The Lone Star State has one of the fastest-growing real estate markets in the country. From sprawling cities like Houston and Dallas to quaint towns like Fredericksburg and Frisco, there are plenty of places to invest in, considering Texas is the largest state by landmass in the continental United States.
If you’re ready to dip your toes in the Texas real estate market, it’s important to understand how this market works. Take a look at our tips on how to get started on investing in Texas real estate below.
Research different areas
With so many cities and towns to choose from, it’s important to do your research and look at different areas. Texas is one of the fastest-growing states in terms of population because it has a rapidly growing job market, along with affordable housing that makes it easy for people to become homeowners.
To begin your researching process, look at different real estate markets within Texas. For example, do you want to own properties in a college town and rent to students? College Station and Arlington are both home to sprawling universities with a vast undergraduate population. Or, do you want to rent to young professionals in tech-savvy cities? Austin and San Antonio have large industry sectors that are drawing in thousands of new Texans each year.
With the help of a realtor, you can begin your research process, discuss your real estate investment goals, and devise a plan for acquiring property.
Get funding
Real estate is expensive. If you want to begin investing in this lucrative market, it’s important you have proper funding so you can acquire property before competitors snatch it up. Whether you’re looking for single-family complexes, fix-and-flip ventures, or commercial property, there are a few ways you can get funding.
The traditional route is taking out a conventional loan issued by a bank or lending institution. These come with relatively low interest rates but often require a high credit score to get attractive terms. Another option is taking out a hard money loan from Texas hard money lenders. Hard money loans are different in that they don’t look at your credit score or financial history. Instead, they use your property as collateral should you default on your loan. With a hard money loan, you can get funds within a few days, whereas convention loans can take weeks or months. However, they come with much higher interest rates, which can increase the loan’s cost over time.
Start a fix and flip venture
If you don’t want to become a landlord but still want to invest in real estate, you can start your own fix and flip venture. This can be an extremely rewarding experience because you’ll be able to turn a worn down and dilapidated property into a livable home that looks like it belongs in a magazine.
Through flipping, all you have to do is find a cheap property and renovate it for as little as possible. Then, once your renovations are complete, try and resell it for a profit. While flipping might seem easy when you watch it on HGTV, it can be fairly risky and time-consuming. This is because you need to comply with zoning laws and acquire the proper permits, and some homes might be in worse condition than you anticipated.
To ensure your flipping venture goes smoothly, make sure to thoroughly investigate the property. If there’s a crack in the foundation or a roof that needs repairing, it’s best to skip it and find another property, as these repairs can be extremely costly with little value in return.
Rent out a room
If you live in Texas and have a room available in your home, consider renting out a room. With a few changes to your home’s layout, you can create a private room with its own entryway and living space. There are plenty of platforms where you can rent out a room for those looking to vacation or those looking for long-term stays, such as Airbnb and Vrbo.
The bottom line
As with any investment, there is some risk involved. However, with proper planning and research, you can begin investing in Texas real estate and diversify your portfolio. From securing funding to flipping houses, these are just some of the ways you can begin investing in Texas real estate.
