And if Texas were a country, it would have the 12th largest economy in the world, ahead of Russia, Mexico and India. But Texas isn't sitting back and letting its resource sector do all of the heavy lifting.
The state's government is actively transforming Texas into a hub of commerce and business activity.
With no corporate or personal income taxes, as well as no goods-in-transit tax, it's little wonder why Texas is home to more Fortune 500 companies than any other state in the U.S. This pro-business environment has stimulated a number of positive ripple effects throughout the state's economy.
For one, it's fuelled the creation of more than 1.2 million jobs in the past five years, and, in 2009, roughly half of all the jobs created in the U.S. were in Texas. This has led to massive in-migration, particularly from the cold and less business-friendly states of the northeast.
Today, Texas has the largest population growth rate of any state in the U.S. and is growing by more than 1,000 people a day. But the majority of these migrants aren't planning on tending to the more than 16 million cattle in the Lone Star State.
Instead, they're heading to major urban areas, where 82.5% of the population lives. In fact, the Dallas-Fort Worth Metroplex is the fastest growing metropolitan area in the U.S., while San Antonio, Houston and Austin were all among the top 10 growing American cities.
For some perspective, the Houston metro area and the Dallas-Fort Worth Metroplex individually have more residents than the entire state of Arizona, as well as 31 other states.
The majority of the state's roughly 25 million population lives within 200 miles of Austin in what the Federal Reserve has termed a megalopolis, but Texans refer to as the "Texaplex."
The Texaplex forms a triangle on a map, with San Antonio and Houston at the base and Dallas at the point. This area is home to four out of five Texans, or roughly 18 million of the state's residents, and it's growing fast. In fact, forecasts show that the area will grow by another 14 million people by 2030. That's the equivalent of adding another Dallas-Fort Worth Metropolitan area, Houston metropolitan area and Austin metropolitan area to the current population of Texas.
Texas shouldn't have trouble absorbing this influx of population growth given its size. Texas is 267,339 square miles, or 7.4% of the U.S. That's bigger than New England, New York, Pennsylvania, Ohio and Illinois combined.
Finding the right plan
Texas did take a hit, like any other state during the recession, but it was less dramatic than in other areas of the country, says Stephen Preston, of Tax Liens Tours, based in Calgary, Alta., adding that he believes much of the pain in the housing market is over.
"There are many markets in Texas where property values are currently on the rise. We may see a slight decline in some of the markets by a few points, but we expect stabilization soon in these markets and then a general steady upward trend as more jobs are created, and the demand for housing increases," he says.
While there are many opportunities for investing in competitively priced properties, Preston prefers to maximize his return by purchasing tax-lien homes. He says that he and some of his colleagues have even bought homes for as little as 10% of their value.
And the best part about this strategy, Preston says, is that once an investor purchases a tax-lien certificate, the property owner must pay back the amount the investor bought the certificate for with 25% interest within six months. If homeowners fail to do this, the investor then receives the deed to the property free and clear.
"It's a two-pronged approach either you're going to get a 25% return on your money or you're going to acquire a property for pennies on the dollar free and clear with no mortgage ... So you can get very good cash-flowing properties this way."
Striking a well of cash flow
For investors who do buy properties in Texas using a tax-lien strategy, they can obviously flip it for a quick return or hold it for long-term cash flow. If investors are looking to flip homes, Preston suggests they keep the property underpriced so they can sell it quickly.
For example, if an investor acquired a property for 40 cents on the dollar, Preston suggests, not getting greedy, and selling it for 80 to 90 cents on the dollar.
But a buy-and-hold approach to Texas investing may just be investors' best bet, especially since home prices in most Canadian markets are maxed out. "Properties in Houston will cash flow a few hundred dollars or more where a more expensive Canadian property would cash flow under US$100," Preston says.
While many Canadians remain concerned, wrongly or rightly, that the sputtering American market may falter further, sending home prices back down, Preston isn't that worried.
"We're not too concerned where house prices are going. As long as we're getting really good cash flow, we still can make a considerable amount of money in the property."
For those who may be interested, Preston says the key is don't wait until it's too late. "I recommend buying while the economic fundamentals are there but when not a whole lot of people are buying because they're holding back waiting for a clear sign that the economy has turned around and by that time we will already own a ton of properties in Texas, and we'll be happy to sell them to them at full value."
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Texas's economic might is only increasing. This resource-rich state - the fifth largest producer of oil and gas in the world - has been the No. 1 exporting state in the U.S. for six consecutive years.