Are Investment Properties in Texas cheaper? | Morris Invest (2024)

During my 15 years in the real estate business, I’ve invested in many great rental properties within the Lone Star state. Because of this, I’m often asked, “Are investment properties in Texas cheaper?”. It’s a question that a lot of people are inquiring about because, like myself, they see a large number of real estate investors exploring the Texas rental market.

Let’s dive into this popular question and then explore the topic in more detail:

Are investment properties in Texas cheaper? Rental real estate in Texas is less expensive for two reasons. First, it has a vast amount of available buildable land, so the non-competition drives the prices down. Second, Texas has a lower cost of living, which makes for low-priced labor and building materials, and this directly affects the cost of the property.

What Makes Rental Real Estate in Texas Less Expensive?

Now that you realize investment properties in Texas are cheaper, you may be wondering why that’s the case. It’s certainly worth looking into and will help you gain a full understanding of why purchasing a rental property in Texas is such a smart move. Let’s go over a few points in detail:

Before diving in, view this short video that discusses why Texas is one of the best places to invest in rental real estate:

1. An Abundance of Land Keeps Rental Real Estate Prices Low in Texas

Have you ever driven through the state of Texas? It’s huge! Along with that comes lots of available land that can be used to build houses. When there is this much buildable land space, the competition for land to build on is low, and equates to low prices. In comparison, research land availability in California, along with its housing prices. You will find that there is not much prime land available, and property prices are typically sky-high. This is also one reason many people have left California to make Texas their new home.

So when asked “Are investment properties in Texas cheaper?”, this is the main reason I discuss because the vast amount of land that is available in the Lone Star state creates a great opportunity to own an inexpensive, cash flowing rental property.

2. A Lower Cost of Living in Texas Contributes to Cheaper Investment Property Prices

The second factor that is responsible for investment property prices being lower in the state of Texas, is the fact that it has a low cost of living. This can directly affect property prices because building a house requires labor and materials. If these two elements are low-priced, then so is the property.

Using CA as an example again, the minimum wage in this state is currently $13, and will be raised to $14 as of 2021. The minimum wage in Texas is currently $7.25. CA wages are almost double, and therefore, it will cost more to hire workers to build a property. Additionally, when you have a state where everything costs more, you can expect your building materials to cost more also. With that said, Texas having a low cost of living ensures that your building materials and labor are cost-effective. This inexpensive pricing gets passed over to the buyer in the form of a lower priced investment property.

How Can You Benefit When Investment Properties are Cheaper in Texas?

I’m guessing your interest is now sparked, and you’re wondering how you can benefit from the fact that investment properties are cheaper in Texas. There are actually four main ways you can benefit from buying an affordable property in the Lone Star state; let’s take a look at them:

1. Allows for Growing Your Portfolio with Affordable Texas Investment Properties

Wise real estate investors know that the best strategy for building wealth is to grow their rental real estate portfolio. Part of that strategy is ensuring that you find rental markets that are cost-effective. This is when the cheaper pricing of Texas investment properties comes into play.

Texas offers a great opportunity to buy more than one rental property. For instance, in two comparable cities, for the money it takes to buy one property in California, you may be able to buy three in Texas. Of course, there are a lot of variables, but in general, this is how much less expensive properties in Texas are.

When someone asks me, “Are investment properties in Texas cheaper?”, I always dive into the conversation of how the state allows investors to easily grow their portfolio using the BRRRR method. It’s a brilliant way to keep moving forward with adding rental properties to your portfolio. You can take a look at our latest article that goes into this topic in detail – The BRRRR Method for Real Estate Investing.

2. Enables You to Invest in a Landlord Friendly State

You can benefit from the fact that investment properties in Texas are cheaper because it will enable you to easily buy real estate in a landlord friendly state. States that are landlord friendly are, by far, the best places to invest in rental real estate.

What is a landlord friendly state? It’s basically a state that favors the landlord’s rights over the tenants. In other words, the law is on your side with situations like a tenant breaching the rental agreement, evictions, and the like.

If you’re a seasoned investor, you will be all too familiar with the issues that can pop up with your tenants. When you invest in a state that is not landlord friendly, and certain issues arise, it can, oftentimes, lead to a significant loss of income, expensive legal fees, a tenant that won’t leave your property, and many sleepless nights. This is something you really won’t have to worry about when you own a rental property in Texas. Additionally, this, with the fact that it offers investment properties that are cheaper in price, makes it an ideal location to own rental real estate.

