As the country’s second-largest state by land area and population, Texas have hundreds of cities and towns real estate investors can choose from. But when it comes to profitability, one has to know the best rental markets in Texas to ensure the best possible returns. 

Investing in the Best Rental Markets in Texas

Investing in the Best Rental Markets in Texas

To say there is an abundance of investment properties in Texas is a huge understatement. When it comes to Texas, it’s not a matter of supply. There is enough supply to meet the growing real estate demands in the Lone Star State. 

The question investors are asking is this: What are the best rental markets in Texas?

The Texas Real Estate Market 

Before we answer the question, let’s first take a quick look at what the Texas real estate market looks like and why people find it so attractive. 

Why Are Real Estate Investors Attracted to Texas?

These are some of the top reasons why you will find some of the country’s best investment properties in Texas. 

  • It is a landlord-friendly state. It always pays to have the law on your side. Investors need not worry too much when it comes to legal matters as Texas is very friendly to landlords and gives them a wide variety of advantages.
  • It has a steady population growth rate. The demand for rental properties remains in high demand as more and more people continue to flock to Texas. 
  • Its economy is booming. Whenever an economy is performing exceptionally, it will always have a positive impact on the local housing market. The best rental markets in Texas have thriving economies, low unemployment rates, and high median salaries which all translate to a strong real estate market. 
  • No income taxes. Every conscientious person knows paying taxes is the right and dutiful thing to do. Well, the great thing about Texas is investors don’t need to worry about this because it is one of the nine states that have no income taxes. This is a big plus for investors as it ultimately increases their ROI. 
  • The properties are affordable. One of the things that make a town or city one of the best rental markets is affordability. The cost of living and the vast land availability in Texas help drive down housing prices. 

As 2021 came to a close, the demand for the Texas real estate market remained at a healthy level, considering the disruptions caused by COVID over the past couple of years. As a whole, it is still a great place to invest in real estate, especially for those who wish to scale their investment portfolios, build residual income streams, and establish careers in real estate investing. 

Now, just because the state offers a very wide selection for investors doesn’t mean each property in it is an instant gold mine. Even with the different reasons people fall in love with the Lone Star State, you will still need to perform your due diligence if you want to identify the best rental markets in Texas that will give the most optimum returns. 

The Top Texas Rental Markets for Investors

They say everything is big in Texas. The same can be said about its real estate market. With hundreds of different locations and tens of thousands of different options, how can an investor ensure he or she gets the best possible return on a Texas real estate investment? What are the best rental markets in Texas?

Investment properties in Texas can be divided into two different categories: traditional rentals and short-term rentals. We have listed the top six markets in each category based on different profitability metrics and reasons to visit. Each category has its own set of pros and cons. Investors should take the time to carefully analyze the different sets of data comparatively and see which ones align with their investing goals. 

6 Best Markets for Traditional Rentals

The term traditional rental applies to properties that are rented out for a period of six months and longer.  Here are the top markets for traditional rentals in Texas:

1. Boerne, Kendall

  • Median Property Price: $887,297
  • Average Price per Square Foot: $266.85
  • Days on Market: 78
  • Listings: 112
  • Traditional Rental Income: $2,088.74
  • Traditional Cash-on-Cash Return: 1.29%
  • Price-to-Rent Ratio: 35.4 (high)
  • Walk Score: 71

Boerne in Kendall County is one of the best places to live in Texas which makes it one of the best places to invest in Texas. With its booming economy, low unemployment rate, and suburban vibe, it is the ideal place for those who wish to start a family or enjoy retirement. 

2. Denison, Grayson

  • Median Property Price: $320,575
  • Average Price per Square Foot: $179.26
  • Days on Market: 18
  • Listings: 203
  • Traditional Rental Income: $1,228.31
  • Traditional Cash-on-Cash Return: 2.42%
  • Price-to-Rent Ratio: 21.75 (high)
  • Walk Score: 67

With an exceptional livability score of 75, Denison is one of the better places to live in the state. This makes it a good place for home buyers looking for investment properties in Texas. Its overall cost of living is one of the things that make it attractive to families and retirees. 

