Why is Trey's business Houston-centric?


Host- Trey Stone

Co-Host- Bobby Duncan

Topic- Location


Why Trey Stone’s Business is Houston-centric


A recent Yahoo Finance article addressed how businesses and people are essentially leaving high cost states in America for more economically beneficial “pastures”- they are headed to places like Texas. Ari Rastegar, founder of Rastegar Property Company- an Austin based real estate investment firm- says “the inside joke in their office is that California and New York are the land of the “flee” and Texas is the land of the free.”

Even Elon Musk is building a Tesla headquarters in Austin, Texas. Trey Stone explains that it’s a losing proposition to build a business in states like California & New York for a lot of people. There’s the exception of, if you’re in finance and you’re a trader or investment banker then you should be somewhere where there’s an exchange so New York, Chicago, Tokyo, London make sense for those industries. But for many businesses, especially looking at the way some of these cities are handling Coronavirus, it’s much more impossible to see building a business in those places in the long run.

Some business are simply saying, we are not going to rebuild and we are not going to re-open in those cities. This may be partially to influence local politicians to be less restrictive. In a lot of the red states, they see constantly in the news what's going on in democrat controlled cities and states as something of a function of what those political beliefs are and that’s reverberating throughout the business community. This is causing an even bigger shift out of those high cost cities in America.


“Now it’s clear that we’re very fortunate and we’re very blessed to be doing business in Texas.” Trey Stone


Trey Stone is based in Houston, Texas and sings its praises for a welcoming place for business.

Texas has some of the friendliest laws, some of the most pro-business people in office, and he personally hopes it stays that way. Trey explains that there are so many vibrant industries in Houston- it has an expansive medical community, it has the number one port in the US by import/export tonnage, technology firms are growing in the area, energy-related businesses that aren’t quite old school are expanding in Houston, liquid natural gas is a thriving industry- all leading to growth in jobs and housing. Houston is seeing benefits from the population growth. People are moving there from all over the world and it’s now the most diverse city in America.

Landlords Have a Unique Advantage in Houston vs. Other Cities


  • Houston Tax Structure
  • Houston is an amazing place to do business because the laws, in particular the tax laws, are so business-friendly.
      • There are no city and no state taxes in Houston or in the state of Texas. This helps with employees and staff.
  • Mild Climate
  • Houston doesn’t have months of snow or any risk of being snowed-in for an extended period of time.
      • Houston has a favorable climate for residents
  • Forgiving Market
  • Over the years of real estate investing, Trey found that out of all of his properties across 9 states in his portfolio the Houston properties were performing better. 
      • He attributes some of that high performance to the Houston market. It is more forgiving in Houston than in other places. That’s important because in business you never know what the next curve ball is going to be.
  • Low Cost of Living
      • Helps retain renters
  • Diverse Economy
      • Not just oil and gas- medical industry, technology, pharma, port, and new companies like Tesla is coming to Texas
  • Opportunity for Higher Rent
  • The growth, value, equity, and the demand in Houston leads to higher rents.
  • Effective Screening
  •  It’s easy to minimize turnover in Houston because of the ability to effectively screen renters. 
  • The type of screening available in Houston is not available in every state which is a huge incentive for landlords. 
  • Zoning Laws
    • There are no zoning laws in Houston


“We’re awful lucky to be real estate owners here in Houston.” Trey Stone

The Value of These Advantages

New investors may think that as the owner, you control everything- the underwriting of the deal, the rents, the renovations, etc.  A common misconception is that as the owner, all those things are going to be 99% of the result and that responsibility rests with you. In fact, a huge determinate of the success of your business are the people that you have working for you: the property manager, the assistant manager, the leasing director, the leasing agents, the lead maintenance, the assistant lead maintenance, maintenance technicians, the porters, housekeepers, carpenters, and different on-site positions. Those on-site people as well as the people at the corporate level impact your business. They determine your success or failure because you can’t be at all of your properties all of the time. The  more properties you buy, the more true that is. In the context of taxes- when a person comes to work for you in Houston they find out there’s a low cost of living, there’s a good climate where you can live comfortably, and money goes further because paychecks don’t have city & state level deductions on top of the federal deductions. This is beneficial not only because it is helpful to your employees but also to the renters. They keep more of their paychecks and can spend more with you. 


You need to be concerned as an owner about whether you’re doing business in a place that is affordable and that has good tax treatment, meaning- less taxes out of the check for the people who have to pay you rent every month and for the people who have to work there. As a business owner, whether you know it or not, you’re in a competition for talent at all times. To have a tax structure that can make their dollars go further allows you to have better people than if you were to re-open the same business in an area that is massively taxed, with inclement weather with a high cost of living. That’s why we’re seeing the exodus from places like New York City. We’ve been seeing it long before Coronavirus, this has just sped it up to the point where people are noticing a bit more.


Zoning Laws in Houston


Houston has no zoning laws. Trey sees it as an advantage because he and his partners are able to go into areas that normally you wouldn't have the chance to develop an apartment complex there. It offers more affordable housing to people who need it. A lot of the properties that Trey competes with are being torn down and the uses for that land is diverse because there is no zoning. The law of supply and demand applies so the fewer competing properties, the more valuable the remaining units are and the higher the rent can be. If an older apartment complex is torn down and replaced by a new apartment complex, it no longer competes with Trey’s properties because he only invests in Class B and C properties. A new complex would immediately be a Class A property by definition. Class A properties have different sets of parameters to qualify so it will never be a direct competitor to Trey’s property type due to the two different types of renters. As a result, all of the supply is fixed or diminishing. Typically in most businesses there is no shortage of competition because there is a never ending supply. In this type of real estate investing, the supply is limited and does not continually replenish. You can’t build a class B or C property but you can tear one down. In other cities, the zoning laws require that if you tear down a type of business you have to replace it with the same type of business. In Houston, not only are they tearing down the competition but also they are re-purposing the land for something else making residents seek new units.

Proximity to Your Investments as an Owner


If someone calls in after listening to the show they go through the process to get qualified to make sure they’re a suitable investor and the next step is to come out to see the property or other properties owned by Trey. Touring the property and envisioning the business plan for the property plus seeing other properties Trey owns in the area allows you some insight into investing with Trey. Proximity to Houston and to these investments gives them a chance to truly see it. There are some investors from other states who come into a deal with Trey who don’t have the benefit of proximity. They may not have immediate access to the properties but they know that Trey does as the lead investor in that deal. Trey and his wife are out at the properties, talking to the staff, and finding out in real-time where they need to make adjustments. They also go to competing properties to see what the competition is doing. It’s hard to know what your competitors are doing and what the appropriate rent should be when you’re out of state. For Trey’s “out of state” investors, the advantage is Trey’s proximity. 


Availability of Investment Opportunities


Houston has such an abundance of apartment properties to invest in. Houston has the largest single, city-wide apartment association and it’s because they have the largest apartment market in America. Houston has a concentration of talent because of that concentration of units. This  allows for better people to run the properties and supervise the people that run the properties. This gives investors an abundance of deals to go after compared to investing in another area. If there isn’t a huge supply of apartments to invest in, you can’t cherry pick what you’re going to get. 

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