Texas Is the Best State for Multifamily Investing

Not All Lists are Created Equal

If you want to be successful apartment investor, selecting the right market is one of the most crucial decisions you will make as you manage your portfolio.

Each year, we see just about every major publication release it’s version of the 10 best cities for.. .(fill in the blank) and then watch as inexperienced real estate investors flock to these areas in search of the next great opportunity.

Truth be told, these lists drive us crazy.

Frequently, the methodology used for these splashy rankings is never disclosed, or worse, uses metrics that are worthless to the careful apartment investor.

Keep it Simple

We believe an apartment investor should begin with two primary metrics when evaluating the best market: Population Growth and Employment Growth.

Simply put: Are people moving to this market, and do they have jobs when they get there? If the answer is yes, then there is a good chance you have found a great multifamily market to investigate further.

With these opinions in mind, we found Forbes’ 2016 list of fastest growing cities in the U.S. to be informative and reaffirming. Forbes used many of the same measurements we use when we analyze markets, and made the same conclusions about a region of Texas that is showing impressive and sustainable growth.

How Big? Texas Big

This region is known as the Texas Triangle and it has shown impressive population and economic growth over the past decade. Recent studies have shown that 80% of all of Texas’s rapid population growth is occurring within this region.

The Texas Triangle is loosely defined by Dallas in the north, Houston in the east and San Antonio in the West. It contains four of the fastest growing cities in the U.S. (Austin, the state Capitol is the fourth city and can be found on the Dallas/San Antonio axis) and a remarkably diverse economy.

How big is this triangle? 17 million people over 58,000 square miles. By 2025, that number is expected to be over 30 million people.

That’s pretty big, even for Texas.

“Increased density should result in a higher proportion of multifamily properties, both for rent and for sale”

– Real Estate Center – Texas A&M University

Not a One Trick Pony

Texas Triangle proponents and savvy apartment investors will tell you the story is not just about population growth – jobs are moving there as well.

Even as the U.S. economy headed into a recession in 2008, the Triangle metros led the nation in job creation with Houston topping the list, at 42,000 new jobs. Of the top 100 metros, Houston, Dallas-Fort Worth, San Antonio and Austin were among the 10 largest for job creation for 2008. While the vast majority of America is just now bouncing back from a stagnant economy, the Texas Triangle flourished over the last 8 years.

Multifamily Struggles to Keep Up

Naturally, the Texas Triangle’s population and job growth are having a positive effect on housing demand.  Home prices in the region have stabilized and begun to increase even while we are seeing home prices nationally continue their decline.

More relevant to us and our investors, multi-family housing inventory can’t keep up with population growth, and the region is seeing extremely low vacancy rates coupled with steadily rising lease rates. Obviously, this is welcome news for apartment investors.

Texas Triangle =  Opportunity for the Apartment Investor

Taking a closer look at the numbers, this region offers some compelling facts:

  • Exploding Population growth that should last for decades.
  • A robust jobs market that shows no signs of letting up.

  • Multifamily inventory that is not keeping up with demand.

The Texas Triangle represents a fantastic opportunity for the apartment investor.

Comments 18

  1. I just listed to your podcast on Joe Fairless’ show. It was excellent and decided to check out your site, I’m a fan of what I’ve read so far.

    As for TX, “everyone” seems to offer up the state as THE place to invest. Do I follow the contrarian model and look elsewhere? Or, as a small player, try to swim with the big fish and jump head first into the TX market?

    Your article makes a compelling case to jump in. If the metrics hold true, adding about 13M people to the TX triangle means there is plenty of upside for those that get in early. Both from a cash flow and appreciation stand point.

    Thanks and keep the content coming!

    -Andrew

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      Author

      Hey Andrew,

      Thanks for your kind words about our blogs. As far as Texas goes, we like to say to people “invest in what you know best”. We have known and liked Texas for a long time. As far as where you invest, it depends on a lot of factors. What are your goals? What kind of properties are you looking for?

      If you have deeper questions, you could set up a call with Paul at this link https://www.wellingscapital.com/schedule-15-minute-call-with-wellings-capital

      Thanks for your comment,

      Ben

  2. I am a small investor and am interested in the details of your organization. Do you combine investments into the existing apartment buildings and offer an income stream? Do you combine investments then purchase the properties or do you only work with large investors assisting them in the purchase of a single property?

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  3. Do you work with small investors? I’m intrigued by your comments, and interested at the same time. If you only work with large investors, this won’t work for me. Please send me some information. ThNKS!

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      Author
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  4. SSG-Engineering is an Architectural & Engineering Design firm concentrating on residential renovations, single, and multi-family houses. We can provide A to Z for your construction including Architectural, Structural, Electrical, Plumbing, HVAC, 3D rendering and videos.
    I wonder if your company or know any companies who need professional Design with an extremely low cost.
    Please let me know if you can connect me to such companies.
    I suggest we have a call to discuss any possible project and come up with the best solution for it.
    Thanks
    Daried

  5. Pingback: The Texas Advantage: Why Texas is the Best State for Multifamily Apartment Investing - Boardwalk Wealth

  6. Some of the points mentioned in this article remain even more true now after Harvey. As many families were displaced from flooding and we also saw an influx of home repair contractors, outside help, and even real estate investors come into the city, the triangle started growing more. Housing was already nearly capped and prices starting driving up with as much demand as there was.

    In my area of town alone, I am now seeing 4-5 multiple hundred apartment complexes being built, but it’s not going to be enough. We’re growing faster than we can handle.

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      Author

      Cindy, those are all great points. Thanks for sharing your insight. Feel free to reach out to us through the contact form if you have any specific questions for us.

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  7. Hi,
    I’m interested in investing in multi family homes in TX. I’m looking for someone to guide me who has market knowledge and experience.
    Do you provide this service? How much do you typically charge?

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      Author
  8. Hi, I’m interested in investing in multi-family homes in Texas. Can you send me more in depth information on how to get started?

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