I have reviewed a lot of models for this corridor. Nearly all of them get the upside roughly right and the carry badly wrong — usually by omitting it altogether, occasionally by assuming an agricultural exemption that does not survive the change of use.
Carry is not a footnote in a market where the catalyst is five to ten years out. It is often the difference between a good thesis and a bad investment.
Why the carry is unusually punishing here
Texas has no state income tax, and it funds local government substantially through ad valorem property tax. For an income-producing asset that is a manageable operating line. For raw land held speculatively it is a pure cash outflow with nothing offsetting it, every year, for as long as you hold.
Layer on financing cost if the position is levered, and opportunity cost on the equity, and the annual burden on a long hold routinely exceeds what buyers assume when they underwrite a "cheap" per-acre price.
Build the line properly
A defensible carry model for this market has four components:
- Ad valorem tax — the combined rate across every taxing jurisdiction the parcel sits in, applied to the assessed value, escalated for reassessment as the corridor develops. Note the second-order effect: if your thesis is right and values rise, your carry rises with them.
- Financing cost — raw land is financed on less favourable terms than improved property, with shorter tenors and higher rates. Model the refinancing events, not just the coupon.
- Holding and compliance costs — fencing, weed and brush control, insurance, survey, and whatever is required to maintain a special valuation if you are claiming one.
- Opportunity cost on equity — the return the same capital would have earned elsewhere over the hold. On a ten-year horizon this is usually the largest of the four and the one most often ignored.
Agricultural valuation: useful, and widely misunderstood
Texas allows qualifying land to be appraised on its productive agricultural value rather than market value, which can reduce the tax burden materially. Buyers frequently assume this solves the carry problem. Two cautions.
First, qualification depends on actual use, sustained over time, and on meeting the appraisal district's standards for the activity claimed. Buying land and letting it sit is not agricultural use.
Second, and more important for a development thesis: changing the use triggers a rollback. When land leaves agricultural valuation, the taxing authority recaptures the three preceding years with no interest, on a formula set by statute. A model that enjoys the agricultural rate for eight years and then converts to industrial without booking the rollback is not a model — it is a hope.
Confirm the current qualification standards and rollback terms with the Maverick County Appraisal District and a Texas property tax professional for any specific parcel. Rates and rules change, and they are parcel-specific.
The stress test I would run
Take your target parcel and model three holds: 2029 (the earliest published catalyst), 2032 (a realistic build-out), and 2035 (a slip of the kind this corridor has already demonstrated — the Camino Real realignment has slipped from an announced October 2024 start to a registered 2 August 2027 start, roughly thirty-four months, and has not started).
Then ask the only question that matters: at what exit price does each of those three holds clear my cost of capital? If the 2035 case requires a price the market has never printed, you do not have a land banking thesis. You have a lottery ticket with an annual fee.
That is usually the point at which entitlement rather than raw holding starts to look like the better structure.
Common questions
What are the main carrying costs on raw land in Texas?
Ad valorem property tax, financing cost, holding and compliance costs such as fencing and brush control, and opportunity cost on the equity. On a long hold the opportunity cost is frequently the largest and the most often omitted.
Does an agricultural exemption eliminate property tax on land I am holding for development?
No. Texas agricultural valuation reduces the appraised value based on productive agricultural use, but it requires genuine qualifying use and a change of use triggers a rollback that recaptures the tax differential for the three preceding years, with no interest — HB 3833 (2021) removed rollback interest entirely. Selling does not trigger it. Confirm specifics with the Maverick County Appraisal District and a Texas property tax professional.
How long should I model a hold for Eagle Pass land?
Published timelines put the earliest meaningful catalysts at 2027 to 2029, with build-out beyond. Stress-testing to 2032 and 2035 is prudent given that the Camino Real realignment has slipped roughly thirty-four months and has not started.
Sources. TDLR TABS2026006714 and TABS2026027376 (realignment schedule slip); TxDOT 2027–2030 Laredo District Rural TIP; TxDOT SL 480 North project record; Texas Property Tax Code (agricultural appraisal and change-of-use rollback). Parcel-specific rates and qualification standards must be confirmed with the Maverick County Appraisal District. Verified as of August 2026; project statuses change and every figure should be re-verified before it is relied upon.