Texas Rental Portfolio Guide
What you need to know before building or growing a rental portfolio in Texas — property tax burden, state income tax, security-deposit rule, source-of-income law, and the metros that actually cash-flow after accounting for local taxes.
Tax burden on Texas rentals
Property tax
1.68%
effective rate on median home value
At 1.68% effective, this is one of the highest property tax burdens in the country (rank 46 of 51). Every underwrite needs to account for the full carrying cost — even a strong rent-to-price ratio can go negative once property tax is properly modeled.
State income tax
None
top marginal rate
No state income tax means rental income and gains from sales flow through your federal return without a state surcharge. This is a structural tailwind for long-term portfolio compounding, especially if you plan to sell into gains later.
Security deposit rule
No statutory cap on security deposits. Landlords set the deposit at whatever the market accepts — typically one to two months' rent, sometimes more for higher-risk applicants or pets. Local ordinances may still apply.
Deposit rules change; verify current statute before drafting a lease.
Best cash-flow markets in Texas
Modeled monthly cash flow on a median-priced single-family purchase at 20% down, 30-year fixed, using Texas’s 1.68% effective property tax rate plus 25% of rent for insurance, maintenance, vacancy and management.
| Market | Median price | Median rent | Annual property tax | CF / month |
|---|---|---|---|---|
| Big Spring, TX | $150,742 | $1,340 | $2,532 | $4 |
| Snyder, TX | $150,206 | $1,300 | $2,523 | $-23 |
| Kingsville, TX | $150,547 | $1,257 | $2,529 | $-57 |
| Plainview, TX | $121,114 | $981 | $2,035 | $-69 |
| Abilene, TX | $217,009 | $1,827 | $3,646 | $-71 |
| Borger, TX | $125,351 | $1,000 | $2,106 | $-83 |
State median across the metros: $228,743 home, $1,364 rent, $-576/mo modeled cash flow.
Track your Texas rental portfolio
The Pro Portfolio Tracker rolls up every property in your portfolio, auto-revalues them monthly against local price data, and flags DSCR risk and equity milestones. Each Texas property carries the state-specific tax burden shown above through to the cash flow calculation.
Property tax rate: Tax Foundation. Security deposit rule: state statute. Verify current law before making decisions — statutes change and this page is a planning reference, not legal or tax advice.