The Lone Star State is rife with investment opportunities. It's home to four of the nation's biggest cities, a number of major universities, and dozens of Fortune 500 companies and large employers.
In short? There are a lot of potential renters.
Still, that doesn't mean any Texas city is worth your dollars. In fact, some are much better bets than others -- especially if you're only looking at the big ones.
Austin, for example, ranked as our 13th-best rental investment market in the entire country earlier this year. San Antonio, on the other hand? That was much further down the list at 57.
Let's take a look at all four major Texas cities a bit more in depth.
Austin (as well as nearby Round Rock) ranked as the single-best rental market in Texas, according to our research in January. It also ranked No. 1 on the Urban Land Institute's list of markets to watch.
It's no wonder why, either. The city's population surged 2.5% since 2017, employment is up over 22% in the last five years, and the price-to-rent ratio is more than 20, meaning it's a city chock full of renters.
If owning short-term rentals is anywhere on your radar, it's a great spot to consider, too. The town's annual South by Southwest music festival brings in more than 400,000 travelers in just a single, one-month period. (Just don't plan to use your property for anything else in March!)
The Dallas-Fort Worth-Arlington metro area is the second-best Texas market to consider investing in. The metroplex has seen a 1.8% uptick in population in recent years (now topping out at over 7.5 million), and employment has jumped 18%. Like Austin, the price-to-rent ratio in the area tends to favor renting -- particularly in the downtown hubs.
Houston clocked in at third in terms of Texas rental markets. Though the population is growing in the area (up 1.3% since 2017), employment isn't gaining like it is in other towns. Jobs have jumped just 8.9% in the last five years, and considering the recent hits the oil and gas industry has taken lately, those gains have probably been all but wiped clean.
Throw in the 35% uptick in building permits in recent years, and you're looking at a pretty competitive market for what might soon be a dwindling number of renters.
San Antonio isn't too far off from Austin geographically (an hour or so drive for most), but its potential as a rental market is starkly different, according to our research. For one, it lacks the youthful population of its neighbor. Nearly 40% of Austin's population is between 20 and 39 and of prime renting age. In San Antonio, just 31% falls into this cohort.
At a population of 2.5 million, the city also has far fewer renters than Houston and Dallas, especially given the large chunk of residents that are military members and living on bases. (San Antonio is home to Fort Sam Houston, Randolph Air Force Base, Lackland Air Force Base, Camp Bullis, and Camp Stanley.)
The city does have one thing going for it, though -- and that's a lack of competition. Building permits are down more than 8% since 2017, meaning there may be room to slip in and make yourself known in the right part of town.
The bottom line
While some of these Texas cities may have more investment potential than others, none of them are bad options per se. Our researchers analyzed 188 markets, and the Lone Star State's major towns all ranked within the top third. Other Texas cities made the list, too, so make sure to check out the full data set to learn more about potential rental investing opportunities in the state.