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Is Buying Land in Texas a Good Investment?

You’ve probably heard the old adage that buying land is never a bad investment.  In light of recent events and the changes in our economy, you’re probably asking yourself if that is still true. Is buying land in Texas still a good investment?

Buying land in Texas is an excellent investment.  Recent economic changes have caused land values to drop, while future projections show increased movement into this region.  This combination leads to a very high probability that land values will increase substantially over the next 5-10 years.

Mark Twain offered this sage investment advice, “Buy land; they’re not making it anymore.”  That statement remains as accurate today as it did in his time.  Land is one of those things that everyone wants.  It is an integral part of the American Dream. As such, land tends to gain value over time, while not being subject to the depreciation so many other potential investments offer.  Land may be the closest thing to a “perfect” investment opportunity, and Texas is ripe for the times.

What Makes Land a Good Investment?

Land is excellent for investment for many, many reasons. Here are the top 5 reasons investing in land is an excellent decision, whether it’s to build your own home or hold for your portfolio.

  1. Land is a finite resource. We’ve already discussed this a bit, but simply put…they aren’t making anymore. Anytime something is limited, it automatically has more value.
  2. Land gives you peace of mind. There is nothing that has to be done when you own land.  It can’t be stolen or destroyed, and there is nothing to maintain.  It simply sits and waits for you.
  3. Land investing is a low competition area.  Most real estate investors tend to focus on home or renovation investments.  Comparably speaking, land investment has a much lower competition level, meaning less risk of being outbid or having prices drive up due to a bidding war.
  4. Land is inexpensive to own. No maintenance, no utility bills, no renovations.  Other than necessary taxes, there is almost no outlay when holding land.
  5. Land is long-term.  Primarily for the investor, the ability to purchase inexpensive land on the outer fringes of metropolitan areas and hold it and let the city come to you is one of the easiest ways to turn a profit. 

Why is Buying Land in Texas a Good Investment?

The secret to good land investment is to find a location with reasonable land prices, an excellent potential for growth (which means high demand), and a strong economy.  This is our perfect trifecta.  Let’s see how Texas stacks up:

Reasonable Land Prices

The fastest-growing metropolitan areas in Texas are:

  1. Dallas
  2. Ft. Worth
  3. Houston
  4. San Antonio
  5. Corpus Christi

These are the areas land will increase in value fastest, so these areas are where you want to be looking.  To keep all comparisons equal, we will focus only on information from Zillow.  Remember, just like with homes, the prices will vary depending on location or neighborhood.

Dallas, TX425 vacant land or lot options in the Dallas area alone.  Prices range from $5,000 for a 1,7425 square feet lot up to $4.5 million for a 16.57-acre parcel. 
Fort Worth, TX308 results for vacant land listings in the Ft. Worth area.  Prices range from $10,000 for 3,097 square feet lot to $3.5 million for 42 acres.
Houston, TX1,571 vacant land or lot listings in the Houston area.  Prices range from $7,320 for 9,748 square feet lot to $15 million for 113.4 acres.
San Antonio, TX557 vacant land or lot listings showing in the San Antonio area. Prices range from $8,000 for a 4,791 square feet lot up to about $3 million for 47.6 acres.
Corpus Christi, TXJust over 300 vacant land or lot listings in the Corpus Christi area. Prices range from $10,000 for a 7,000 square feet lot up to $4.76 million for just under 30 acres.

Great Growth Potential in Texas

According to Auction, Texas hits all the growth potential power buttons:

  • Average population growth of 15.31% since 2010
  • Great weather
  • Younger demographic
  • Low unemployment

Strong Economy in Texas

Texas has had and continues to show indications of having a strong economy, even with the recent challenges in the U.S. economy overall:

  • Economy worth approximately $1.6 trillion and growing
  • 50+ Fortune 500 companies
  • Rising housing market
  • Friendly tax laws

Final Thoughts

As with any investment, the goal of land investment is to buy low and sell high.  When you can find a combination of relatively inexpensive land, in an area with clear past and anticipated future growth and a strongly growing economy, this is land you want to invest in.

Take the time to research the various neighborhoods in the area.  Determine areas of highest growth potential.  Frequently these will NOT be the most expensive areas, but rather the lower-priced neighborhoods.  As housing continues to increase, the value of your vacant land also increases.

Generally speaking, you want to buy in areas that have either (a) appreciated significantly in the past year or (b) lie on the outskirts of a growing metropolis.  In the former, you will be looking at a faster, yet probably smaller return on investment.  With the latter, your payoff may take a little more time, but you will get a more substantial yield. 

As always, with investment, the choice is yours.  What you won’t have is a considerable outlay while waiting for the appreciation to occur naturally.

Interested in investing in a home instead? Check out our article on whether it’s worth buying a house in Texas!

By Lah

My vision in the mortgage industry is to NOT be just another application emailed to any borrowers. I want my clients to know I'm here for them even after they get approved for their home loan.

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