Real Estate Blog

Last week we spent some time talking about the favorable investment and business climate in Texas with an eye toward having conversations with potential partners and financiers. The goal of most of us who are in investment real estate is the next "big" deal -- no matter how you might define "big" in the context of your personal plans. One of the things I find myself hashing around with business associates is short-term versus long-term opportunity.

After several decades of "boom," the "bust" that has plagued the American economy since late 2008 has many people leery -- especially people in real estate -- and especially anyone with a mortgage. It's tremendously important in these discussions to be able to make the case for long-term investment opportunities in Texas, because it's a valid case, and one with tremendous potential ripe for the picking. (Especially now before too many people figure out the depth of that potential.)

One of the major assets this state is enjoying is population growth. Demographic projections suggest that from 2010 to 2030 we're going to see potential population growth of 12 million. The share of the U.S. population living in Texas increased from 7.4 percent in 2000 to 8.1 percent in 2009. The federal Census Bureau calculates that half a million people relocate to Texas from other states on an annual basis. (We also get about 180,000 international residents per year.)

Now, we've already discussed the fact that Austin has the fastest growing population of retired Baby Boomers in the nation, another really interesting source of new residents. The cost of living here is 15 percent under the national average. Over the next 15 years -- every single day -- 10,000 Boomers will turn 65. And they have every intention of being trailblazers in the new active, involved concept of "retirement."

About 70 percent of the heads of these relocating households have a college degree or have done college-level work. One of the reasons Boomers like Austin so much is all the continuing education opportunities and programs at UT. But even beyond that retired population, we are drawing in college graduates who, statistically, have a lower level of unemployment. Nationally college graduates face 4.3 percent unemployment compared to 14.3 percent for those with a high school diploma only.

What does this all add up to? A lot of people are coming to Texas. They are all going to need someplace to live - either Buy or Lease. They have a high educational profile, which correlates to sound employment. Jobs equal money. Money equals solid tenant base.

You don't have to have had high school algebra to see what's behind the equal sign in that equation. -- Profit for real estate investors in terms of high demand in rental property.  Or the other side of the coin, a great time to cash out of your investment.

This is not just short-term in Texas, but at least for the next decade and likely for the next two.