The Best Real Estate Investment Locations in Texas
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Melissa Holtje, Contributing AuthorClose
Melissa Holtje Contributing AuthorMelissa enjoys using her experience as a house flipper, investment buyer, and waterfront home owner to help buyers and sellers thrive in the housing market. When not scouting real estate, you’ll most likely find her at the beach.
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Richard Haddad, Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
If you’re looking to invest in Texas real estate, the present conditions could be in your favor.
A study revealed that four of Texas’s largest metropolitan areas — Austin, San Antonio, Dallas, and Fort Worth — have shown significant improvements in housing affordability in 2024. Nationwide, affordability has been a challenge due to mortgage rates hovering in the upper 6% range.
However, Texas stands out as an increasingly attractive option. As housing costs ease in these major cities, the state is cementing its reputation as a prime hotspot for real estate investments, appealing to both buyers and investors alike.
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What does the current market environment mean for Texas investors? And how can investors maximize their potential earnings within the Lone Star State?
To get to the heart of the real estate market in Texas, we spoke with Melissa Orr, a top real estate agent in Victoria, Texas, who works with over 80% more single-family homes than the average agent in her region. Years of experience networking with investors give Orr a unique perspective on what qualifies as a hot investment market and a good investment property in Texas.
Factors of a great real estate market in Texas
Before we dive into specific Texas investment markets, it’s worth noting a few things that optimize an area for investment in general.
Orr says it’s important to evaluate the city as a whole first. “Look at how the schools are doing in that market. How is the health of that city? How are they growing? What are they doing [for jobs]? And then also, are there any restrictions?”
As you’re looking into investment locations, keep the following factors in mind.
Desirable area
A great property at a great price is nothing if it’s not in a great area. Savvy investors spend time researching the location of the property, paying special attention to features that would make it desirable to renters or buyers.
Many know that Texas is one of the hottest vacation spots in the country. With over 3,000 miles of shoreline, varied cultural experiences, and plenty of natural parks, Texas has seen a travel surge, with visitor spending contributing nearly $95 billion to the state’s economy in 2023. The tourism boom is great news for the short-term rental market.
In addition, the influx of people choosing to call Texas “home” continues to rise. According to the 2024 Texas Relocation Report, about 668,000 people moved to Texas from other states. The state was ranked the second most popular destination for Americans relocating in 2024. That’s great news for investors looking into long-term rentals and fix-and-flip operations.
As you’re researching a local market within the state, consider what makes that area particularly attractive. Is there something –– such as a university, industry, or natural feature –– that will continue to draw tourists, renters, or buyers to that area?
Growing economy or job market
CNBC ranks Texas as the third-best state for businesses in 2024. The state secured the top spot in the workforce and technology and innovation categories, second place in the economy, and sixth in access to capital.
A growing economy usually indicates a stable, appreciating real estate market. At a local level, investors should note large businesses with a solid track record in the area and any new businesses intending to move into the location. Both are great indicators of consistent residential needs.
Consistent population growth
Population growth is good for investors because it means the area will continue to demonstrate a strong demand for housing. Currently, Texas is the second most populated state, with over 30 million residents. The state of Texas is expected to increase by 11.4% between 2020 to 2030.
Of course, investors will want to dial that number in closer to their intended city or county. To research historical and projected population growth in any given area, consider checking the World Population Review as well as this county-by-county data.
Competitive average rental rates
Since cash flow is directly related to rental income, investors should always look into an area’s average rental rates. Investors can expect the following rental rates, on average in Texas:
- Studio apartments: $792
- One-bedroom units: $840
- Two-bedroom units: $1,037
- Three-bedroom units: $1,358
- Four-bedroom units: $1,568
However, within the state, rental rates vary significantly by location. The average rent for a two-bedroom residence in Baylor County, TX is $905, while in Austin-Round Rock, TX MSA, it’s $1,924. Even within the same county, factors such as waterfront access and community amenities create variable rent prices that investors will need to look into by neighborhood, specifically.
