What can you tell me about the Lubbock, TX market

Question

What can you tell me about the Lubbock, TX market? Appreciate any and all feedback from locals, investors, realtors, etc. Thanks guys!

Jordan Sutherland · Answer

The cost of living is very cheap in Lubbock, compared to most other areas in TX or in the U.S..  Naturally this makes the cost of Lubbock real estate lower, which in turn makes the rents relatively low compared to some other markets. It's all relatable. So the rents may be considered low, but you can buy property for so much less than in other areas like the DFW area.

Some U.S. markets are "cashflow markets" and some are "appreciation markets". The great thing about Lubbock is that it typically has a little of both. I chose to invest in Lubbock not only because I've lived hear for 20 years, but because I truly believe it is one of the best markets to invest in. It is very easy to meet the 1% rule in Lubbock and have good solid properties, if you know what you're doing. (All of my properties are around 1.5%). So in my opinion, this makes Lubbock a pretty good cashflow market.

On the other hand, some investors may be looking for some appreciation. Lubbock has steadily appreciated. From what I've studied and what my mentors have told me, the Lubbock market has been minimally affected by recessions, when compared to other local markets. With Lubbock being such a stable market, I think it makes a good place to invest.  It really is true that Lubbock doesn't rely on outer influences as much as some of the rest of the country. It is kind of a self sustaining micro economy. We have Texas Tech University, the best hospital within a few hundred miles, and produce the majority of the U.S.'s cotton all in Lubbock. All of these things contribute to keep the local economy booming and the city growing. My family owns a property management company, and we have many clients from all over the country. There are a lot of people that see value here.

Some people may not be impressed when they consider investing here, but if they take a deeper look at the local economy and growth that we have, it makes our market look great. There are deals to be had, cashflow to be made, and lots of speculative appreciation to hopefully exist!

Brad Gibson · Answer

Rents in Midland rose by more than 10-15% in ‘15-‘16.  In 2014 things were flat, but surprisingly did not regress even though jobs in the area fell by 10,000 that year.

Lubbock is a more stable market than Mildand/Odessa and will likely remain so.

Rent Cafe for Lubbock (average rent):

May 2016 — $928

May 2017 — $915

May 2018 — $910

April 2019 — $907

There have been some bounces both lower & higher in some months, but this has been the trend line.

Stuart Chinworth · Answer

We have seen the rental rates increase on all of our SFH's the past two years and our multifamily is getting the best rent possible for the area it's in.

It's no surprise that the rates in Midland are climbing higher than Lubbock....for right now. How did the two markets compare in 2015-2016 during the down turn? I would bet that the rate chart for Lubbock is much more stable than Midland is.

Curry Blackwell · Answer

Please avoid Lubbock if you believe those stats. It IS true that the apartments have caused a strain in leasing SFH around Tech, but there are still plenty of people who want the house experience rather than the apartment feel.  It's a challenge, but affordable prices will keep deals around.  I've been investing here for 30 years.  I would suggest you get with someone who knows all the different areas of town and can help with price points and cap rates.  Medical, students, professional, agriculture, downtown, surrounding towns.....All have opportunities.  I actually have investigated investing in Midland/Odessa...It's just 2 different markets. Good luck !

Austin Hughes · Answer

My take on Lubbock-- AWESOME cash flow opportunities without fear of a large market downturn.

Second fact-- It's a "Good ol boy" network, and reputation is everything. People are almost always willing to help out another investor or realtor.

The investor scene has been steadily growing, but that's because there's massive opportunity here. There are only a few large companies that buy... and they aren't big in terms of Dallas or Houston markets. Other than that, it's a lot of small to mid-sized investors doing their thing! I'd still call myself small (20 deals/year), but I see the opportunity and am running full steam ahead to capture a very large portion of the market.

Brett Whaley · Answer

@Brad Gibson I have heard the same thing from some people, actually, especially with all the resort-style apartments going up.  I was looking at Zillow the other night at work, and it looks like many homes and rentals are sitting on the market for weeks.  Granted, it is not peek season considering it is mid-semester, but nonetheless, it was concerning.

Jordan Sutherland · Answer

Yes @Matt Van Winkle, technically you are not allowed to have more than 3 unrelated people in a single residence. This is almost never enforced, but it does happen very rarely. To my knowledge,  it usually stems from tenants that like to party a bit too much and unhappy neighbors that make formal complaints to the city.  Other than that, the city doesn't go looking for unrelated people living together. They mostly just keep that in their back pocket, so they can make citizens happy when they have a bunch of college kids causing trouble next door to their homes.

David Trevino · Answer

@Brad Gibson Great info

Brad Gibson · Answer

I own investment properties in Lubbock as well as Midland/Odessa.

They say there are lies, damn lies, & statistics.

All I can tell you is my rental property monthly rates have been stagnant for the last two years in Lubbock and there is legit data to back that personal anecdote.

The same is not true in Midand/Odessa. Each place has its own perils. Labor is the issue in Midland/Odessa. You may have a great deal that will be a cash flow monster, but getting any renovation or repairs done could be a nightmare.

All I can tell you is a dollar invested right now in Lubbock returns far less to me than a dollar invested in Midland.

That may not be the case long term as all markets run in their own cycles & also why I was very careful to qualify my statements.

What can you tell me about the Lubbock, TX market

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