High prices and a tight supply of houses for sale are not exactly the best mix for homebuyers, but they’re even worse for investors looking to become landlords. Sure, both tenant demand and rental returns are also high, but if the cost to get in is too high, the math doesn’t work.
The good news is, as always, all real estate is local, so while the national picture may look bleak, certain local markets still offer lucrative options.
Texas, which continues to see strong growth in both employment and home construction, appears to be a landlord’s dream state.
Three of the top five markets for investors, according to a new ranking by real estate sales and auction company TenX, are in the Lone Star State. San Antonio tops the list, followed by Fort Worth and Dallas.
While home prices are rising fast in Texas, they remain low compared with other hot markets, like most of California. In addition, while Hurricane Harvey did not hit these top cities, the storm exacerbated the state’s labor shortage by creating massive reconstruction needs in Houston. Tight labor will reduce new construction in the rest of the state, squeezing inventory and not only pushing home prices higher but also propping up rental demand.
