, says Avison Young Investment report, particular attention should be paid to Austin and Houston multi-family housing, and very large commercial properties. What he does not mention is who is paying for the property.

According Steve Brown, Real Estate editor for the Dallas News said in a June, 2017 article Hello, good buy: Texas’ commercial property a key target for foreign investors, 20% of the investment money for commercial properties, be it residential multi-family, warehousing, manufacturing, or whatever, came from China, Mexico, the United Kingdom, and Venezuela. China alone accounted for 17% of the closings in Texas. Texas only trailed Florida in how much foreign money flowed, snapping up real estate.

What is driving the Texas economy

Texas is a big oil and agricultural state, among many other things. Cattle are king in Texas and oil flows instead of blood in many Texans’ veins.

What a lot of people do not know is the oil market in Texas is primarily from shale extraction. Shale extraction is expensive, with a lower yield and higher sulfur content, which requires more refining. More refining means more pollution and toxic chemicals. Just ask the folks in Beaumont what happened during Hurricane Harvey – hhhmm, wonder if that has anything to do with their housing values going down?

The more demand for oil, and there is always an increase when the economy is growing, the more jobs Texas can gain. Wars are especially profitable for Texas as resources have to come from home instead of depending on foreign sources. Storms, especially those not hitting Texas Gulf platforms, also drive oil prices up.

Oil is also traded on the world market and is joined at the hip to world politics. Let there be a barf in Saudi Arabia or Korea or Russia or China and prices bounce all over the place. That said, Texas’s economy can fluctuate dramatically on the turn of a dime. I prefer to have a business like mine that is not blown around by political winds and is a lot more stable. Every business needs more customers, and that is what my lead gen business provides them – more qualified customers.

What they are not telling you is that many of those folks moving to Texas are coming to escape winter, economic hardships in manufacturing, and early retirement as baby boomers. Texas’s population is changing and becoming more diverse. A lot of Texans do not consider that a good thing. Texans are proud of who they are and like to keep it that-a-way.

Is the Texas real estate market hitting over priced range?

According to Inzo Winzer, president of North Carolina based Local Market Monitor and pundit of all things related to forecasting real estate investments, Texas can still be a good investment in a few areas. In the Feb. 8, 2019 Forbes.com article Investing in Texas real estate? Here are a few things you should know, Winzer breaks down what is going on in Texas by job rates, house valuation change, and income to house price rations.

Texas claims its good realty market is due to a growing economy and booming jobs market, since job growth has been around 4%, nearly twice the national average over the past year. Problem is, the wages and the job count do not coincide well.

While Dallas (+8%), Houston (7%), and Austin (7%) are all up in home values in the last year, you have to dig a little deeper to get the real feel for home prices versus the economic conditions of the area. When you look at home price versus income last year, Dallas is at -24%, Houston at -23%, and Austin at -31%. In other words, people lost that amount of buying power versus how much they make towards a home. Anything over 20% is considered an over priced market. The more over 30%, the higher chance of a crash in local real estate values.

Translation: people moving/living/transitioning there from elsewhere or within Texas can not afford a home on their salaries. I say within Texas (perhaps displaced by Hurricane Harvey) as a million of the 3.5 million population change apparently was from within Texas. Apparently if you come from another area of Texas, you are coming from a foreign country, or state, or something. But, like all things Texas, big. Just give or take a million. Or two.

Where, if any, are safe property purchase bets in Texas?

Winzer suggests that if you want safety in Texas, buy moderate residential properties near a major hospital complex. With some of the highest out-of-pockets in the nation, I am not convinced those would be good long-term investments. The paradox is to make money in the slow and low growth areas, like those hit along the coast, you have to buy higher end properties. Not sure I would want to pay for flood insurance in Beaumont or Brownsville about now, either, if it is even available since FEMA rewrote the flood zone maps after Harvey.

Of course, Texas being big has big college towns, like Waco, Lubbock, and College Station. Rental properties in college towns, as long as you rent to staff and faculty and not students, usually are pretty safe investments. But even these three towns had drops, up to 9%, in home values last year, and a mixed review of income ratio to home pricing. All had job increases. So where are they living if they are not buying? Rentals.