3. Gives You the Opportunity to Take Advantage of the Booming Economy that Texas Offers

Because the state of Texas offers affordable real estate, it gives many investors the opportunity to take advantage of an economy that can yield solid financial returns. Texas offers a hot job market and a notably successful economy. This, combined with the fact that investment properties in Texas are cheaper, can set you up with a stable and profitable investment. When you have such a great job market, you will also have a need for renters who are employed in the area. These are also renters who typically want to stay for years to come.

So what makes Texas known for its prosperous economy? Of course, there is the oil and gas boom that occurred and greatly contributed to its economic growth. You will also find a variety of Fortune 500 companies within the state, as well as manufacturing and tech companies, along with a large health care sector. It all comes together to create a thriving economy. So when you have a Texas economy such as this, coupled with investment properties that are more affordable, it becomes a recipe for success for real estate investors.

4. Investors Don’t Have to Pay State Income Tax on Texas Rental Properties

Investors who reel in monthly rental income don’t have to pay state income tax! This, in itself, makes owning an investment property in Texas more cost-effective. It will certainly keep more money in your pocket.

When it comes to doing your Federal taxes, you will want to ensure everything is done in such a way that you are lowering your tax burden to the fullest extent. If you’re not 100 percent familiar with how to do this, you can pick up this helpful book from Amazon – Tax-Free Wealth. It’s packed with useful information that was written by the personal tax consultant of real estate giant, Robert Kiyosaki.

Additionally, we recommend checking out www.justbuildwealth.com for some great tax strategy articles, as well as posts on how to start generating wealth.

What City in Texas is the Best Place to Invest in Real Estate?

The other thing I bring up when asked, “Are investment properties in Texas cheaper?”, is which city is the best place to buy rental real estate. I’m partial to West Texas, specifically the city of Lubbock, because I’ve had so much success there. I’ve built and bought many great rental properties in this city, at such inexpensive prices, that I’ve been able to bulk up my portfolio in a quick amount of time.

Lubbock is an awesome place to invest in for more than a few reasons. First, Texas Tech is located there and typically has over 40,000 students. That means the need for rentals will certainly be high. Also, Lubbock is the home of major health care facilities, which makes for employees who become long-term, stable tenants. You will also find successful Fortune 500 companies that have set up camp in Lubbock. Most importantly, this city has been included in a top ten list of most recession resistant cities in the U.S. While we’re on the topic, you might be interested in reading over our latest interview article – Recession Proof Your Investing – An Interview with Jarrett.

Get a sneak peek of this 3 bedroom, 2 bath, Lubbock, Texas, rental property that was built by Morris Invest:

How to Invest in Low Cost Rental Real Estate in Lubbock

Now that you know the answer to the question, “Are investment properties in Texas cheaper?” is “yes”, and you realize that Lubbock, TX is one of the best cities in the state to buy real estate in – now what? Well, if you want to move forward with owning a cash flowing rental property in the Lone Star state, Morris Invest can help you – no matter where you live.

We have properties available in this city, and we make it simple for you by taking care of every single aspect of the deal. This includes providing you with a fully renovated property, filling it with a tenant, and even assigning a professional property manager. This is what we do; we know the industry inside and out, and that enables us to successfully provide you with a rental property that will start cash flowing the very first month. Hear what one of our latest clients had to say when she worked with us to make her dream of owning a rental property happen – An Exceptional Real Estate Investment Experience – An Interview with Norvella. If you would like to talk to us to learn more about investing in Texas real estate, feel free to schedule a complimentary call with one of our experienced team members.

Additionally, even if you utilize a property manager, we suggest checking out the Landlord Studio website. They provide a rental income and expense tracking app with bank account integration, tenant screening, and document upload features. It comes in handy and can save you time and money. We personally use it, and so do a lot of our clients.

Real Estate Articles by Morris Invest

No matter what state you buy rental real estate in, it’s wise to fully arm yourself with knowledge. You can start by diving into a few of our most popular articles on the topic:

• Is a Cost Segregation Study Worth it?
• Are Turnkey Properties a Good Investment?
• Should You Renovate Your Rental Property?
• The 1% Rule for Real Estate Investing
• Top Self Directed IRA Tips That Will Make You Rich
• How to Buy Property with Multiple Investors
• Why Investing in Real Estate VS Stocks is a Smart Strategy
• How to Find Turnkey Rental Properties
• Tax Benefits of Real Estate Investing

Affordable Texas Investment Properties Are Your Ticket to Financial Independence!

We hope our article has given you some insight as to how cheap Texas investment property prices really are, and how you can benefit from them. Texas is the place to buy property if you want to quickly grow your real estate portfolio, build great wealth, and become a successful investor.

Please feel free to contact Morris Invest with any questions you may have, or to inquire about getting set up with a cash flowing rental property in Texas. We would love to speak with you and help you achieve your investment goals.

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