Which of the big 4 cities in Texas is the best to invest?

[Tyler D.]

I'm looking to invest in Texas, and have been looking at Austin, Dallas, Houston, and San Antonio. All 4 cities have their pros and cons, and I haven't yet decided which one I want to focus my efforts on. I'm not from Texas, but I have done a fair amount of research and want to know what you think. The way I see it, here are the pros/ cons for each city:

1) Austin - 

Austin is the most expensive by far, with rents not substantially higher than the other cities. Due to this I would likely stay away from Austin, as it would be difficult to get cashflow.

2) Dallas -

Substantially cheaper than Austin, and has a lot of job growth happening. Houses are still fairly expensive compared to Houston, but appreciation may be better if companies that are moving to Texas choose Dallas over the other 3 cities.

3) Houston - 

House prices are quite cheap and you can cashflow quite easily from what I've seen on the MLS. It has the downsides of being somewhat invested in oil and being vulnerable to hurricanes, but from what I've read both of these downsides are mitigated by Houston having a pretty broad job market nowadays, and buying homes outside of flood zones. Houston has had huge population growth and good potential for appreciation if businesses moving to Texas choose Houston.

4) San Antonio -  

The cheapest of the 4 by a fair margin, and pretty easy to get cashflow. It is close to Austin which could help San Antonio as the two continue to develop toward one another. The downside to San Antonio is a lack of jobs compared to the other 3 metros, though this could change. Overall, I like Houston and San Antonio the most as they both offer cashflow with appreciation potential in the future.

Keep in mind, this is all written by someone who hasn't lived in Texas, and is based on what I've read the internet. I'd like to know what you think about the best metro to invest in Texas. Let me know what you think!

[Violeta Archer]

Hi Tyler,

Where do I start? As a native Texan who was born and raised in San Antonio, went to college out of state and then returned to Texas -- Austin for 15 years and then Houston for the last 8 years, I think I can address your question. First, all three cities are NOT what they used to be when I was growing up. 

Austin is now a destination city, dubbed Silicon Hills for its tech industry. The housing market is beyond anyone's means if you're not in tech. Profits will be slim. I designed and custom-built my dream home (2,500sf) on the southwestern side (hill country) on an acre for $150K. I had to sell in 2007 due to a divorce and sold it for $316K and made a nice profit. The market is overpriced now. That same house would sell today for over $600K.

I thought I'd buy in Houston, but the constant flooding and ground shifting always braked that idea. It never floods in the same way; it always floods, and no house is immune to flooding. Many Houstonians are migrating to higher ground -- central Texas (Austin or San Antonio) -- where it doesn't flood and selling to clueless out-of-towners. The high humidity level is a magnate for termites, and the constant ground shifting from floods translate to foundation problems. So I never bought. And when it floods, it does so up to the attic! Houston is technically BELOW sea level and has a lot of ground water. The market is overpriced. Very competitive landscape among retail buyers and investors.

I just moved to San Antonio in December and am shocked to see how much home prices are for a mid-century style ranch. The neighborhood I grew up in was on the wrong side of the 'tracks', but because it's close to downtown, it's been gentrified and designated as a historical district. Beautiful downtown and terrain. No flooding. Less expensive than Austin or Houston, and somewhat competitive. The job market, however, is not stellar-- unemployment is high. This is a HUGE MILITARY town and everything / everyone caters to vets. Many retired vets have civilian jobs and it's more diverse now.