Why savvy multifamily investors are turning to Texas’s secondary markets
For years, Texas’s major metros — Dallas, Austin, Houston, and San Antonio — have been hotbeds for multifamily investment. But today’s sharpest investors are looking beyond the urban core to secondary and tertiary markets, where deals are less crowded, pricing is more attractive, and cash flow is stronger.
If you’re considering expanding your multifamily portfolio, here’s why Texas’s smaller markets should be on your radar.
Stronger cash flow, less volatility
In primary markets, cap rate compression has made it harder to generate strong returns. Meanwhile, in secondary and tertiary markets, properties trade at higher cap rates, meaning your cash flow is healthier from day one.
Take West Texas, for example. Markets like Lubbock, Midland, and Amarillo offer stable rent growth, high occupancy rates, and lower acquisition costs compared to their big-city counterparts. These markets may not see the meteoric appreciation of an Austin high-rise, but they also don’t see the same volatility when the market turns. Investors who prioritize steady returns over speculative value jumps are finding a sweet spot in Texas’s smaller cities.
Growing Demand for Workforce Housing
As the cost of living skyrockets in major metros, Texas’s workforce is seeking affordability in secondary markets. Employers, too, are following this trend, relocating or expanding to areas where wages go further and housing is more accessible. This shift is fueling demand for well-positioned workforce housing, making it an attractive investment category.
We’ve worked with investors who acquired 1970s- and 1980s-built properties in these markets and, with strategic value-add improvements, saw rent growth outpace initial underwriting. That’s because demand is strong, competition is lower, and the right repositioning can unlock significant upside.
The Advantage of Less Competition
Multifamily investment in major metros is often a bidding war. Institutional capital, REITs, and large private equity firms drive up pricing, making it tough for individual investors to compete. In secondary and tertiary markets, however, fewer institutional players mean greater access to deals at fair pricing.
We routinely uncover properties in these markets that fly under the radar of large firms but offer exceptional value for investors who know how to evaluate them properly. The key is understanding local market drivers — something we specialize in through our deep market research and firsthand experience.
More Predictable Rent Growth and Stability
Texas’s smaller markets don’t make national headlines, but their fundamentals are strong. Job markets in cities like Waco, Tyler, and Abilene are fueled by education, healthcare, energy, and manufacturing—industries that provide economic stability through market cycles. Rent growth in these areas is steady, and tenant retention is often higher, leading to more predictable cash flow.
How to succeed in Texas’s secondary markets
Success in these markets requires a different approach than investing in a primary metro. Here’s what we’ve learned from closing more than $1 billion in multifamily transactions:
Know Your Market Inside and Out – Secondary markets have unique dynamics that aren’t always captured in national data. Local expertise is crucial for accurate underwriting and identifying hidden value.
Position Your Asset for Success – Value-add renovations should be tailored to tenant demand, not just broad market trends. We help investors pinpoint where to invest capital for the highest ROI.
Work with the Right Network – Buying or selling in these markets requires strong local connections. We’ve built relationships with local lenders, property managers, and contractors to help investors move quickly and efficiently.
Ready to explore Texas’s next great investment markets?
Investing in secondary and tertiary markets isn’t about chasing the latest trend—it’s about recognizing the real opportunities where others aren’t looking. With the right strategy, these markets offer investors better cash flow, less competition, and strong long-term fundamentals.
If you’re ready to explore opportunities in Texas’s secondary markets, let’s talk. We’ll help you identify, evaluate, and execute on the right deals to grow your portfolio with confidence.
