Houston vs San Antonio vs Austin??

Question

Hello,

I'm new to the group but have read some of Brandon Turner's books, listened to many BiggerPockets podcasts, done some research, and ready to start buying (and continuing to learn). I'm in a good financial situation and I'd like to start buying 2-3 properties per year - mainly focusing on rentals but also open to flips (single family homes, and duplexes to quadplexes).

I have a great job that allows me to work from anywhere in the country so I'm not really tied to any state or city. I like the idea of investing in Texas because I feel like its economy is very strong and that its major cities will continue to grow.

I'd like to keep my investments in the same city in order to make it easier to manage so I'd like to pick the "best" city if I'm starting with a clean slate. My question is whether the group would suggest focusing on Houston, San Antonio, or Austin. I know that Austin is growing like crazy but the entry price is quite high. I've heard great things about the growth in San Antonio. That said, currently I'm leaning towards Houston because it too is growing, I know the city better than Austin and San Antonio, and there seems to be lower priced houses that are easier to start off with. But Houston also has hurricanes and its economy is affected by the oil industry.

What would you all suggest? If you weren't tied to one specific city, which city would you focus on if you could start from scratch? Why would you chose that city?

Thanks in advance for your feedback.

Ben

Daniel Hyman · Answer

I thought that this article had a nice take on the various TX markets

https://www.forbes.com/sites/ingowinzer/2018/04/18/texas-offers-a-broad-range-of-real-estate-investment-opportunties/#2148a7673fe0

Faraad Mohamed · Answer

@Ben Sherman Houston has more population growth than San Antonio and Austin. Also, I personally feel it's always best to invest in what you know vs. trying to learn a new market.

If you need help finding deals, I know a guy that can definitely help you out with that :)

Jason Hsiao · Answer

Given what you shared @Ben Sherman, I'd go with Houston or San Antonio. I personally don't like Houston too much bc the job base is not diverse enough and tons of flood and other weather risks. Austin is prob just too hot. I grew up there and I personally think the potential for the city is capped bc the highways and infrastructures are awful. San Antonio is big, diverse, affordable, and stable, which would be my #1 vote out of the three.

Ben Sherman · Answer

That's a great article @Daniel Hyman . Super helpful. Take a look at the article below from this January:

https://www.har.com/content/newsroom?pid=1585

Houston still had strong growth in 2018 despite the effect of Harvey

Ben Sherman · Answer

I would agree with you @Ryan Johnson . Again this article is a great testament to the strength of the Houston economy:

https://www.har.com/content/newsroom?pid=1585

Ryan Kelly · Answer

Hey Ben, this is an excellent question and it will all depend on your goals. If you are targeting immediate strong cash flow, Austin will be a difficult market to achieve this. However, when you combine appreciation potential, Austin is a strong market for long-term investors. As you alluded to, Austin is the most expensive housing market in Texas, so immediate cash flow is difficult to generate without some BRRRR investing or creativity. However, if you can set up a good deal, the appreciation and long-term job climate are hard to beat. Feel free to reach out if you want to chat about market details.

Ben Sherman · Answer

@Mark Sewell  - I'm only in Houston part of the month. I'm not originally from Houston but have been spending time in Houston off and on in the past 3 years so I'm familiar with the city. Your feedback is much appreciated.

Mark Sewell · Answer

Austin and SA will have more stable house foundations.  Houston is built in the red clay, so the ground moves and houses frequently experience foundation issues (which creates opportunity as well as cost).

Wait, you are from here -- what am I telling this to you for?

Ben Sherman · Answer

I agree with you @Faraad Mohamed . Would be happy to connect on finding some deals.

Ben Sherman · Answer

Thank you for the feedback @Jason Hsiao . I agree with you that Austin is probably too hot and not worth jumping in to as a start. So I'm down to San Antonio vs Houston. I'm not certain but my guess is that San Antonio also has a higher percentage of lower cost homes which would make it easier to jump in to from a upfront capital perspective. I hear that it is becoming harder to find the $100k-$125k range homes with good numbers in Houston but I could be wrong.

That said, I do have some other life and work factors that pull me towards Houston.

It sounds like Houston and San Antonio are very similar as far as good and promising cities to invest in. One is not necessarily a stronger bet than the other. Perhaps I just have to pick one and start buying.

Houston vs San Antonio vs Austin??

Most Popular Reply