Real estate investors are always looking for the “next hot market.” They say that San Antonio, Texas, is “the way Austin was 20 years ago.” If you’ve been waiting on the sidelines to invest in the Lone Star State, here are five reasons to buy investment properties in San Antonio, the country’s seventh-largest city.
5 Reasons To Buy Investment Property in San Antonio, TX
Reason #1: A Diverse, Recession-Resistant Economy
San Antonio’s top four industries are the military, tourism, education, and healthcare. With three recession-proof sectors (only tourism is sensitive to economic downturns), real estate investing in San Antonio has caught the attention of investors.
The Military
Known as “Military City, USA,” San Antonio is home to three major bases: Fort Sam Houston, Lackland Air Force Base and Randolph Air Force Base. Together, they employ over 90,000 military and civilian personnel.
These facilities and eight other operating areas form the largest joint base operations for the Department of Defense. They house significant cybersecurity, intelligence, surveillance, and reconnaissance services. Additionally, NSA Texas/the Texas Cryptologic Center is located in northwest San Antonio.
Tourism
San Antonio hosts 30 million visitors each year, drawn by:
- The San Antonio Mission (UNESCO World Heritage Site)
- The Alamo
- The River Walk
- SeaWorld San Antonio
- Six Flags Fiesta Texas
Education
More than 160,000 students attend 15 higher education institutions within a 50-mile radius of San Antonio, including the University of Texas at San Antonio (UTSA), Texas A&M University-San Antonio, the UT Health Science Center, Texas State University, Trinity University and others.
Healthcare
The South Texas Medical Center is a significant cluster of healthcare facilities, with 45 institutions and supporting facilities, including 12 hospitals, five specialty institutions and the University of Texas Health Science Center, a leading health education center.
The San Antonio Military Medical Center at Fort Sam Houston is the largest military hospital in the United States and the only Level 1 Trauma Center, bringing in patients and their families from all over the world.
Additionally, San Antonio is home to the corporate headquarters of USAA, Valero Energy, NuStar, Whataburger, Southwest Business Corporation (SWBC), and HEB Grocery stores, which have a combined total of approximately 40,000 employees.
Reason #2: Job Growth
City planners are actively trying to diversify and expand San Antonio’s economic base into high-paying 21st-century industries that will help diversify the economy and support business startups and spin-offs. From an investor perspective, its growing job market makes investing in San Antonio real estate very attractive.
Here are some of the targeted industries:
Information Technology/Cybersecurity
San Antonio’s unique association with the military and scientific research has made it a leader in cybersecurity. This specialization creates a foundation for over 80 cybersecurity, defense companies and institutes and includes:
- Joint Base San Antonio (JBSA)
- Lackland Airforce Base, home to the 24th Air Forces Cyber (AFCYBER), part of the U.S. Cyber Command
- University of Texas at San Antonio Institute for Cyber Security (ICS)
- Southwest Regional Institute (SwRI), one of the largest applied R&D organizations in the U.S.
- NSA’s Texas Cryptologic Center
This cyber and defense technology concentration is poised to attract high-paying jobs and new spin-off industries.
Advanced Manufacturing
This category includes aerospace, auto, heavy equipment and other high-automation manufacturing.
Toyota has a major manufacturing plant that produces the Toyota Tundra, and Boeing, Standard Aero, and General Dynamics—all located in Port San Antonio—are leaders in the aerospace industry.
Biosciences and Scientific R&D
Companies like Medtronic, Becton Dickinson and Cytocentrics have major operations in San Antonio.
Clean Energy
CPS Energy is partnering with a consortium of businesses focused on solar, battery, and other power storage technologies, such as solar module manufacturer Mission Solar Energy.
Reason #3: Population Growth
The result of all this investment is that San Antonio’s population, currently at 2.6M for the metro area (MSA), is expected to grow by 1.2M by 2040, according to the Texas Demographic Center. Most expect San Antonio and Austin to merge into one large metroplex, like Dallas-Ft Worth.
Macrotrends.net shows the historical and projected population growth just for San Antonio proper (not including the surrounding metro area) and it’s impressive:
Image Source: Macrotrends
When a population grows, so does its demand for housing, which usually results in higher rents and property values. The city’s recession-proof sectors, job growth, and population growth, are all good indicators of investment properties in San Antonio delivering on your return on investment.
Reason #4: Appreciation
Zillow’s Single Family Home Value Index shows how San Antonio home prices have doubled in the last seven years alone, dampened only slightly by the recent rise in interest rates.
Image Source: Zillow.com
Job and population growth increase the demand for housing, so it’s no surprise that property values have increased. This trend is poised to continue into the foreseeable future. If you are looking for an appreciation market, investment property in San Antonio fits the bill.
Reason #5: Landlord Friendly Laws
Texas has some of the most favorable landlord-tenant laws in the nation and consistently ranks in the top 10 for landlord-friendly states. It favors landlords’ rights regarding security deposits and eviction notices and has no rent control laws.
Bonus Reason! Property Taxes May be Reduced
The Governor and Legislature of Texas have approved a reduction of property taxes that will average approximately $1,200 per property per year. The initiative is on the ballot for the November election and would be retroactive to all of 2023 if approved by voters. It remains to be seen whether the tax break applies only to owner-occupants or rental properties owned by out-of-state investors. If it does apply to rental properties, that would be the icing on the cake.
How RealWealth Can Help You Find Investment Properties in San Antonio
Looking for investment properties in San Antonio, Texas? Become a RealWealth member to connect with the San Antonio property team and view their off-market turnkey inventory of single-family and multi-family investment properties. To see properties and pro formas, join RealWealth today!
