When you think of Texas, a few things likely spring to mind: barbecue, hot summers, and no state income tax often top the list. However, Texas also offers some of the most intriguing real estate markets for landlords and investors.
With landlord-tenant laws that favor landlords, relatively low median house prices, and consistently strong population growth, investors have many reasons to consider investing in the Lone Star State.
As you know, some markets within a state are better than others, and Texas is no different. Let’s explore the best rental markets in Texas. But before narrowing our focus, we’ll examine the broader rental trends that make Texas an attractive state to invest in.
Demand for rentals across Texas remains strong. While vacancy rates saw a slight uptick from 2022 to 2023, Texas’s continued population growth fuels the demand for rentals.
Rent prices are declining in some of Texas’s most popular cities. Austin, Dallas, Frisco, San Antonio, and Plano are all experiencing month-over-month dips, with Austin leading the pack.
But that’s not the case across the state. Houston, Fort Worth, McKinney, Katy, and Prosper have all seen month-over-month rent increases, with Prosper registering an over 10% increase.
The key takeaway is that rent prices are fluid. In places that saw rapid growth around the pandemic, there’s reason to believe that those markets could see a correction. With continued migration to Texas, especially in places with ample job opportunities, like Fort Worth and Houston, investing in Texas makes sense.
With large numbers of California residents pouring into the state, roughly 102,000 in 2022, house values will likely appreciate, meaning that investment now could result in a payday later. Admittedly, many California residents are likely buying homes, but many will need a rental.
Plus, new residents from states like Louisiana, Florida, and Colorado bring much lower average incomes, indicating a potential need for rental housing. In total, nearly half a million new residents moved to Texas in 2023, so demand for rentals will likely stay high.
In 2021, Texas passed a state law enabling landlords to offer their tenants the option to pay a monthly fee instead of a large up-front security deposit. If landlords choose this option, however, they must inform their tenants via written notice:
Both parties must agree in writing if the landlord and tenant agree to the monthly fee option.
Across Texas, home prices were up 2.9% year over year, resulting in a median sale price of $340,600.
We gathered data from various sources to compile our list of the best rental markets in Texas, ensuring you receive the most up-to-date information.
For population growth, we examined the figures from census.gov. Employment statistics were sourced from bestplaces.net. Redfin.com provided all housing-related information.
With that information, we calculated rent-to-price ratios to examine how rent prices compare with purchasing a property. Lower numbers indicate that properties in a given market provide better buying opportunities compared to renting.
Investors who want to put their money in one of the fastest-growing regions in the country are wise to look towards San Antonio. As the 7th most populated city in the U.S., San Antonio features a sizeable pool of potential renters.
With all that growth, San Antonio features a highly approachable median home sales price of $265,000. And with rent clocking in at nearly $1,800 a month, real estate investors can grow their portfolios while capitalizing on the lowest rent-to-price ratio on the list.
Where San Antonio presents an alluring opportunity to take advantage of a fast-increasing population, the Dallas-Fort Worth market has seen substantial population growth at 4.1%. In addition to population growth, Dallas-Fort Worth also saw the most significant increase in net jobs added in the country.
Interestingly, a number of in-demand jobs are in tech. These jobs generally provide excellent pay, and young people just starting out, who are typically renters, may be interested in setting down roots in a place with excellent economic opportunities in a region with no state income tax.
According to USA TODAY, Tyler, Texas, is the best place to live in the Lone Star State. For investors and landlords, the same reasons people look toward Tyler as a place to live are good reasons to consider investing in the town.
Compared to housing on the Texas coast, landlords don’t need to worry as much about damage wrought by hurricanes. Plus, the unemployment rate is low, and housing prices recently saw a dip. Now could be the perfect time to scoop up a good deal.
A number of the best rental markets in Texas have seen similar home value decreases, and New Braunfels is no different. With its unique German cultural heritage, New Braunfels represents a quality investment option.
Situated between Austin and San Antonio, New Braunfels might appeal to remote workers searching for a less expensive alternative to Austin. Similarly, residents looking to move somewhere less populated than San Antonio while still accessing its amenities might be enticed to move to New Braunfels. This central location offers landlords the best of both worlds.
Like San Antonio, Houston is one of the largest cities in the country. Though, while San Antonio ranks #7, Houston sits at #4. That considerable population size means investors will have ample residents to provide housing to.
However, the population alone isn’t a reason to invest in a city. Houston’s incredibly diverse economy provides residents with abundant work opportunities. With a lower cost of entry compared to other highly populated cities like Los Angeles and Chicago, investors can quickly grow their portfolios in Space City.
Texas landlords who want to create Texas-specific lease agreements in fewer than 15 minutes have a great opportunity with TurboTenant. Our lawyer-reviewed lease agreements ensure that you remain compliant in the state of Texas and anywhere else you own rental property.
But that’s not all. Adding TurboTenant features like rent collection, tenant screening, property advertising, and maintenance management helps you do more in less time. It’s a great way to modernize and automate your processes — for free.
If you’re interested in investing in the best rental markets in Texas, consider these essential tips.
San Antonio, Fort Worth, Tyler, New Braunfels, and Houston are the top five rental markets in Texas for 2024.
Population growth, employment growth, home value increase, median sale price, price per square foot, average rent, and rent-to-price ratio represent some of the most essential growth and price indicators.
Strong rental demand exists in Texas despite slight fluctuations in vacancy rates. Rent prices vary across different cities, with some experiencing declines and others witnessing increases.
Out-of-state landlords should pay close attention to local regulations, economic conditions, and the feasibility of remote property management with property management software like TurboTenant.
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