Hottest Real Estate Markets in Texas for Rental Property Investors

If you’re considering buying an investment property in Texas — you’ve chosen an excellent time and place to purchase real estate. Texas is a dream for real estate investors. Rental properties are affordable and profitable, the economy is booming, the population is growing, the laws favor property owners, and there’s no state income tax. Honestly — what more could you ask for?

That said, some Texas real estate markets are smarter to invest in than others. Before jumping into a real estate investment, read through our best tips for choosing the right real estate opportunities among the hottest real estate markets in Texas. Plus, we’ll cover how to boost your rates and nightly bookings with vacation rental furnishing — an obvious investment for short-term rental owners.

What Makes a Great Texas Real Estate Market?

When looking for somewhere to buy rental properties (in Texas, or anywhere else, for that matter), here are some things you’ll want to look out for.

Desirable Destination

No one wants to live — or go on vacation — in an unsafe, dumpy part of town. That’s why it’s super important to choose a city (and, more specifically, neighborhood) with features that are desirable for renters, like proximity to a concert venue, a local restaurant or cocktail bar, or a notable outdoor attraction, like an epic hiking trail or popular lake for kayaking, boating, or SUP.

If you want to invest in a long-term rental property or a fix-and-flip house, consider what makes that particular city or area attractive to people moving from another state. Is the property next to a university that will see a steady influx of incoming students needing housing? Or is it near a massive corporation that employs thousands of people each year?

Growing Economy

A booming economy is usually a solid indication of a stable, appreciating real estate market. Cities with long-standing large corporations and new businesses moving to the area are super promising for real estate investors. This means there will be a constant demand for housing.

Texas is one of the top states for economic growth and job growth — at least 10% of the top public and private companies in the country are located in the state.

Population Growth

Like a strong job market and thriving economy, steady population growth is a good sign for Texas investors because it demonstrates that the city will continue to show a strong demand for housing.

While investors should pay close attention to the local economies in Houston, Austin, San Antonio, or whatever city they’re considering investing in — Texas is home to some of the fastest-growing cities in the nation. To summarize — almost all investment properties in Texas cities are a good purchase.

High Rental Rates

Purchasing investment properties is a long game and a short game.

On the one hand, you want to choose a real estate market with a growing economy and population to ensure your property appreciates over time so you can sell it for a profit. However, if you’re getting into the short-term rental market — you also want to choose a market with high average nightly rental rates so you can make money now from renters on Airbnb, Vrbo, or Booking.com.

Top Cities for Real Estate Investors in Texas

Have a better idea about what makes a Texas rental market worth investing in? Good. Now, let’s dive into the best places to buy rental property in Texas while keeping the above-mentioned things in mind.

1. Houston

Houston is the largest city in Texas and the fourth-largest city in the nation. Houston sees an average population growth between 1–2% per year, and the city’s manufacturing, energy, and aerospace job market employs over a million people. Real estate prices are lower in Houston than in other cities in Texas, but the average rental rate is still high — so the cash-on-cash return is promising.

Vacation rental investors have a lot of options in Greater Houston. Downtown Houston attracts over 20 million tourists yearly with world-class attractions like the Houston Museum of Natural Science, the Houston Zoo, Space Center Houston, and more. Additionally, the warm weather attracts snowbirds looking to escape the cold, and popular nearby beach towns, like Galveston, are an excellent investment for short-term rentals.

• Median Home Value: $273,576
• Average Rental Rate: $1,925 per month
• Population Size: 6,980,000 people

2. Austin

Yes — the median home values in Austin might be well above the national average and certainly well above the average in Texas. However, an 80% increase in home values over the past five years combined with a solid rental market and high potential for rental income can only mean one thing — now is the perfect time to purchase an investment property in Austin before property values increase even more!

Austin is one of the best cities in the nation for long-term and short-term rental owners. Austin (or “Silicon Hills”) has a robust economy and has attracted huge tech companies over the past several years, including Apple, Amazon, Google, Dell, and Oracle. Thousands upon thousands of young professionals and millennials are flocking to Austin for the job market and are looking for rental housing.

However, owning a vacation rental in Austin is just as smart of an investment strategy. Tourists are coming here by the millions for live music events, the trendy dining scene and craft breweries, and outdoor adventures, like kayaking on Lady Bird Lake or lounging in Barton Springs Pool.

• Median Home Value: $625,705
• Average Rental Rate: $2,480 per month
• Population Size: 2,170,000 people

3. San Antonio

San Antonio is one of the most populous cities in Texas (just behind Houston) and is an attractive choice for long-term rental investments. However, this tourist hotspot attracts over 30 million people annually, making vacation rentals in San Antonio an ever more profitable investment.

Tourists from around the country come to San Antonio to visit the Alamo, San Antonio RiverWalk, Six Flags Fiesta Texas, Natural Bridge Caverns, and more. Plus, the city’s proximity to other popular tourist attractions, like Austin and Fredericksburg, makes San Antonio the perfect “home base” for exploring more of Texas and one of the most profitable Airbnb markets in the country.

• Median Home Value: $299,182
• Average Rental Rate: $1,745 per month
• Population Size: 2,510,000 people

 Thanks to Lendai for the statistics.

Why Invest in Vacation Rental Furnishing with THE STAGING COMPANY for Your Texas Rental Property?

You don’t have to be a genius to realize that the Texas housing market is one of the best in the nation for short-term and long-term rentals. However, you’re not the only one investing in the Texas market — which means that setting your rental property apart is key to helping it stand out in the local market in Houston, Austin, San Antonio, or North Texas.

That’s why you should leave vacation rental furnishing to the experts at THE STAGING COMPANY — unless you want to leave thousands of dollars in potential rental income on the table! In just two weeks, your rental can be move-in ready with durable furniture, stylish decor, and living essentials — all custom-curated by our team of award-winning decorators.

So, what are you waiting for? Contact us today to get started!