Aligned with personal portfolio goals
In addition to data, investors should also choose an area for how it can generally help advance their personal goals. For example, some investors have no interest in management and maintenance. They may therefore want to choose an area based more on long-term appreciation than on cash flow.
Other investors prefer a hands-on approach to real estate. Thus, they would want to choose property that’s within driving distance of their permanent residence.
Orr recommends that investors consider an area with strong multi-family prospects. “Multi-family is a great way to get started, and here’s why: If you purchase a duplex, you can live in one side, rent the other, and qualify for an FHA loan.” Since not all locations are zoned for multi-family, that goal would need to be considered among other priorities.
Best cities in Texas to invest in real estate
With those factors in mind, let’s check out some of Texas’s top individual markets. We’ll take a look at some desirable local factors, as well as median home prices with data from Realtor.com, average 2-bedroom rental rates from RentData.org, and population size data from Texas Demographics.
Houston
With a thriving economy rooted in energy, aerospace, and manufacturing, Houston is one of the best places to consider a real estate investment in Texas. It’s currently the fourth largest city in the nation, with steady annual population growth.
As the Houston metro area ages, there’s great potential for flipping, and nearby Galveston represents a wonderful opportunity for short-term vacation rentals. And take note of that great average rental rate—when analyzed with the median price point, the cash-on-cash return in Houston looks promising!
Median home price: $311,000
Average rental rate: $926
Population size: 2,314,157
Austin
The capital city of Austin is home to a hip cultural scene of live music, trendy food, and outdoor activities. Data indicates that Austin is the fourth most populous city in the state, and The University of Texas drives a continual demand for rental properties.
Don’t be deterred by the high median home price. Multi-million dollar homes on the northwest side of the city drive up the price data, but there are great deals to be found in the city center and southward. Orr also recommends nearby San Marcus for those who prefer to be a little outside the city.
Median home price: $550,000
Average rental rate: $922
Population size: 979,882
Waco
Waco reported a rise in housing availability in 2024, and this small town packs in big benefits. Waco job producers include Amazon, SpaceX, and Baylor University, among others.
The stable price appreciation over the last years makes the location a great choice for buy-and-hold investors. The popularity of Chip and Joanna Gaines’ Magnolia network draws tourists who would simply love to stay in a “fixer-upper” style cottage for vacation.
Median home price: $250,000
Average rental rate: $1,266
Population size: 144,816
College Station
Home to Texas A&M University, College Station represents a good opportunity for investors in the middle of the Texas Triangle. Student housing in a place like College Station can be a great portfolio strategy since leases are often signed and guaranteed by parents (who are less likely to miss rent payments).
College Station experiences an annual population growth rate of 1.18%, reflecting its steady expansion and vibrant community appeal. Known as a hub for agricultural and biomedical innovation, the city draws the attention of global corporations and highly skilled professionals from around the world. This reputation as a leader in cutting-edge research makes the city a prime destination for investment.
Median home price: $342,000
Average rental rate: $1,140
Population size: 125,192
Dallas
Though the price point may be higher than some smaller Texas cities, Dallas makes an excellent investment choice due to a booming economy. Companies like Toyota and Topgolf have headquarters in Dallas, taking advantage of the city’s favorable business climate.
The metropolitan area is named as the country’s “top spot for real estate investment and development for 2025.” The population boom and stable economy make it a hotspot for buying and building properties.
Median home price: $340,000
Average rental rate: $1,758
Population size: 1,302,868
Victoria
For investors who prefer a small-town feel, Victoria is the place to be. Situated just 30 miles from the Gulf of Mexico, the city offers plenty of family-friendly fun like a zoo, children’s museum, and parks.
Victoria’s average rent-to-price ratios make it an attractive investment, with a thriving real estate market for properties at the right price point. Orr says, “In Victoria, if a home is updated and move-in ready, we are still seeing bidding wars.”
Median home price: $249,000
Average rental rate: $1,276
Population size: 65,800
El Paso
El Paso, Texas, is an excellent choice for property investments. The University of Texas at El Paso generates a steady demand for long-term rentals, making it an attractive option for those who seek a stable passive income.