3. Houston, Harris

  • Median Property Price: $920,835
  • Average Price per Square Foot: $386.13
  • Days on Market: 119
  • Listings: 4,664
  • Traditional Rental Income: $2,030.91
  • Traditional Cash-on-Cash Return: 1.92%
  • Price-to-Rent Ratio: 37.78 (high)
  • Walk Score: 41.61

Houston may be a metropolis but its cost of living is far lower compared to other major metros like New York or San Francisco. According to US News, it is ranked #93 in best places to retire, #39 in best places to live, and #3 in the best places to live in Texas. 

4. Keller, Tarrant

  • Median Property Price: $700,418
  • Average Price per Square Foot: $239.51
  • Days on Market: 52
  • Listings: 124
  • Traditional Rental Income: $2,538.79
  • Traditional Cash-on-Cash Return: 1.76%
  • Price-to-Rent Ratio: 22.99  (high)
  • Walk Score: 71

Perhaps Keller’s major appeal to real estate investors is its geographical location. Keller is situated between Fort Worth and Dallas which makes it one of the best rental markets in Texas. This access to both major cities along with a low crime rate, great public schools, and tons of activities for both the young and young-at-heart make Keller one of the family-friendliest cities in TX. Its strong real estate market also makes it an ideal Texas real estate investing spot. 

5. McKinney, Collin

  • Median Property Price: $516,236
  • Average Price per Square Foot: $217.46
  • Days on Market: 53
  • Listings: 1,342
  • Traditional Rental Income: $2,010.2
  • Traditional Cash-on-Cash Return: 1.58%
  • Price-to-Rent Ratio: 21.4 (high)
  • Walk Score: 61

McKinney is considered to be one of the best places to live in the US. In fact, it was recognized by Money Magazine in 2014 as the best place to live in the country. Even to this day, people are flocking to this city because of the safe atmosphere, outstanding education, and booming economy. 

6. Tyler, Smith

  • Median Property Price: $489,041
  • Average Price per Square Foot: $180.63
  • Days on Market: 82
  • Listings: 198
  • Traditional Rental Income: $1,514.45
  • Traditional Cash-on-Cash Return: 1.78%
  • Price-to-Rent Ratio: 26.91 (high)
  • Walk Score: 75

Great food. Picturesque surroundings. Strong economy. Friendly people. All of these things and more make Tyler TX one of the best real estate markets in Texas. 

6 Best Market for Short-term Rentals

Real estate investors looking to make their investment properties in Texas more profitable should consider going into the short-term rental business, such as Airbnb. Since the pandemic began, short-term rentals experienced a significant increase in their market share of travel lodging hitting as high as 41% in 2020. 

Here are the top short-term rental markets in the Lone Star State: 

1. Abilene, Taylor

  • Median Property Price: $262,209
  • Average Price per Square Foot: $130.88
  • Days on Market: 35
  • Listings: 118
  • Airbnb Occupancy Rate: 62.99%
  • Airbnb Rental Income: $2770.18
  • Airbnb Daily Rate: $175
  • Airbnb Cash-on-Cash Return: 6.92%
  • Price-to-Rent Ratio: 7.89 (low)
  • Walk Score: 30.4

Despite the low price-to-rent ratio, Abilene is still a great moneymaker for investors with a 62.99% occupancy rate that offers more than $2,700 worth of monthly rental income. Tourists and history buffs flock to it for its museums and top-notch attractions.  

2. Boerne, Bexar

  • Median Property Price: $887,297
  • Average Price per Square Foot: $266.85
  • Days on Market: 78
  • Listings: 115
  • Airbnb Occupancy Rate: 48.82%
  • Airbnb Rental Income: $3761.66
  • Airbnb Daily Rate: $242
  • Airbnb Cash-on-Cash Return: 2.79%
  • Price-to-Rent Ratio: 19.66 (medium)
  • Walk Score: 71

Boerne makes another appearance on this list as one of the most profitable cities for short-term rentals. Even if the price-to-rent ratio swings in favor of traditional rentals in the city, its short-term rental game is not far behind with an almost 50% occupancy rate and a 2.79% cash-on-cash return, which makes it among the best locations in TX for real estate investors. 

