Renting out a property in Killeen, Texas is a great idea for investors who are hoping to earn stable and consistent rents while their investments appreciate in value over the long term. Texas communities such as Killeen are seeing a population surge, and that’s creating a larger tenant pool and more demand for high-quality rental homes. The strong military presence in and around Killeen, particularly Fort Cavasos, also helps keep the rental market strong. Rising interest rates make mortgages more expensive, which means more people are choosing to rent for a bit longer, contributing to the high demand and low inventory when it comes to Killeen rental properties.
We’re talking about the state of the Killeen rental market, which is important to investors who currently own rental properties as well as investors who are considering a new acquisition. You’ll want to know where the rental values are falling, what the tenants are looking for, and how to leverage the property you have to earn more in rent, increase value, and attract the best residents.
Here’s what we can tell you.
Demand for Killeen Rental Homes
One of the reasons that the Killeen rental market is so strong and expected to stay so strong is that there are a lot of tenants looking for homes. If you have a property to rent out, you will not have to worry about vacancies or a lack of residents. If you’re thinking about investing in a property, look for a home in a good neighborhood that’s in good condition. You’ll easily attract the area’s best residents.
Renters make up 56 percent of the Killeen population, outnumbering homeowners. That gives investors a large pool of potential customers. The large (and increasing) number of tenants can be attributed to:
- Fort Cavasos Army Base keeps a steady stream of incoming military tenants.
- Homeownership being too expensive for a number of would-be buyers, keeping them in the rental market.
- Population growth. The population of Killeen has been growing steadily since 1990, with the sharpest increase in population happening between 2010 and today.
Rising interest rates are having an impact on tenant pools. For more than two years, it seemed like everyone was either buying or selling a home. Many people were doing both. The rental inventory shrunk a little bit when so many owners decided to cash out and sell their properties as those home values rose.
That trend has shifted just a bit. While the sales market in Killeen remains competitive and prices are strong, the higher interest rates are making mortgages more expensive. Because of this, there’s some hesitation among certain demographics of buyers. Some would-be homeowners are not buying right now because they believe they won’t find anything they can afford, or they don’t want to spend too much money on a home.
So, they continue to rent.
This is good news for vacancy rates and rental values. We will continue to have a strong pool of renters in Killeen, especially as a number of existing and future tenants decide against buying until it becomes more affordable and accessible.
Investors in Killeen have access to a diverse pool of tenants with stable financial histories and a good track record of maintaining rental homes. Demographically, this market is also at an advantage. There’s the military presence, which delivers a number of tenants reliably every year, and there’s also the low cost of living and high-quality life that Texas is known for. We are a growing retirement destination as well, and many people in that demographic are choosing to downsize into low-maintenance rentals. Local real estate investors and landlords are also renting to families, professionals, and tenants from almost every possible demographic and background.
Rental Values in Killeen
Rents have gone up more than 15 percent in the last two years.
This alone tells you about the state of the rental market in Killeen.
Will they peak and stabilize and stop going up? Of course. However, they’re at a comfortable level right now, and investors can expect to earn an excellent income every month. With occupancy rates high and retention rates high, you won’t have to worry about vacancy loss or turnover costs.
The rents are driving up profits for Killeen real estate investors.
Median rents right now are at about $1,000 for an apartment and $1,500 for a single-family home. These averages don’t reflect the peaks; some rental homes with lots of updates, beautiful amenities, and the right neighborhood location are bringing in rents near $2,000.
Investors have an opportunity to push their homes to the top of the rent range by making improvements, updating curb appeal, and keeping the property well-maintained.
What to Expect When You Invest in Killeen Rental Properties
Once you decide you’re ready to buy in the Killeen market because of the excellent opportunities that exist here, what can you expect as an investor? This is an introduction to what you’ll find when you begin leasing, managing, and maintaining your rental home:
- Time on Market
Vacancy days will be limited. Get your property ready for the rental market as soon as you can. After you close, have vendors lined up to make any repairs that are necessary to get it rent-ready. List it online and put a For Rent sign in the yard for anyone who may be walking or driving through the neighborhood. The property will rent quickly. Years ago, it would take a month or more to move a property from listed to rented. More expensive homes would take even longer to rent. In the current market, you’ll have interest relatively immediately, and it won’t take long for your property to be rented by a qualified tenant.
- Location Matters
Location is always important in real estate, and that includes your Killeen rental property. You’ll find that you’re able to rent your property faster and to better tenants and for more rent when you’re in one of the neighborhoods that tenants find especially desirable. This is likely to be communities like Copperas Cove, Harker Heights, Nolanville, Fort Cavasos, and anywhere in Killeen.
- Higher Maintenance Costs
We’ve painted a positive picture of the state of the current rental market in Killeen. We stand by all of it, but we also want to be realistic. While real estate investors are likely to earn more with their investments in Killeen and the surrounding areas, there will also be higher expenses, especially when it comes to maintenance and repairs. The costs of labor, materials, and supplies have risen with the costs of everything else. You’ll want to budget for maintenance to cost more than you probably anticipated. Make it a priority to put together a list of preferred vendors and contractors so you have reliable professionals at the ready when you need emergency maintenance, cosmetic work during turnovers, or emergency response.
- Growing your Portfolio
Investing in Killeen gives you a unique opportunity to grow your existing investment portfolio. It’s a great market for new investors who are buying their first rental property. It’s also a tremendous market for investors who want to add new properties to an already growing portfolio. If you live outside of the area, you can leverage any real estate that you might own elsewhere to get more for your money in Killeen. Conducting a 1031 exchange, for example, with a property from California or New York or other larger cities will give you a lot of flexibility if you buy in Killeen.
You can expect to set and reach some new investment goals when you decide to invest in Killeen rental properties.
Killeen Property Management
As you’re thinking about buying a Killeen investment property, surround yourself with experts before you get to the point where you could make an expensive mistake.
We are delivering this overview of the 2023 rental market forecast because we spend every day studying the market. We know the properties that are for sale and we know what to expect from the existing inventory. We also understand the tenant population, the rental values, and the competition that you’ll face from all the single-family homes, condos, and townhomes that are currently on the market and expected to come onto the market.
As you invest, you’ll look for real estate agents, brokers, insurance agents, and attorneys. Always partner with a local property manager, too. This is especially important if you’re investing from outside of the area. Having a local resource who can tell you what you’re likely to earn in rent, how much you’ll have to spend on maintenance, and what you’ll need to do to get the home rent-ready is invaluable.
We can provide a lot of expertise around the sales and rental markets in this region. Talk to us when you’re ready to buy. Contact our team at Shine Residential Management.
A property management company based in Harker Heights, Shine Residential Management cares for exceptional single-family homes throughout Central Texas, including in Killeen, Temple, Belton, Copperas Cove, Salado, and Georgetown.