Texas Real Estate for Foreign Investors
No state income tax, fastest growing markets, and zero residency restrictions. Texas is the #3 destination for foreign real estate buyers.
0%
State Income Tax
On rental income & gains
$350K
Median Price
Statewide average
#3
Foreign Buyers
After FL and CA
10%
Market Share
Of foreign purchases
Texas Markets for Foreign Buyers
Four major metros offer different investment profiles for international buyers.
Houston Metro
Energy capital of the world
- The Woodlands: $400K-$1M+
- Sugar Land: $350K-$700K
- Katy: $300K-$600K
- Downtown: $250K-$500K
Median Price
$340,000
Austin Metro
Tech boom capital
- Downtown: $400K-$1M+
- Round Rock: $400K-$600K
- Cedar Park: $350K-$500K
- Dripping Springs: $500K-$2M
Median Price
$450,000
Dallas-Fort Worth
Corporate relocation hub
- Plano: $400K-$800K
- Frisco: $450K-$900K
- Dallas Uptown: $350K-$700K
- Arlington: $250K-$400K
Median Price
$380,000
San Antonio Metro
Most affordable major metro
- Stone Oak: $350K-$600K
- Alamo Heights: $500K-$1M+
- Downtown: $250K-$500K
- New Braunfels: $300K-$500K
Median Price
$280,000
Austin experienced rapid appreciation (80%+ from 2020-2022) followed by correction. Focus on cash flow rather than speculation.
The Texas Tax Advantage: No State Income Tax
Texas is one of only nine states with no state income tax, making it highly attractive for real estate investors.
What No State Income Tax Means
- Rental income: Only federal taxes apply
- Capital gains: No state tax when you sell
- Business income: No tax on LLC distributions
- Salary: No state tax if you move to Texas
Comparison: Texas vs California
- $50K rental income in CA: ~$5,000-$6,000 state tax
- $50K rental income in TX: $0 state tax
- 10-year savings: $50,000-$60,000+
- Capital gains: 13.3% in CA vs 0% in TX
For most foreign investors, Texas's no-income-tax structure is beneficial despite higher property taxes.
Property Taxes: The Trade-Off
Texas compensates for no income tax with higher property taxes:
| Tax Type | Texas | California |
|---|---|---|
| State Income Tax | 0% | Up to 13.3% |
| Property Tax Rate | ~1.8% | ~1.1% |
| On $400K property | ~$7,200/year | ~$4,400/year |
- Average effective rate: 1.8% of assessed value
- Higher than national average of 1.1%
- No homestead exemption for foreign investors
- Reassessment can increase annually (no Prop 13 cap like California)
Franchise Tax for LLCs
- 0.375% of Texas revenue for retail/wholesale
- 0.75% for other businesses
- Real estate rental LLCs typically qualify for 0.375% or exemption
- First $1.23 million in revenue is exempt
Texas Population Growth
Texas adds approximately 1,000 new residents per day:
| Metro | 2020 | 2024 | Growth |
|---|---|---|---|
| Dallas-Fort Worth | 7.6M | 8.1M | +6.6% |
| Houston | 7.1M | 7.5M | +5.6% |
| Austin | 2.3M | 2.6M | +13% |
| San Antonio | 2.6M | 2.8M | +7.7% |
Corporate Relocations Driving Growth
Major companies have moved headquarters or expanded significantly in Texas:
Headquarters Moved to Austin
- Tesla - from California
- Oracle - from California
- Apple - $1 billion campus
Moved to Dallas Area
- Toyota - North American HQ in Plano
- CBRE - headquarters
- AT&T - headquarters in Dallas
Moved to Houston
- Hewlett Packard Enterprise
- Energy sector expansion
- Healthcare sector growth
Texas Purchase Process
Texas has a straightforward purchase process with unique aspects for international buyers.
STEP 1
Get pre-approved for financing (or verify cash funds)
STEP 2
Find a property with buyer's agent
STEP 3
Submit offer using Texas Real Estate Commission contract
STEP 4
Earnest money deposit (typically 1-3% of purchase price)
STEP 5
Inspection and option period (7-14 days)
STEP 6
Title search and survey
STEP 7
Close with title company (30-45 days total)
Unique Texas Features
Option Period
- Pay $100-$500 for termination right
- Can cancel for any reason
- Time for inspections and due diligence
No Attorney Required
- Title companies handle closings
- I recommend legal review for foreign buyers
- Survey required (~$400-$600)
FIRPTA in Texas
Texas follows standard federal FIRPTA rules:
- 15% withholding on gross sale price for foreign sellers
- No additional state withholding (unlike California)
- Texas title companies are experienced with foreign transactions
No state income tax means no state withholding on sale - only federal FIRPTA applies.
Mexican Buyers: Cross-Border Investment
Mexico is consistently a top source country for Texas real estate buyers. The close proximity and cultural ties make Texas particularly attractive.
Why Mexican Buyers Choose Texas
- Geographic proximity (drive from Monterrey)
- Spanish widely spoken
- Safety and stability
- USD asset diversification
- Education opportunities for children
Popular Areas
- San Antonio - closest major city
- Houston - energy sector connections
- McAllen/Rio Grande Valley
- Austin - tech opportunities
Legal Considerations
- B-1/B-2 tourist visa sufficient for closing
- Document source of funds carefully
- May have Mexican reporting requirements
- Easy border crossing for property visits
Mexico has an E-2 treaty with the US. If you plan to start a business in Texas (not just passive property), you may qualify for an E-2 investor visa.
Texas Real Estate FAQ
Which Texas city is best for investment?
Houston offers the best value and steady appreciation. Austin has tech growth but is pricier and more volatile. Dallas-Fort Worth offers corporate stability. San Antonio is most affordable. The best choice depends on your budget and risk tolerance.
How do Texas property taxes compare over time?
Texas property taxes can increase annually based on assessed value growth. Unlike California's Prop 13, there is no cap on assessment increases. Budget for potential tax increases when calculating cash flow projections.
Can I manage Texas property from abroad?
Yes, property management companies are widely available in all major Texas metros. Expect to pay 8-10% of rental income for single-family management, less for multi-family.
Is Texas prone to natural disasters?
Houston has significant flood risk (Hurricane Harvey 2017). Coastal areas face hurricane exposure. Tornadoes can occur statewide. Ensure adequate insurance and check flood maps before purchasing. Dallas and Austin have less flood risk than Houston.
Should I form a Texas LLC or out-of-state LLC?
Either works. A Texas LLC offers simplicity since you will need to register any out-of-state LLC in Texas anyway. Wyoming or Delaware LLCs offer more privacy.
What are HOA fees like in Texas?
HOA fees are common in Texas master-planned communities and can range from $100-$500/month. Some areas have mandatory HOAs with significant fees. Always factor HOA dues into cash flow calculations.