If you’re ready to make the jump into Texas rental properties, it can be a bit overwhelming. It’s hard to know where to start.
This is especially true if you’re looking to buy real estate for the purpose of renting. Moreover, the state of Texas is huge.
However, you can narrow down your search by sticking to larger cities in Texas like Austin, Dallas, and Houston. Additionally, you’ll need to decide whether you want to have a traditional rental property or if you want to focus on short-term rentals such as Air Bnb.
Nonetheless, before we get into the best places to buy up hot properties, let’s dig into why you might want to buy a rental property in the first place.
Why Buy Rental Property in Texas—or Anywhere?
Every investment has an element of risk. For example, the sudden downturn of a market, the unexpected collapse of a company, or a particular technology becoming irrelevant can all be sources of instability.
On the other hand, buying real estate is almost always a good bet. Of course, a real estate investment can only be sound when you research the surrounding area. Also, you must know the local market and be able to handle a market change.
Here are a few tips for your first rental property:
1. Learn How to Do Repairs Yourself
To start with, if you can avoid paying a professional for things like painting your house or installing cabinets, this can help preserve and boost your profits. Of course, in some cases, you might need a professional. However, it’s a good idea to be a little handy.
2. Get Ready for a Bigger Down Payment
Because rental properties aren’t eligible for mortgage insurance, you’ll probably need at a minimum 20% of the purchase price.
3. Set a Margin
Aim for a 10% margin when you’re managing your own rental property. Also, don’t forget to include fees like insurance, homeowners’ association costs, property taxes, and other related expenses when you’re calculating your margin.
4. Know the Neighborhood
It’s a good idea to get a feel for the local neighborhood you’re renting in. That’s because this knowledge could help you anticipate changes in the local rental market in the future.
5. Get Affordable Financing
For example, use reputable Dallas hard money lenders you know and trust if you’re in the Dallas area.
RELATED ARTICLE: HOW TO GET AFFORDABLE FINANCING FOR RENTAL PROPERTIES
With these tips in mind, let’s dive into where you can find the hottest homes in Texas!
Austin
Median Home Cost: $525,481
Top activities in Austin:
- Bike and Brew ATX
- Lone Star Riverboat
- Zilker Metropolitan
- Congress Avenue Bridge
- Barton Springs Pool
Austin is a bustling, interesting Texas city full of art, coffee shops, historic landmarks, and fun outdoor activities. Moreover, it’s home to the Texas State Capitol which, at the time of its construction, was the tallest capitol building across the US. It’s also one of the best markets for rentals, with rent averaging from $1,300 to $1,500.
Dallas
Median Home Cost: $469,817
Top Activities in Dallas:
- The Dallas Arboretum and Botanical Garden
- The Sixth Floor Museum at Dealey Plaza
- Dallas Zoo
- Grapevine Vintage Railroad
Dallas is known for its glitz and glamour—think bedazzled cowboy hats. However, it’s much more than that. This modern city has incredible attractions.
For example, spend the day at the Dallas Museum of Art for some high-brow entertainment. Alternatively, see your favorite artists at a show at the House of Blues Dallas. Or simply stroll through the Dallas Farmers Market to enjoy delicious food and drinks from local vendors.
Houston
Median Home Price: $507,568
Top Activities in Houston:
- Miller Outdoor Theatre
- Discovery Green
- Topgolf
- Walk along historic 19th Street
With neighborhoods like Midtown and Fourth Ward, Houston is an exciting city full of character. What’s more, it is home to the famous Space Center. Moreover, this hub is actually the largest city in Texas, with a population of more than 2 million people. Average rent prices range from $1,000 to $1,200.
Final Thoughts About Rental Properties in Texas
Buying and owning your own rental property isn’t just a one-and-done kind of deal. It takes a lot of work. Therefore, if you think that buying a rental means easy money, you might want to consider other types of investments.
RELATED ARTICLE: 6 TIPS TO STARTING A SUCCESSFUL AND LUCRATIVE SIDE HUSTLE
On the other hand, with the right knowledge and skills, owning a rental property and being an independent landlord could be a lucrative business that helps to build your wealth. Moreover, if you live in Texas, the four most populous cities in the Lone Star State are good places to start.
