Texas, the second-largest state in the US by both population and land area, offers real estate investors a huge selection of towns and cities. However, to assure the highest possible returns when it comes to profitability, one must be aware of the top rental markets in Texas.
It would be a vast understatement to say that Texas has a plethora of investment properties. When it comes to Texas, it’s not a matter of supply. The Lone Star State has a sufficient supply to match the rising demand for real estate.
Let's quickly examine the Texas real estate market's characteristics and the reasons why people find it to be so alluring before we answer that question.
These are a few of the prime reasons why Texas has some of the best investment properties in the nation.
Despite the COVID-related interruptions, demand for Texas real estate was maintained at a solid level as 2021 came to an end. Overall, it's still a fantastic spot to make real estate investments, especially for individuals looking to expand their investment portfolios, create passive income streams, or start careers as holiday rental owners or managers.
However, just because the state provides a very large selection for investors does not automatically imply that every property in it is a gold mine. Despite the many reasons why people fall in love with Texas, you still need to do your research if you want to find the rental markets in Texas that will yield the highest returns.
They say everything is big in Texas. The real estate market there is comparable. How can an investor be sure they obtain the highest return on a Texas real estate investment with hundreds of locations and tens of thousands of options? Which Texas markets for short-term rentals are the best?
The top ten Texas markets are shown below based on several profitability indicators (all metrics as per Mashvisor) and draw factors. Every market has a unique blend of benefits and drawbacks. Investors should take the time to carefully compare and contrast the various kinds of data to determine which ones correspond with their investment objectives.
Consider entering the short-term rental market, like that of Airbnb, if you're a real estate investor trying to increase the profitability of your Texas investment properties. According to research, short-term rentals have seen a huge increase in their market share in travel lodging since the pandemic started, reaching as high as 41% in 2020.
The major short-term rental markets in Texas are shown below:
Despite having a low price-to-rent ratio, Abilene nevertheless generates more than $2,700 in monthly rental income thanks to its 62.99 percent occupancy rate. Its museums and world-class attractions draw tourists and history enthusiasts.
Even while the price-to-rent ratio in the city tends to favor traditional rentals, its short-term rental game is not far behind with an occupancy rate of almost 50% and a cash-on-cash return of 2.79 percent, making it one of the finest areas in Texas for real estate investors.
With a staggering $5,818.90 monthly income at a close to 72 percent occupancy rate and a cash-on-cash return of 7.83 percent, Ennis is one of the top Airbnb rental income earners in the entire state of Texas. It simply makes sense for investors to want a piece of the action when the figures are that good.
Even with a pandemic, Fredericksburg in Gillespie county maintains a thriving tourism sector and is the center of the Texas wine industry. When setting up shop in this unassuming city, an investor is most likely to obtain a high return on their investment.
One of the top short-term rental markets in Texas is Marfa, which is known throughout the world for its art and culture and draws visitors from all walks of life. Even though the town has a small population, tourism is growing, making it a profitable place for real estate investors to invest.
South Padre Island, well-known for its white sand beaches, is a terrific vacation spot for families as well as a popular spring break destination.
Denison’s history is rich in flavor and personality, and its residents are dedicated to preserving the unique history. The Texas Commission on the Arts endorsed Denison as one of the original arts and culture districts making it appealing for visitors interested in arts and culture.
Houston, one of the most diverse cities in the nation, has been dubbed "the American city of the future" and described as "smart, skilled, and soulful." That's a lot of praise, and in our opinion, it's merited. From bayou-side hikes and Asiatown food crawls to Downtown discoveries and tours of local music and art, there is a lot to do in Houston.
With more than 300 acres (121 hectares) of developed property for 11 park sites and 23 miles (37.01 km) of hiking and bicycling trails, Keller, a suburban community in Tarrant County, is primarily residential. "Successfully mixing big-city comforts with small-town charm," the city claims in its advertising. It draws so many visitors due to its proximity to the Trinity River.
For locals, and visitors, as well as those attending conventions and business meetings, Tyler offers a variety of year-round attractions.