Texas keeps showing up on lists of the best states for real estate investors, and for good reason. But “Texas” isn’t one market. An Austin duplex, a San Antonio rental near the medical center, and a lake house in Lakeway behave nothing alike, and the risks that matter in one don’t always apply to the next. Here’s what actually holds up when you look past the headlines.
I’m Robbie English, REALTOR and Broker at Uncommon Realty in Austin, and I work with investors buying across Central Texas.
Why Texas holds up for investors
A few things about Texas are structural, not seasonal, which is what makes them worth building a strategy around.
There’s no state income tax, and that’s been true for decades and isn’t up for debate at the ballot box the way it is in some states. Rental income and any gain on sale still owe federal tax, but the state doesn’t take a second bite.
Texas is also one of the more landlord-friendly states in the country. State law bars cities and counties from enacting rent control, lease terms are largely left to the parties to negotiate, and the eviction process for nonpayment moves faster here than it does in many other states. None of that replaces a properly drafted lease or a lawyer’s review of your specific situation, but it’s a friendlier legal backdrop than an investor gets in most coastal markets.
Then there’s population growth. Austin passed a million residents for the first time in its history, and the metro keeps pulling in people chasing jobs in tech, healthcare, and education, plus the retirees and small business owners who follow them. Growth like that doesn’t guarantee any single property performs well, but it’s the demand backdrop that makes Texas worth the closer look in the first place.
The costs you need to underwrite honestly
Every one of the advantages above comes with a trade-off, and skipping past it is how deals stop penciling out after closing.
Property taxes are the big one. Because Texas leans on property tax instead of income tax to fund schools and local services, effective rates here run well above the national average. That’s not a passing story, it’s just how the state funds itself, and it needs to be in your rent-vs-expense math from the first offer, not discovered after you own the place.
Insurance is the other line item that’s caught investors off guard lately. Texas deals with hail, wind, and severe storm exposure that few other states combine in one place, and premiums in a lot of areas have climbed faster than rents or incomes in recent years. Get a real quote before you’re under contract, not after. In the coastal counties, ask specifically about windstorm coverage through the state pool, since standard private policies often don’t cover it there.
Beyond taxes and insurance, do the ordinary due diligence: check zoning and any pending development nearby, verify HOA rules if there is one, and get a real inspection. Nothing here is unique to Texas, but skipping it because “the market’s hot” is how otherwise good investors lose money.
Why city-by-city matters more than state-level trends
Austin, San Antonio, and Lakeway aren’t interchangeable, and treating them that way is the fastest way to misprice a deal.
Austin’s story is tech-driven demand and tight inventory in the closer-in neighborhoods, which supports both appreciation and rental demand but usually means a higher entry price. San Antonio trades some of that upside for stability. It’s anchored by military bases, a large healthcare and biosciences sector, and several universities, which tends to make it less prone to sharp swings and a reasonable fit for investors more focused on steady cash flow than fast appreciation. Lakeway and the Lake Travis area are a different animal entirely, driven by lifestyle and second-home buyers, where HOA rules, lake access, and school zoning move value more than almost anything else.
Suburbs like Leander and Cedar Park sit in between: lower entry prices than Austin proper, still riding its job growth, but with their own permitting rules and pace of new construction that can affect a multi-unit or new-build strategy. None of these markets is automatically the “right” one. The right one depends on your goals, your timeline, and how much risk you actually want to carry.
How I work with investors
Most of what I do for investor clients happens before an offer ever gets written: pulling comps that reflect what’s actually closing (not just what’s listed), flagging the tax and insurance numbers that change a deal’s math, and walking a property with rental viability in mind rather than just curb appeal. I don’t push a listing because it’s available. I tell you when a property doesn’t fit what you’re trying to build, which is sometimes the more useful answer.
If you’re weighing a first rental property or adding to an existing portfolio anywhere in the Austin area, get in touch and we’ll talk through what actually makes sense for your situation.