In addition, the city’s attractions, namely the Franklin Mountains State Park and the historic Mission Trail, draw numerous tourists every year, making vacation rentals popular. Inbound relocation from more expensive metros like Houston, Chicago, and Los Angeles is likely to support population growth in El Paso.
Median home price: $265,000
Average rental rate: $1,150
Population size: 678,958
Tips for finding a great investment property in Texas
No matter what local market you choose, keep the following tips in mind as you pursue your Texas real estate investment property.
Partner with an expert real estate agent
Whether you’re investing locally or from another state, you’ll want to work with an agent who specializes in investment properties.
Having an investment-focused agent on your team will be a great resource in understanding the market on a micro level, including capitalization rates, cash flows, neighborhood norms, and more. HomeLight can connect you with that perfect agent partner.
Orr says, “You’ve got to get yourself connected to a local market expert. Finding a Realtor® is so important, someone who knows the health of the city and someone who can look for those off-market properties.”
Understand local landlord and tenant laws
In general, Texas is a friendly environment for landlords. But Orr says, “There are many, many laws that you need to pay attention to. Be sure to get yourself connected to a licensed property manager [who] can help you with that.”
Landlord laws vary on the local level, so you’ll need to research the requirements upfront. Your agent can be a great resource in this aspect.
Run a realistic budget
As you’re evaluating investment properties, be sure to set a budget that includes things that are not reflected in the list price. Closing costs, property repairs, tenant placement costs, and ongoing maintenance are all significant expenses. Orr adds that connecting with a local lender is key.
Buyers are really on edge about the current interest rates. You need to get yourself connected to a professional lender. Have a good chunk of money saved, and don’t just jump into something because you think it’s a get-rich-quick thing.
Melissa Orr Real Estate AgentCloseMelissa Orr Real Estate Agent at Coldwell Banker D'Ann Harper, Realtors5.0Currently accepting new clients
- Years of Experience 9
- Transactions 943
- Average Price Point $236k
- Single Family Homes 893
Be ready to make an offer quickly
Investment properties move quickly. Thus, you’ll need to be prepared to make an offer quickly when an eligible property comes on the market.
Keeping that in mind, have your budget ready, your financing in place, and your market research done. When other investors compete for the same property, you need to be confident in your strongest and best offer.
The Texas real estate market presents an incredible opportunity for investors. With little research and a great team in place, now could be a great time to buy in the Lone Star State.
Ready to invest in Texas?
With a flourishing economy and steady population growth, Texas is a top destination for real estate investments. However, it’s crucial to research market trends, buyer and rental demand, and property values before committing.
By partnering with a local agent, you gain a trusted expert who knows the market inside and out, ensuring you make smarter investment choices. Connect with a top-performing agent today.
Editor’s note: This post is for educational purposes only and does not provide legal or financial advice. When investing in Texas real estate, research options thoroughly to determine the best choice for your specific situation.
Writer Madeline Sheen contributed to this story.
Header Image Source (Vivian Arcidiacono / Unsplash)
- "Texas housing market sees improvement in affordability, new study finds," Spectrum News, Katharine Finnerty (January 2025)
- "Gov. Abbott travels to North Texas, discusses the state's 'booming' travel industry," WFAA, Adriana De Alba (October 2024)
- "This is the No. 1 state Americans moved to in 2023—it’s not Florida," CNBC, Celia Fernandez (January 2024)
- "How Texas' Population Is Set to Change by 2030," Newsweek, James Bickerton (January 2025)
- "Texas Counties by Population (2025)," Texas Demographics, Kristen Carney (December 2024)
- "New Texas housing market report shows increase in housing availability in Waco; is favorable to buyers," KXXV, Bella Popadiuk (July 2024)
- "Chip and Joanna Gaines on Taking a Risk With New Family Content on Max and Their Next ‘Fixer Upper’ Special Edition," Variety, Jennifer Maas (November 2024)
- "This Texas metropolitan area was named the hottest spot for real estate investment in 2025," Yahoo! Finance, Mary K. Jacob (November 2024)
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