So Texas is hot, right? What about West Texas?

Question

So more of a curiosity question.....what's going on in West Texas?  The state is on fire - business friendly, good weather, low taxes (with the exception of property), jobs, growing population, etc.  It seems Dallas and Austin are always top cities for investments, with San Antonio and Houston close behind.

But what about West Texas?  I'm just curious.  Same state, but is it a completely different market? I'm thinking Lubbock, Amarillo, Odessa, Midland, El Paso.  Is it Oil and that's it for economy.

Admitting I know nothing about these areas, but just interested if folks think the migration/growth will expand to these areas, and why/why not?

Mason Moreland · Answer

@Paul Shannon - That is a pretty broad area, the cities you mentioned are really chunked up into a few distinct units.

1) Panhandle/High Plains - Lubbock (south end), Amarillo (north end) are the two main markets - agriculture and higher education based; Lubbock is on FIRE due to Tech growing rapidly. It has a growing vineyard/wine industry (see my other posts) and big white collar components, it does not track oil prices at all. The city is growing southwesterly/toward Wolfforth, buy in that direction for appreciation. Full disclosure, my brother @Matt Moreland is a realtor there. Amarillo is NOT a small city (unless you compare it to one of the metroplexes) and has adjacent Canyon with WTAMU and a good sizes student population, is adding the TTU veterinary school, and has a relatively diverse economy. These two cities are the main hubs for an area just north of Midland all the way to the Oklahoma panhandle and southern CO. Huge.

2) Permian Basin & Trans-Pecos - Midland to Big Bend area south, Big Spring west to Pecos. - This area is almost exclusively O&G based and will 90% track with drilling rig numbers and oil prices. Buy good deals that work when rents are low and stick with bigger markets (Midland, Odessa, Big Spring) and you will do fine and rake it in during boom times though. I live in Midland, there is still demand for rentals but you must buy the deals right to work in down times.

3) "West" Texas - Not "real" west TX (El Paso to Pecos), but that awkward in-between area from Abilene to Ozona that is between West TX, Central TX, and the Panhandle. - Somewhat tracks with O&G as it is on the edge of the Permian Basin and (especially down by Ozona) some older oilfields. Lots of agriculture and deer lease/hunting economic impact. Abilene and San Angelo have higher education and other economic impacts, they are up-and-coming markets and hubs for their area. Great tertiary/quaternary market options.

4) Real West TX - El Paso to Pecos - I don't know enough about this area to tell you anything, truthfully. El Paso is huge. I would avoid Pecos, it is on the western edge of the Permian and is almost 100% tied to O&G. Pody's BBQ is great though. The Guadalupe Mountains and Davis Mountains are sweet and you should go visit. Not at all what you would expect to find in TX.

Matt Moreland · Answer

@Paul Shannon

Speaking on what I know about, Lubbock is 9/10 times the go-to for out of state investors looking to invest in West Texas and put their money to work.

The cost of housing out in Lubbock is still low compared to most of the state of Texas, and the economy is booming. Our local economy is driven off of three main components: higher education (Texas Tech that is rapidly growing, Lubbock Christian University, and Wayland Baptist), healthcare (Covenant Hospital & University Medical Center), as well as agriculture (60% of TX cotton grown in Lubbock county, and more than 90% of Texas wine grapes grown in the High Plains AVA). Within each of those categories there is far more to delve into such as the numerous law and medical schools, PT school, nursing schools, and branches off of each institution and businesses that cater to each industry, but you get the idea.

We typically see very stable and predictable appreciation annually, with consistent rent growth in areas not dominated solely by student rentals (which can be slightly more volatile with everything going on). There are certainly great cash flowing investment deals still to be found in Lubbock, as well as the rest of west Texas for those willing to seek them out!

Cheryll Ramirez · Answer

Hello @Paul Shannon El Paso is often overlooked.  Thank goodness!  More for me!  LOL  Depending on which website you visit, El Paso Metro/County population is between 850,000 to 950,000.  We are extremely diverse both in population and industry.  We are not dependent on oil and gas.  We have 70 Fortune 500 Companies in El Paso, Fort Bliss (the largest Army installation in United States Army Forces Command), Manufacturing, and will be home to the new Amazon fulfillment center 2021.  El Paso is an excellent rental market with the landlord friendly laws of Texas, lower purchase prices, and approx 40% of households are renters.

Tyler Bains · Answer

“West” Texas is extremely broad. I live in Lubbock and am therefore partial but we see a TON of out of town and out of state money pour into the Lubbock investment market. Our entry point to value is very low compared to the DFW, Houston, Austin metro areas.

I always say it like this, “determine your game plan, then determine the market.” Lubbock could be exactly what you are looking for or it could be the worst possible place. Do you want SFR and multi-family investment properties? If so Lubbock is an excellent choice. Do you want a strip mall, flex space, and entertainment venues? Then Lubbock won’t hold up against the metro areas.

Oil does not drive the Lubbock economy which is why we do not see the ebb and flow the way the Midland/Odessa areas do. I would caution against investing in the oil towns just because everything is very cyclic in those locations.

Wale Lawal · Answer

@Paul Shannon West Texas is only good for the Oil & Gas money except for Amarillo.

I use to work in the Oil Field as a Field Engineer and I have seen the GOOD, BAD and UGLY of the rental property in the area. Lubbock is also a better option because of Texas Tech (Buy near campus).

Goodluck and Happy Investing!

Ryan Kelly · Answer

Like @Matt Moreland and @Mason Moreland stated, "West" Texas is massive and made up of very unique areas that are nothing alike. The communities are very far apart and have different economic drivers. They can have great opportunities and I recommend visiting with local brokers/Realtors who know their markets well.

Scott R. · Answer

Amarillo is a hot market, prices jumped up recently, not much on market. Amarillo has been high on several “best place to buy rentals” type of awards recently, one of montley fools publications actually ranked Amarillo #1. Theres still money to be made, but not the best market to be buying in currently compared to what it has been in recent times.

Trampas Tanklage · Answer

@Paul Shannon I'm down in San Antonio, lived in Fort Worth for 4 years prior. The Oil and Gas industry is the primary driver in West Texas, and as of a few months ago it basically hit rock bottom again. Very boom and bust, it had been taking off the past few years. You've also got Ag, but that's a bit less pertinent to outside real estate investment.

Lubbock and Amarillo could be solid choices, Lubbock because of Texas Tech and Amarillo is a small city, I haven't done much research but I'd imagine they're pretty affordable. Lots of opportunity in El Paso as well.

I may be a little biased, but San Antonio is a great alternative to the other big markets in Texas. Cheap compared to Houston, DFW, and Austin right up the road, solid employment bases, and a good mix of neighborhoods to fit any investment strategy.

Polo Vazquez · Answer

You can make a lot of money in West Texas when oil is up because oil companies where paying up to $200 per night per room to house their workers but when oil goes down, like it has twice in the last 7 years, the area becomes a ghost town. You have to be very careful and have a backup plan for when this happens.

I’m an ex oil worker and worked there a few months of the year Every year. Let me know if you any more questions. I’ll do my best to answer them.

Turo Tales · Answer

@Cheryll Ramirez

Stationed at Fort Bliss. Sent you a request.

So Texas is hot, right? What about West Texas?

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