If you have extra money and you’re not sure what to do with it, one of the best avenues for investment is real estate. Why? If you own a second property, you can make a profit by turning it into a rental. However, not all real estate markets are the same.

So, how do you know where you should buy property? Start by looking at places with a high growth rate. For example, Texas has one of the hottest real estate markets because in the last five years, the population grew by over three million. That’s more growth than California or Florida.

Keep reading to dive into how to properly finance your real estate investment and what areas in Texas are best for investment opportunities:

  1. Know How You Will Finance Your Investment

The first step to achieving your real estate dreams is figuring out how you’re going to properly finance it. One way is to use a hard money loan which allows you to buy a property outright. The catch is that the rental property serves as collateral for the loan. If you default on your payments, the lender can seize the property.

With that said, it’s a faster process than applying and getting approved for a mortgage, in most cases. A hard money loan may also allow you to borrow more, as well – up to 100% of the property’s value with no requirement of a down payment.

Are you ready to jump into the rental market in the Lone Star State? Start by researching the best Texas hard money loans. Make sure you shop around and compare interest rates and terms. You’re likely to get a better deal if you have good financial health, so check up on your credit score and calculate your debt-to-income ratio to see where you stand.

In addition, if you’re planning on owning a rental property and you’ll be living out-of-state, plan on going to sites like Angie’s List to hire a reputable independent property manager. A property manager is a critical for maintaining your property and answering to any tenant needs.

Below, we’ve broken down the best areas to buy up real estate in Texas and where you’re likely to see the most return on your investment.

  1. Houston – Business, Tech, Education Hub

Okay, so you’re ready to make more money from your extra savings or you’ve just received a windfall of cash. But where should you invest? Houston and its surrounding areas is a good place to start – it’s full of real estate opportunities.

Houston currently boasts a population of over 2.2 million people and experts expect it to grow even bigger. This vibrant city is a major locus for business, technology, and education where millions work and play. Because there’s so much commercial viability and job potential in this area, the housing needs are plentiful.

As an investor, you have a variety of properties to choose from: new homes, older homes, and even commercial properties, as Houston is still under development. Tip: make sure that you stage your rental property once you’ve bought it so potential renters can imagine living there.

  1. San Antonio – Tourism Hub

San Antonio is another city in Texas that’s been experiencing major job growth over the last couple of years. Unemployment has remained low and the population is growing – two important indicators of economic health. Housing, for the most part, has stayed very affordable in the San Antonio area and investors there have reported a higher return on investment (ROI) than in other Texas cities.

Home values are increasing all of the time, so it’s a great, profitable decision to go with San Antonio for your rental property.

If you do decide to buy up property in San Antonio, take the extra step to make sure your rental is properly insured – that goes for any city, in fact. Protect yourself and your investment.

  1. Austin – College and Tourism Hub

Austin is one of the most unique cities in Texas but most importantly for potential investors, it also boasts an incredibly healthy economy. It has a low unemployment rate and the population is expected to grow in leaps in and bounds. Experts predict at least 42,000 new residents in the next five years.

Millennial, it turns out, have been flocking to Austin and make up one third of the city’s population.

There’s a high demand for housing in this craft-brewery filled city, which makes it the perfect place to have an investment property. Looking for a real estate pro to give you more insight into properties and show you different possibilities? Use the Thumbtack app on your phone to find the right pro for you.

Be Smart with Your Money and Invest Like a Pro

Like any major financial decision, it’s important to know what you’re doing when you’re deciding to invest. Whether you choose to buy a townhouse in San Antonio or a condo in Austin, buying real estate is a huge decision. If you’re new to real estate, it can be an overwhelming prospect. But by arming yourself with the right knowledge, purchasing a rental property in Texas can be a lucrative project that will make you money for years to come.