The rent situation is not a lot better, as rent in all three towns plus Ft. Worth averages over $1K a month. The major towns in Texas are growing and doing ok, but when you look at the Local Market Monitor for Texas’s top 15 metropolitan areas, there are a lot of areas that it is pretty obvious are not doing so well. Some, like Brownsville, Corpus Christi, and Beaumont, got hit super hard with Harvey and are still (and will be for a very long time) in recovery mode. While Beaumont and Brownsville both show valuations up, remember that most of that is due to lack of available housing that survived the storm.

Other areas like El Paso, while home values are slightly up, still have serious disparity with regard to wages versus home prices. You can tell a lot about the local area by how cheap rent is. Nearly all areas damaged by hurricanes are down in jobs. If they are in a building boom, that seems a bit strange. Even San Antonio, the state capital, is up on home prices, but down on employment and wages.

Currently the one exception where you can make a good real estate investment that is not a college town is Ft. Worth. Ft. Worth average rent is over $1,000/mo and had both an increase in home values and average income to home price last year. Demand is still good, since it is commutable to Dallas. So, investing in Ft. Worth can still provide a comfortable income. Kind of.

What kind of ROI are you looking for?

Since I make an 80-90% return on investment in my lead gen business, I was curious what the return would be on a Ft. Worth piece of rental property. Ft. Worth has an average home price of $255,000 for last year. Average rent is $1,032/mo.

Let’s do a little math.

That is a .4% gross return on your investment.

You take out taxes, maintenance, vacancy, you will be at probably 30% less than that. But, just for sake of comparison, let’s use the .4%. At those average numbers, it will take 247 months, or 20.6 years, for you to get your money back. That is not counting repairs, taxes, large expenses like appliances, roof replacement, or months you go without a renter. And heaven forbid you get a bad renter who tears the place up.

I did not even mention the 2 a.m. calls when the toilet leaks, or the threats from weather (Texas also has tornados that wreak havoc), or a gazillion other things that cause ulcers when you own rental property. It is so much easier and relaxed to just pull up my bank account online and see all the automatic deposits from my lead gen customers, every month, just like clockwork.

I average 80-90% ROI on my lead gen business. Seriously.

Let me show you what I am talking about with some facts.  Below is the first site I ever put up:

It took me six hours to build it and rented it within the first month for $750/month. It has been rented ever since. I do not have to touch it. My customers are thrilled with the results. Their payment automatically shows up the first of every month.

After expenses, I have made net profit of $32,400 on this site over the last 4 years. That is a killer return for 6 hours of work and a very little bit of expense every month.

Now that is Texas big and that is no bull.

Why are you telling me this Ippei? Do you want competition?

Honestly, I am not the least worried about competition. 2.4 million small businesses in the U.S. need more customers. There is plenty of room for good, hard working, honest business people to help them grow. Lots of room.

See, I got involved in lead gen after trying nearly every MLM, internet marketing, drop shipping, you name it business there was to make some extra money online. I had graduated with a degree and gone straight into the $35K/yr J-O-B, which I quickly came to loathe. I knew I was never going to be happy unless I worked for myself. So I started to look. I made some money. I was working stupid hours at my job and my other businesses, and still had no life. Then I read about Dan and his coaching program for building and owning lead gen sites.

After some research I thought Dan looked pretty straight up, a straight shooter, from the hip as the Texans would say. He was working his business every day, not just selling a bunch of fluff like so many others. So I signed up for a call to learn more. After talking I decided to sign up, pay my tuition, and get to work.

Yes, lead gen is work. Any business is. But it is way less hours and stress than I spent in any other business or at my old J-O-B. Oh, by the way, I killed the job in 5 months and never looked back. I am 29 and in 4 years I have a very comfortable 6-figure income, and I travel and have other ventures. And I work part-time now doing it.

I kind of like my 80-90% profit margin. I also like working for myself and not worrying about the company being sold and outsourced overseas. Or the oil industry dying, yet again, and again, and again.

If you are looking for a business you are in control of, that does not control you, provides a solid passive income, and is not tied to the world oil market, check out this link: https://www.bestrealestatedirectory.com/lead-gen/

You will not regret grabbing the bull by the horns, and that is no bull.