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INVESTING 101 EDUCATION

4 Reasons Why Texas is a Real Estate Investor's Dream

Real estate investors from around the country look to invest in the Texas market. While it can be very challenging to see a good investment return in many other states, Texas continues to demonstrate its economic viability and resilience against economic downturns. Here are four reasons why Texas is a real estate investor’s dream.

Landlord-Tenant Laws Favor Landlords

Texas is one of only a handful of states where the laws heavily favor landlords. This makes it very attractive for real estate investors who want to get into either commercial or residential rental properties. In Texas, the laws are tipped in favor of landlords in these ways:

  • There’s no limit on how much a Texas landlord can charge for the security deposit. That does a lot to cover losses if a tenant damages the property, especially in the case of a multi-unit apartment building, where deposits are typically lower.
  • If a tenant hasn’t paid their rent, landlords only have to give tenants three days to vacate with a quit notice. That’s a strong motivation for a tenant to pay rent in a timely manner. It’s also good for landlords that want to quickly turn a property when the tenant stops paying rent.
  • Landlords can file for eviction as soon as three days after the tenant’s received their quit notice.
  • Landlords in Texas can charge late fees on overdue rent as early as one full day after the rent is late. Laws say that the landlord can charge an initial fee plus daily fees on late rent.
  • There’s no cap for rent in Texas. There aren’t any communities in Texas with rent control, so landlords can charge as much as they want. Naturally, landlords need to set reasonable rates in order to maximize occupancy rates, but not having a limit offers a freedom that real estate investors in other states don’t always have.

Population Growth

Where there are people, there is a demand for housing. In 2010, the population in Texas was 25.1 million. The estimated population number in 2019 is 29.1 million, indicating a growth rate of almost 2%, the 3rd highest in the nation. Like other states around the country experience layoffs and economic adversity, people flock to Texas for jobs and financial stability. This bodes well for real estate investors looking to flip houses in Texas, do commercial or residential rentals or invest in turnkey or vacation rentals in Texas.

Job Growth

Job growth in Texas is far outpacing the national average. Texas is #1 for job growth according to multiple reports. Texas’ $1.6 trillion dollar economy is boosted by the energy and oil sector but is also home to nearly half of the public companies on the Fortune 500 list. In 2018 alone, Texas added over 350,000 jobs, and that number is expected to grow in 2019 as more large companies move into Texas. Google reports that it plans to open a new data center in Texas in 2019. Jamba Juice is moving its headquarters to Dallas, Core-Mark is moving headquarters from San Francisco to Dallas, and McKesson, which offers medical supplies and pharmaceuticals, is also moving headquarters out of San Francisco and into Dallas.

Economic Diversity

Texas is more economically diverse than ever before, and the economy is the second largest in the country with a gross state product of over one and a half trillion dollars. Economic diversity is a proven indicator of the strength to withstand economic downturns, as Texas has shown able to do in the past. For real estate investors, this means not losing money — or not as much — on investments if the economy shifts.

Texas has the largest number of farms of any state, making it a top agricultural center. Another big part of the Texas economy is the aeronautical sector. The Lyndon B. Johnson Space Center, which is NASA’s hub for manned space flight and training. DFW airport is the second largest in the nation. American Airlines is headquartered in Fort Worth. In terms of government facilities, Both Fort Hood and Fort Bliss are located in Texas. The U.S. Air Force operates out of six cities in Texas, including one in Houston. Lockheed Martin, the defense contractor, has two headquarters in Texas – one in Fort Worth and one in Grand Prairie. Texas is a hub for tech companies as well. Familiar tech names with headquarters or major offices in Texas include Dell, Cirrus Logic, Intel, Silicon Labs, Google, EA Games, Facebook, Texas Instruments and Compaq.

Texas truly is a real estate investor’s dream. Whether you’re looking to invest in rentals, private lending or something else, Texas has all the features of a great place to invest. Many of the most successful companies in the world certainly think so, as evidenced by the influx of jobs and growth. If you’re interested in discovering new ways to invest in Texas, please contact American Real Estate Investments today.