Everything’s big in Texas, including the foreclosure auctions.
A total of 27,324 Texas properties were scheduled for public foreclosure auction in the first 11 months of 2018, the most of any state and accounting for one in 10 scheduled foreclosure auctions nationwide, according to ATTOM Data Solutions.
Texas foreclosure auctions are on track to increase 12 percent in 2018 compared to 2017, the first annual increase since 2014 but still well below the peak of more than 126,000 scheduled foreclosure auctions in 2006. In Texas, foreclosure auctions are on the courthouse steps on the first Tuesday of each month.
“There’s not as many foreclosures as we used to have. People fly in from other states to Dallas, Austin and Houston for the day and then fly home. They show up and bid on a couple hundred properties in Texas,” said Aaron Amuchastegui, co-founder of HomeRock, LLC, who, with his support team, prepares a list of potential properties in those three metro areas to bid on every month. “The trick is having a big list when you come in. Most investors target three or four counties a month.”
With an estimated population gain of 1.34 percent in 2018, not only is Texas the home to 8.75 percent of the nation’s population, it’s also a very popular state for people to relocate, according to a state migration study published by LendingTree.
Based on the study of 2 million purchase mortgage requests, Texas is a top destination choice for people thinking about moving out of state from Colorado, New Mexico, California, Louisiana, Arkansas and Oklahoma. Texas also had the highest percentage (93.4 percent) of residents applying for a purchase mortgage who wanted to remain within the state’s borders.
Statewide unemployment, which most recently topped out at 8.3 percent between August 2009 and March 2010, has dramatically dwindled to 3.7 percent as of November 2018.
Between population growth and job growth alone, it is easy to understand why Texas has been, and continues to be, a popular place for investors looking for passive income from long-term cash flow and appreciation.
“The only downside with investing in Texas is the property taxes are really high,” said Amuchastegui. “But it is a landlord-friendly state. You can evict someone in just two to three weeks.”
With the help of data and local market experts, I’ve assessed real estate investing opportunities in the state’s five largest metro areas — Austin, Dallas, El Paso, Houston and San Antonio.
Austin: A Great Place to Work and Live
U.S. News & World Report ranked it the top place to live in the U.S. for 2018. More than just the state capital, Austin is the 11th largest city in the country. Everything considered, it is no wonder that Austin is a popular place for flipping as well as buying and holding rental properties.
Named the eighth fastest growing city in the country in 2018 by Forbes, Austin has a very stable tenant pool to draw from thanks to population growth and low unemployment, which remained at 2.7 percent in October 2018, unchanged from 2017.
The number of jobs in Austin grew by 3.88 percent during the same 12 months and is up 20.5 percent over the past five years, according to statistics provided by Dr. Ted Jones, chief economist and senior vice president at Stewart Title Guaranty Company.
In November 2018, ATTOM Data Solutions reported a 42 percent year-over-year increase in foreclosure auctions in Austin, and foreclosure auctions — which start the foreclosure process in Texas — were up 31 percent through the first 11 months of the year compared to the same period in 2017.
“A few years ago, Austin was much more affordable than the rest of the U.S. You could get more bang for your buck two to three years ago. Now investors are coming into a market that’s been booming for a couple of years,” said Amuchastegui.
While the main city centers are no longer affordable as they once were, he noted that investors who are coming in to look for bargain properties need to go 30 minutes outside of Austin’s city core to get more house for not as much money.
The median sales price for a home in the Austin metro area in Q3 2018 was $310,000, down 1.3 percent from the previous quarter but still 5.4 percent above the same quarter a year ago. In Travis County, ATTOM Data Solutions reported a median sales price of $350,000, a 5.0 percent yearly increase and up 141 percent increase from the county’s home price trough in Q1 2008.
Amuchastegui said his target price for rental properties close to the city core is $250,000 and $125,000 for those 30 minutes outside the city center.
ATTOM reported the monthly rent for a three-bedroom single-family home in Travis County rose 4 percent in 2018 to $1,812 a month for a potential annual gross rental yield of 6.3 percent.
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