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PODCAST EDUCATION

Why Texas Is A Real Estate Investors Dream

Episode 045

John Larson and the Real Estate Cowboys talk passive income real estate investing.

Hear new episodes every Sunday morning at 8 a.m. The Cowboys talk about Texas, deep in the heart of Texas. It’s a real estate investors DREAM!

Keep the #CowboyCoffee hot while listening to John, and the Cowboys talk about how to #BeACowboy and earn passive income in real estate.

Episode Transcript

Keith Weinhold: Hey, this is Keith Weinhold from the Get Rich Education podcast. You are listening to my friend John Larson and the Real Estate Cowboys. Don’t quit your daydream.

Robert Helms: Hey everybody, it’s Robert Helms, host of the Real Estate Guys radio show, and you are listening to the Real Estate Cowboys.

Announcer: Have you thought about becoming financially free through real estate investing, but don’t have the time or knowledge to get started? Welcome to the Real Estate Cowboys podcast. Each week we discuss passive income investment opportunities in the red hot Texas market. John Larson and the Real Estate Cowboys will show you how to leverage their team to build wealth in real estate through passive investment opportunities. And now here’s John.

John Larson: Hey and welcome to another episode of the Real Estate

Cowboys is your host, John Larson. We are keeping up the theme of Texas real estate this week with a discussion on why Texas is a real estate investor’s dream and it’s really no secret that real estate investors from around the country and the world look to invest in the Texas market. I’ve identified four main reasons on why that is, so we’re going to get into that. But it can be very challenging to see a good investment return in many states and Texas continues to demonstrate its economic viability and resilience against economic downturns. That’s one of the main, main reasons why I’m here. Because I look at the landscape of the rest of the country. There’s areas of the country, the Midwest specifically that is very, very dependent on manufacturing and the big three and history has shown us that these regions in the U.S. when we go into an equal economic shift and economic downturn, those areas really tend to become depressed.

You also look to areas around the country where pricing is very inflated. California being one, New York, New Jersey, Arizona, Colorado, pricing

has become very inflated, and I worry about those areas as well. Seattle, Washington is another one. I just believe that the pricing has gone to high so we’re now going into a possible, another recession here. Uh, in the very near future. It’s going to have a very negative impact on pricing and valuations when it comes to the real estate market in these areas. Now when pricing goes down, there’ll be more opportunity for investors to come in and purchase property at a good rate, which will then spin off a more attractive cap rate on rental income. But then also you’ll be able to ride that upswing like we saw in California, prices got slashed and investors came and bought property as cheap as possible, and then you see in the next two, three, four years, the property gains a bunch of equity. It goes up in value a hundred, 200, $300,000 or more. And these investors are sitting on a ton of equity. So I feel like that cycle is about to happen again.

Now, history has shown us that the Texas market did not really get too affected and really affected at all during the last recession because the pricing wasn’t inflated. The pricing, the real estate pricing here in, in Texas, in DFW specifically is still slightly below the U.S. Average. If you take all of Texas into account, the median home value is slightly below what the U.S. average is. So there’s not, it’s not like we’re dealing with super inflated pricing to where you’re going to see a drastic decline in values when we go through another economic depression or recession, um, or housing crisis, so on and so forth. I don’t really feel like there’s a bubble here.

I do feel like there’s some areas within the DFW area where pricing has become a tad bit inflated, but nothing drastic and going into another possible recession, I don’t expect to see huge decreases in pricing. We didn’t see it before. I don’t think we’re going to see it again. And one of the main reasons is because of the fact that the economy so diverse here, which is driving the population growth and keeping demand stable. So I believe that the Texas market should hold values during another recession. And I also don’t expect too much layoff, job layoff in the Texas

market because of the diverse economy that we have here. And the fact that DFW is home to the most corporate headquarters in America. So there’s a lot of white collar jobs here. That’s, that’s a big, big bonus that we have here in the state of Texas.

The four reasons I’ve identified in terms of why Texas is a real estate investors’ dream number one, it’s very landlord friendly here. So the way that the tenant laws are set up, it really favors landlords, whereas other and areas of the U.S. that I’ve invested in, in other areas where I’ve lived and I’m from Michigan, what I’ve noticed is that those laws, uh, in, in those states really favor the tenant. Whereas down here in Texas, the laws really favor the landlord. So if you’re going to own residential property or commercial property, I think you want to position yourself in a state that’s very landlord friendly. Whereas California is very, very, very tenant friendly. All of the real estate investors that I know and hang with just speak very ill of California when it comes to owning property for lease, just because the laws really favor the tenant.

So you know, Texas is one of only a handful of states where the laws really heavily favor the landlord and this makes it very attractive for real estate investors who want to either get into a commercial or residential property like I said. And in Texas, the laws are tipped in favor of the landlords in these ways. There’s a list of ways. There’s no limit on how much a Texas landlord can charge for a security deposit, whereas other states, they put a cap on that. 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. So no cap on how much a landlord can charge for security deposit. That’s one positive.

