Buyer Resources
~13 min read · Financing, returns, and Central Texas market context
Central Texas has attracted property investors for decades, with sustained military demand in the Killeen-Fort Hood corridor, state-government stability in Austin, and a growing healthcare and education base in Waco and Temple. This overview covers the fundamentals every first-time investor should understand before making an offer: property types, financing constraints, how to measure returns, and the local factors that make a deal here different from the national averages you see in investing podcasts.
Focus
Cash flow, leverage, and local demand
Watch for
Property tax, insurance, and reserves
Best fit
Investors who underwrite before they tour
Property Types
🏠
Best for: First-time investors, military-area markets
Advantages
Considerations
🏘️
Best for: Investors who want to house-hack or scale
Advantages
Considerations
🛋️
Best for: High-traffic areas with favorable STR ordinances
Advantages
Considerations
Financing
Investment property loans are not the same as primary residence loans. Expect higher requirements across the board — but also understand that local lenders with Central Texas investment experience can be more flexible than national retail banks.
| Factor | Primary Residence | Investment Property |
|---|---|---|
| Minimum down payment | 3–5% (conventional) | 15–25% (typically 20% for SFR) |
| Interest rate premium | Base rate | +0.50% to +1.25% above primary rate |
| Reserves required | 2 months PITI | 3–6 months PITI per property owned |
| Debt-to-income (DTI) | Up to 50% with strong compensating factors | Lenders often prefer ≤ 43% |
| Rental income counting | N/A | 75% of lease rent counted (vacancy factor) |
| VA loan eligibility | Yes (on primary) | Only if owner-occupying one unit (multi-family) |
| Seasoning for refi | N/A | 6–12 months typically required for cash-out refi |
Return Metrics
📊
NOI ÷ Purchase Price
e.g. $15,600 NOI ÷ $200,000 = 7.8%
Use for comparing properties independent of financing. Central Texas SFR cap rates typically range 5–8% depending on market and condition.
💵
Annual Pre-Tax Cash Flow ÷ Total Cash Invested
e.g. $4,800 cash flow ÷ $50,000 invested = 9.6%
Accounts for financing. More relevant for leveraged investors. 8–12% CoC is a solid target in this market.
✖️
Purchase Price ÷ Annual Gross Rent
e.g. $200,000 ÷ $18,000 = 11.1× GRM
Quick filter metric. Lower is better. Below 12× is generally worth underwriting in Central Texas.
🧮
Gross Rent – Vacancy – Operating Expenses
e.g. $1,800/mo rent – $90 vacancy – $690 expenses = $1,020/mo
Does NOT include mortgage. This is the property's core earning power before financing.
🏦
NOI ÷ Annual Mortgage Payment
e.g. $12,240 NOI ÷ $10,200 mortgage = 1.20 DSCR
Lenders typically require ≥ 1.20. Below 1.0 means the property doesn't cover its own mortgage from rent.
⚡
Monthly Rent ≥ 1% of Purchase Price
e.g. $200,000 × 1% = $2,000/mo rent minimum
A market heuristic, not a guarantee of profit. Useful for rapid filtering. Increasingly hard to achieve in appreciating markets.
Local Market Context
Whether you're looking at a single-family rental in Killeen, a duplex near Baylor, or a longer-term appreciation play near Austin, the right strategy depends on your goals and timeline. Let's talk through the numbers.