Houston compared to San Antonio/Austin, TX (buy and hold) purchase recommendations

[Tony Duran]

Hi BP, 

I live in California and own a townhome in Houston, TX near my in-laws. I have had great luck renting it out with the help of a management company and knowing the area based off of the multiple visits a year i take there. I am looking to purchase a SFR in the near future in the Houston (specifically Katy, TX) area in the price range of 125K or so. I was talking to my insurance agent since my rate continues to go up yearly which is at $111.12/month on my current Houston rental. He suggested to look into San Antonio or Austin which offers lower rates averaging $50.00/month due to the less likely hood of hurricanes/flooding. Im here to hopefully hear from experience in all area's and suggestions as to the pros and cons of each area. It might be a broad scope but Im looking for profit and the ease of renting. Let me know what you guys have to say. Thanks!

[Hattie Dizmond]

Dallas isn't tied to oil either.  In fact, Dallas is a much larger tech market than Austin/Roundrock.

The fact is, @Fred Heller is right.  The major markets in Texas are stupidly competitive right now.  San Antonio has far more available inventory than Dallas, Austin or Houston.  However, I have my own personal concerns about the long-term viability of the growth in SA.  There are plenty of 3rd tier suburbs in both Dallas & Houston, where the competition is less extreme and cash flow is easier to come by.  

I recommend you hook up with an investor friendly realtor or 2 in those areas. Give him/her your criteria for what makes an attractive investment for you, and let them do what they have trained to do. But, when you give them your criteria, don't just tell them 3/2/2 for $125k or less. Lift the covers and let them see what actually drives your decision. Is it net monthly cash flow? If it is, give them your calculations (i.e. 10% for PM, 5% for OpEx, 5% for CapEx, 10% for vacancy, etc.) I gave my realtor my analysis workbook. He can plug in the purchase price and property tax, and it immediately tells him what my monthly net is. Then he knows whether to move on or present the property. If you're willing to do some rehab, how much?

Basically, make your realtor your partner in the search.  The more information you arm them with, the better the properties they present will be.