Um, if a tenant hasn’t paid their rent, landlords only have to give the tenants three days notice to vacate with a quit notice. And that’s strong motivation for a tenant to pay the rent in a timely matter. It’s also good for landlords that want to quickly turn a property when the tenant stops paying rent, so you do not have to give tenants 30-day notice, so on and

so forth, where a lot of these other states, you have to give at least 30 days. In Texas, you only have to give the tenants three days notice to vacate.

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. So you could charge an initial, an initial fee of let’s say $150 and then a daily fee after that until it gets to the point where, hey, you just got to follow through with eviction, right?

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, right? You can’t charge too high over what the market is commanding because then you won’t lease the property. But there is no cap on what you can charge, which is really good. And obviously, you know, not having a limit, uh, offers freedom that real estate investors in other states don’t have. So that’s a good thing. Okay, so the next reason that I want to bring up why Texas is a real estate investor’s dream is the population growth. Where there are people, there is a demand for housing. In 2010 the population in Texas was just over 25 million. The estimated population number in 2019 is 29 million. So it’s grown by 4 million people in only nine years. That’s a growth rate of almost 2%. The third highest in the nation. Unlike other states around the country, they experience layoffs and economic adversity. People flock to Texas for jobs and financial stability. That’s why I believe that we’re bringing in so many young business professionals from around the country. One, affordable cost of living, two, this is where the jobs are, so just naturally people are going to flock to where the jobs are and where the financial stability is.

And 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. There’s people and there’s jobs here that are

going to continue to bring people in. That’s just a staggering figure. 4 million people, the population has grown over the past nine years, not even a full decade and we have grown by 4 million people. So really, really solid, solid numbers there.

When we get back from this commercial break, I want to go into the other two key factors that I’ve identified as to why Texas is a real estate investor’s dream. Let’s get to a quick commercial break first and when we get back, I will name the other two reasons why Texas is a real estate investor’s dream.

And welcome back from the commercial break. This is John Larson and the Real Estate Cowboys. We are discussing why Texas is a real estate investor’s dream. We’ve already talked about the fact that it’s one of the few states in the union that the tenant laws favor the landlords. We’ve talked about the exponential population growth that we’ve been getting here in the Texas area. Uh, the population has grown by about 4 million people since 2010, so nine years. The state of Texas has grown by 4 million people averaging about 400, almost 450,000 people a year. That’s just amazing. I can’t, I can’t, I don’t know another state that’s growing by 450,000 people a year. It’s just, it’s unbelievable. Uh, almost a half million people a year moving into the Texas market. The other thing that I wanted to touch on is job growth. Job growth in Texas is far outpacing the national average. Texas is number one for job growth according to multiple reports. Texas’ $1.6 trillion economy is boosted by the energy 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. Coremark 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. The McKesson headquarters is actually being built right near my house. It’s an

unbelievable facility, brand new, beautiful, beautiful building that’s just being finished up right near where I live. It’s just, it’s amazing when you talk about the fortune 500 and Fortune 1000 companies located here in Texas. Texas is tied with California for having the most Fortune 500 companies at 57 and Texas is second on the list for Fortune 1000 companies at 94. So amazing, amazing information there. And I believe that Texas eventually will be number one because of the fact that there’s no state income tax, affordable cost of living, central location to the entire nation. And, uh, I believe that in a few short years, Texas will be leading the nation for Fortune 500 and Fortune 1000 headquarters. It’s only a matter of time.

These companies keep leaving California because it’s not the most affordable state to live in. It’s, it’s just, it’s really difficult to operate there and you also get burned on the taxes. So definitely understandable why companies continue to migrate to the Texas market, which is just going to continue to bring more and more people into the market. So I don’t know a better state, a better area in the country to invest in real estate than this one that we have right here. And that is why I started the Real Estate Cowboys podcast. So it doesn’t matter if it’s residential, commercial, I know the property taxes are still pretty high here in Texas. But the affordability of the real estate itself far outpaces, you know, the negativity when it comes to the high property tax.

The last thing I want to touch on is the economic diversity here. So we’ve already talked about on the show DFW’s home to the most corporate headquarters in America, making it very, very diverse. But in case you didn’t know this, 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 that it’s been 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. And I do really believe that Texas provides that sense

of security for investors. You don’t really have to worry about going into a recession or an economic shift when investing in the state of Texas due to the fact that its economy is just, it’s the second largest in the country. It’s the 12th largest economy in the entire world, just the state of Texas.

