Texas Land as Investment: Historical Returns and 2025 Outlook

Land has been a cornerstone of Texas wealth for generations. But does it still make sense as an investment in 2025? Let's look at the data, the opportunity, and the risks.

Historical Texas Land Appreciation

Long-Term Trends

Texas rural land has appreciated consistently:

• 20-year average: 5-8% annually
• Strong periods: 10-15% annually (2020-2022)
• Weak periods: 2-4% (recession years)
• Long-term trajectory: Steadily upward

Regional Variations

Not all areas perform equally: High Growth Areas (near major metros)

• Hill Country, Williamson County, Hays County
• 8-12% annual appreciation
• But: High entry prices limit upside

Steady Growth Areas (our market)

• Coleman, Brown, Runnels counties
• 5-7% annual appreciation
• Lower entry = more room for growth

Slow Growth Areas (remote regions)

• Far West Texas, Panhandle
• 3-5% annual appreciation
• Lower land quality/demand

Investment Return Analysis

Scenario: 150 Acres in Coleman County

Purchase

• Price: $600,000 ($4,000/acre)
• Closing costs: $18,000
• Total Investment: $618,000

Annual Costs

• Property taxes (with ag exemption): $600
• Maintenance/insurance: $2,000
• Annual holding cost: $2,600

Annual Income (if leased)

• Hunting lease: $1,800 (150 ac × $12)
• Net annual cost: $800

5-Year Projection (6% appreciation)

• Year 5 value: $803,000
• Total appreciation: $203,000
• Minus holding costs: -$4,000
• Net gain: $199,000 (32% return)

10-Year Projection

• Year 10 value: $1,075,000
• Total appreciation: $475,000
• Minus holding costs: -$8,000
• Net gain: $467,000 (75% return)

Income Potential Analysis

Hunting Lease Income

Most consistent income source:

• Rates: $8-20/acre depending on quality
• 150 acres: $1,200-$3,000/year
• Reliability: High—demand steady

Agricultural Lease Income

For properties with farmable acres:

• Grazing lease: $3-8/acre
• Crop share: Varies with production
• Hay: Can net $30-60/bale on shares

Short-Term Rental Income

Properties with homes/cabins:

• VRBO/Airbnb: $100-300/night
• Seasonal demand: Strong for hunting season
• Requirements: Quality accommodations, management time

Combined Income Scenario

McKamie Ranch example (154 acres, 3 homes):

• Hunting lease: $2,000
• VRBO income (seasonal): $4,000
• Total annual income: $6,000
• Property yields 1% annually + appreciation

Risk Factors to Consider

Market Risks

• Economic recession: Demand decreases, prices stagnate
• Rising interest rates: Financing costs increase, buyer pool shrinks
• Regional decline: Local economic factors matter

Property-Specific Risks

• Water issues: Drought, well failure
• Access problems: Legal disputes, road damage
• Environmental issues: Contamination discovery
• Title problems: Liens, boundary disputes

Management Risks

• Ag exemption loss: Rollback taxes if requirements not met
• Lease problems: Bad tenants, liability issues
• Maintenance neglect: Value decline without upkeep

Why Texas Land Remains Attractive

Supply Constraints

• No new land being created
• Agricultural land converting to development
• Increased demand, finite supply

Texas-Specific Advantages

• No state income tax (keeps wealth in Texas)
• Business-friendly environment (population growth)
• Strong property rights
• Diverse geography and opportunities

Inflation Hedge

• Land historically appreciates with inflation
• Hard asset vs paper investments
• Productive potential (agriculture, recreation)

Investment Strategies by Budget

Under $500,000

• Focus on smaller tracts (50-100 acres)
• Consider properties needing improvement
• Coleman County offers best value

$500,000-$1,000,000

• 100-250 acre properties
• Look for income potential
• Can access better properties

Over $1,000,000

• Larger ranches with multiple features
• Operating properties with income history
• Portfolio diversification approach

My Investment Perspective

I invest in the area I sell. I believe in:

• Coleman County's value proposition
• Long-term appreciation potential
• Quality of life benefits beyond ROI
• Land as generational wealth builder

Ready to Discuss Investment Properties?

Whether you're buying your first investment property or adding to a portfolio, I can help you evaluate opportunities in Coleman County and surrounding areas.

Call (325) 465-1342 to discuss your investment goals.