Hey guys. I have a question about the Texas market. Sifting through loopnet I have noticed there are quite a few deals for GREAT prices that I have seen. How is the market? The prices are much better it seems. I guess I have a few questions.

  1. How are the property taxes? I have heard through the grapevine that they can be murder.

  2. AIR CONDITIONING? I have recently had a conversation with an investor in California that invests down there. He said one of the most painful expenses was air conditioning units popping left and right because of the climate there.

  3. Is the market slowing down and that is why I am seeing the deals? I seem to remember Texas had a big rental market.

Thanks in advance. :beer


First of all, Texas housing is one of the most inexpensive in the country for several reasons. Materials, labor and land are all plentiful here. Many states have a lot of Federal land and materials have to be imported. There are almost no unions in Texas and immigration makes labor very cheap relative to the rest of the country.

The price difference can be shocking for foreigners (we call anyone who isn’t from Texas that :rolleyes). In my opinion the deals aren’t always as good as they may seem.

Having said that I’m very happy with the Texas real estate market as it is. I don’t have a clue about the rest of the world. Hell, I don’t even have a clue about most areas of my own town. And most types of real estate in the county where I live.

I think investing in what you are very very familiar with is the best bet. I’ll never do it any other way but I guess folks can do what ever they want.

Ok, time for me to stop rambling and try to answer your questions as best I can.

  1. Property taxes in the Houston area vary from 2.2% to as much as 5%. School taxes are high everywhere. The biggest difference is MUD taxes (Municipal Utility District).

  2. Air Conditioning is a bitch. Units don’t explode every year but the electric bills can be nuts. It is important to get a unit that is appropriate for the space.

  3. I am not in the rental business but I market to renters when I am selling homes. I suspect that many renters have been able to buy homes in the past few years.

Good Luck.

Thank you very much for the response.

The nice thing about Texas is that we have no state tax. That is why property taxes are so high. So for investors and homeowners that live in Texas it is offsetting, but for out of state investors it can be a shock when they see estimated property taxes.

Texas is still the home of the 10 cap. I have lots of California clients that are buying apartment buildings in TX because it is SOOOO cheap!

Current news said that Texas is going to be the fasting growing state.

Is 10 cap really that plentiful? Sure that’s what loopnet says but a lot of Loopnet stuff is crap (outdated, phishing schemes, etc).

I’m from California & going to Dallas/Ft.Worth at the end of this month (April 2007), believe it or not, to look at 10+ cap properties. Can you PM me? Maybe we can talk business.

speedy, you need to take a few moments and read your Instant messages.

Texas is doing well due to the afforementioned factors. Job growth, relocations, boomer retirees, students coming to the colleges, etc. are contributing. Not all markets are the same. Houston and San Antonio are rental and flip markets. Austin and Dallas are appreciation markets. Of course, you can flip in Austin, but it’s more complicated due to our permitting process and guidelines. We’re a breed of our own.

Taxes in Austin are often highest in the state at 2.711 to 3.4 or so in MUD districts. There’s a lot to learn about the state. Start your research at the Texas A&M University Real Estate Center. http://recenter.tamu.edu. Has all the data, history, reports, etc. Once you narrow an area/city, you’ll be able to focus on market research in that area.

Thank you.

Texas is a great market for REI. But don’t forget property taxes are sky high. =)