3. Ennis, Ellis

  • Median Property Price: $498,533
  • Average Price per Square Foot: $193.09
  • Days on Market: NA
  • Listings: 10
  • Airbnb Occupancy Rate: 71.89%
  • Airbnb Rental Income: $5,818.9
  • Airbnb Daily Rate: $218
  • Airbnb Cash-on-Cash Return: 7.83%
  • Price-to-Rent Ratio: 7.14 (low)
  • Walk Score: 78

Ennis is one of the top Airbnb rental income generators in the entire state of Texas, with a whopping $5,818.90 monthly income at a near 72% occupancy rate with a cash-on-cash return of 7.83%. With numbers like that, it only makes sense for investors to want a piece of the action.

4. Fredericksburg, Gillespie

  • Median Property Price: $851,905
  • Average Price per Square Foot: $404.61
  • Days on Market: 133
  • Listings: 581
  • Airbnb Occupancy Rate: 51.98%
  • Airbnb Rental Income: $4,388.39
  • Airbnb Daily Rate: $284
  • Airbnb Cash-on-Cash Return: 3.79%
  • Price-to-Rent Ratio: 16.18 (medium)
  • Walk Score: 69

Fredericksburg in Gillespie county is the heart of the Texan wine industry and has an outstanding tourism industry, even amid a pandemic. An investor is most likely to get a good return on investment when they set up shop in this unassuming city. 

5. Marfa, Presidio

  • Median Property Price: $645,308
  • Average Price per Square Foot: $326.41
  • Days on Market: 137
  • Listings: 117
  • Airbnb Occupancy Rate: 52.19%
  • Airbnb Rental Income: $3,094.43
  • Airbnb Daily Rate: $199
  • Airbnb Cash-on-Cash Return: 2.93%
  • Price-to-Rent Ratio: 17.38 (medium)
  • Walk Score: 60

Known internationally for its art and culture, Marfa attracts all tourists from all walks of life year in and year out making it one of the best rental markets in Texas. The town’s population may be small but its tourism is soaring which makes it a lucrative town for real estate buyers to invest in. 

6. South Padre Island, Cameron

  • Median Property Price: $814,099
  • Average Price per Square Foot: $414.38
  • Days on Market: 62
  • Listings: 343
  • Airbnb Occupancy Rate: 50.91%
  • Airbnb Rental Income: $3,284.15
  • Airbnb Daily Rate: $229
  • Airbnb Cash-on-Cash Return: 1.88%
  • Price-to-Rent Ratio: 20.66 (high)
  • Walk Score: 51

Known for its white sandy beaches, South Padre Island isn’t just a popular spring break destination but also a great place for families on vacation. 

For investors who want to invest in other states for short-term rentals, click on this link for 100 of the best short-term rental markets in the US today. 

Finding Rental Property in Texas

To find the best rental markets in Texas, real estate investors should perform their due diligence to make sure they make the smartest decisions. However, even if you were able to determine the best rental market in Texas but don’t have a sound investment strategy, the business venture will very likely end up a major flop and a huge disappointment. 

Aside from working hard, they should also learn how to work smart and leverage technology to assist them in their search for the most profitable rental property not just in Texas but all over the US, too. 

This is where Mashvisor comes in. We specialize in analyzing data that help determine a certain listed property’s profitability. Using our platform allows investors to access important and accurate data in a matter of minutes with tools like: 

  • Property Finder which helps investors look for listed properties in a particular area;
  • Real Estate Heatmap which shows the greens (highs) and reds (lows) of listing prices, rental income, cash-on-cash returns, and occupancy rates; 
  • Investment Property Analytics which helps investors find the most lucrative rental properties using accurate and up-to-date data; and 
  • Short-Term Rental Calculator helps crunch the numbers to determine a property’s profitability. 

Investing in the best rental markets in Texas requires plenty of research and preparation. We at Mashvisor are here to help you locate the most profitable properties that align with your goals. Start your free trial now and get 15% off on your subscription.




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