Some of you may not know this, but Texas has the largest number of farms of any state, making it a top agricultural center. So, not only do we have the most corporate headquarters right here in DFW, but also we’re one of the top agricultural centers in the entire nation. And another big part of the Texas economy is the aeronautical sector. Obviously down in Houston, the Lyndon B Johnson Space Center, which is NASA’s hub for manned space flight and training. Uh, DFW airport is the second largest in the nation. It’s larger than Manhattan. American Airlines is headquartered in Fort Worth. Uh, it’s just one of the Fortune 500 headquarters that we have here in, in DFW. Uh, in terms of government facilities, both Fort Hood and Fort Bliss are located in Texas. The U.S. Air force operates out of the 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, which is a suburb of DFW. Texas is a hub for tech companies as well. More and more continue to move into, uh, the Austin area as well as DFW. It’s starting to grow for tech companies. And familiar names with headquarters or major offices in Texas include Dell, Cirrus Logic, Intel, Silicon Labs, Google, EA Games, Facebook, Texas Instruments, so really, really amazing and it keeps growing. Texas keeps growing as far as tech companies moving into the Texas market and so really, really exciting stuff that we have going on here in Texas, which is why I believe it is a real estate investor’s dream, which is why I moved my company here, myself here, my family here. I decided to start my family here. It just keeps, keeps growing and it’s, it’s really producing phenomenal results. So if you have not been looking at Texas, I really think that you need to be looking into this market for some sort of real estate investment.

You need to capitalize on the growth that we’re experiencing in this market. I know cash flow numbers aren’t the best on single-family homes in the Texas market, but commercial real estate, we talked about this a few weeks ago. I mean it’s, why wouldn’t you want to invest in commercial real estate here with all the jobs and moving here and all the people moving here. These jobs and people, you know, they need places, buildings to work out of. You can be one of those owners that are cash flowing on these, these businesses that are coming into the market and need space to, to uh, work out of, right? It just makes sense. You know, we didn’t see a huge steep decline in the past recession, so we don’t really expect to see that in, in a future recession. And I believe that the economy will still be chugging along here, even in an economic shift.

So there will continue to be more and more companies that move into the market to reap all the great benefits at Texas has to offer. And I’m really excited about the future that we have here in Texas, and in Dallas specifically, because that’s where we’re headquartered. And I just see all the great things that are going on here on a daily basis and all the new people that are moving in on a daily basis. So very, very excited about the future.

If you like what you heard on the podcast today and are interested in getting involved in Texas real estate, interested in single-family rentals, interested in learning more about our private lending program, you have a IRA or 401k that you want to self-direct or maybe you’re already self-directed and want to put that money, get it out of Wall Street and bring it main street, so to speak. If you are interested in that and, and receiving double-digit fix returns on your money in a very, very passive manner by

just playing the bank. If that sounds interesting to you, then go to our websites, RealEstateCowboysDFW.com or AREIUSA.com. That’s

American Real Estate Investments website. Put your information in. If you’re an accredited investor, you can get the PPM on our current offering right now that is paying 12% annually. And your money starts to

collect interest as it sits in escrow, waiting for the deal to close, waiting for us to raise enough funds to close on the, on the next raise. So what do you have to lose? You put your money in escrow right now and it can start working for you at 12%. I know it’s not working for you at 12% in a lot of the other, uh, investment vehicles that are available to you.

You know, and like I said, in a very, very passive manner, in the form of a monthly dividend, a monthly payment, you know what you’re going to get each month to the penny by taking the role of the bank. So like I said, if that interests you, go to our websites, put your information in a, learn more about our current raise that we have, a member of our team will reach out and explain the current offering and how to move forward if you so choose to move forward on that deal. Or if you’re just looking for some information. We have my book, The Passive Income Guide: What’s Your Return on Life that’s available to purchase on Amazon or through the website. We have some great reports, some great blogs, lot of useful information on Texas and you know, just getting started in real estate. We have our passive income starter kit that talks about all of our great passive income options through real estate, which would be single-family rentals, private lending, or our vacation rentals that we offer down in Belize.

We do tours down to southern Belize. Placencia is where our investment opportunities are located. Private island development, luxury vacation home development, a condo development. We have a whole bunch of exciting stuff going down in Belize as well. So if you’re interested in learning more about our opportunities, like I said, download the passive income starter kit, put in your information, a member of our team will reach out to explain the offerings in further detail. And we look forward to having you back for another week’s episode, Real Estate Cowboys next week. But in the meantime, have a great week and always remember, what is your return on life? This is John Larson signing off.

Have a great week, everyone.

Announcer: All opinions expressed by the host of the show are the opinions of American Real Estate Investments LLC and do not reflect the opinions of guests or sponsors. No personal or professional advice on this program should be considered an endorsement to follow a real estate financing or investment strategy. Before acting on any information, seek advice from your financial tax, mortgage or real estate advisor, as the information is not guaranteed and investment strategies have the potential for profit or loss.