Real Estate Investing Performance In Houston
|Avg Purchase Price||Avg Cap Rate||Avg Cash on Cash Return||Avg Cash Needed to close|
|Commercial 5+ units LTR||n/a||n/a||n/a||n/a|
|Short Term Rental (SFH)||n/a||n/a||n/a||n/a|
|STR (2-4 Units)||n/a||n/a||n/a||n/a|
|Long Term Rental (2-4 Units)||300-400k||3% - 5%||2% - 4%||98k|
|Long Term Rental (SFH)||300k - 350k||2% - 4%||2% - 3%||$71,500|
|Househack (2-4 Units)||150k - 175k per door||n/a||n/a||$12,500 per door|
|Househack (SFH)||325k - 400k||n/a||n/a||$18,750|
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Houston Real Estate Investment Tips
If you intend to purchase properties and apartments in Houston, here are some tips to follow:
- Look closely at local markets: We find that many real estate clients like to look for prospects around Houston Heights and River Oaks. Montrose is another popular location with its bohemian vibe and close proximity to the museum district. There are beautifully established properties here for less than $400,000 that will get plenty of tenant demand.
- Check property condition: Carefully evaluate properties in terms of their condition or you could lose money. In some areas, there are many homes that were built more than 100 years ago, while others have lots of newer housing. Inspect things like structural condition and plumbing or electricals before making a purchase. There may even be features like cast iron sewer drainages that many insurance companies won’t cover.
- Growth potential: The potential for growth is a key consideration of any real estate investor. Evaluate the growth rate in Houston and its many local markets to help predict whether the prices of homes will appreciate or stagnate.
Main Activities, Attractions, and Employers in Houston
As you assess the growth potential in Houston, spend some time looking at popular attractions and employers that drive local economies. This can be a strong indicator of potential for a property purchase in Houston. Here are a few key things to look at:
Houston is known as a world-leader in the oil and gas industry – there are over 5,000 energy firms operating in this region. Houston dominates U.S. oil and gas exploration and production, which has led to some enormous growth spurts in the city’s economy throughout its history.
University of Houston System
This has an impact on the Houston-area’s economy similar to that of a major corporation. It attracts billions of dollars in funding and total economic benefit, as well as generating more than 24,000 local jobs. Students come from around the country as well as surrounding local areas to attend the university.
Johnson Space Center
NASA’s largest research and development facility is located in Houston, employing close to 20,000 personnel in total. The city’s aerospace industry is another huge driver of economic growth, and this is only increasing as forays into space increase. With funding and grants pouring in, the NASA presence is a great reason to invest in Houston property.
Houston is always at or near the top of the ranking for U.S. cities in terms of job creation. Walmart is the largest employer in the city, with 31,900 employees. But other large companies mean that people come to this city seeking stable employment in a broad range of industries. This means there is high demand for rental housing throughout the city.
Success stories investing in this area
“Used Victor in finding and purchasing my first investment property. Victor and his team were knowledgeable in providing help along the way especially toward the end while getting everything squared away.”
Long Term Rental
Victor was an awesome realtor! We were first time investors in Texas and he was very responsive, experienced, and pleasant. Every question we had he answered promptly and from start to finish Victor guided us thorough the whole process and made the buying transaction as smooth as possible for us! You will not be disappointed by working with Victor Steffen, thank you Victor!
Long Term Rental
Investing Strategies in Houston
Here are some recommended investment strategies for anyone looking to invest in property in Houston:
Long-, short- and mid-term rentals: Short-term rentals are a decent option for Houston thanks to its booming tourism industry. But the real money is in mid-term and long-term rentals, thanks to the presence of a large student population and many employment opportunities in the city. With the university campus, Downtown is a great area for mid-term rentals, while the large number of employment opportunities in Uptown Houston make it great for more long-term rentals.
Occasional flipping: This is where you buy a house with the intention of selling it for a profit within three years. This takes a lot of research and planning to find prospects with high appreciation potential, but there are lots of opportunities for house-flipping in Houston. Always seek guidance from trusted sources to find prospects for this strategy.
Is Houston a Good Real Estate Investment?
Houston is home to a wide range of businesses and employers. With its combination of large corporations, small businesses and a broad spectrum in between, the diversity of opportunity is vast. Prominent employers in Houston include:
Walmart: As mentioned, Walmart has thousands of employees and stores are very prolific throughout the city. They are recognized as a great employer and many young people seek to work with them, attracting rental prospects in every part of the city.
Memorial Hermann Health System: With 15 hospitals and numerous specialty programs in and around Houston, this is one of the area’s largest employers. Many qualified professionals come here to work for the healthcare provider and it employs more than 24,000 people.
H-E-B: This vast grocery chain is prolific in Texas and has been in the Houston area since 1905. Currently employing over 23,700 people, this is another big drawer for property buyers and tenants in the city.
Houston Methodist: Hiring registered nurses, this organization offers sign-on bonuses for those who qualify. It operates out of the Texas Medical Center with 6 community hospitals in Houston, hiring more than 10,000 people and attracting professionals to the region in numbers.
Is it a Good Time to Invest in Houston?
Houston is a great destination for property investment because it is in the midst of a period of sustained growth. Its history dates back to the early 19th century, and it has grown from a rich oil mecca to a bustling, diverse metropolis in nearly 200 years of existence. With an ever-increasing population of more than 2.2 million people, there really is a wealth of opportunity for investors here.
Tere can be several factors that are behind Houston’s growth. Its prominence in the energy and aerospace industries are clear drivers, as is the popularity of the university. Quality of life is high here, and there is a robust economy that reverberates throughout the city. Prominent employers cover the energy, tech, retail, tourism and many other industries, so there are countless reasons for people to move into the city. And there are many historical and contemporary attractions that draw crowds in their thousands every year, such as the Space Center, the Museum of Fine Arts and the famous Houston Zoo.
Arlington is continually investing in its own infrastructure and housing, with new parks, shopping centers and more always in construction. It has a low cost of living and income tax is low, so it is an attractive place for families, young professionals and retirees alike. This is another big driver in the city’s growth, particularly as cost of living increases in other areas.
Best Neighborhoods to Invest in Houston
There are various neighborhoods in Houston that are good prospects for real estate investors. These include:
This suburb north of Highway 10 is within commuting distance of the jobs in Downtown Houston. There are some very popular public schools here and it is close to the Northline Commons. Real estate inventory here is quite low, so it’s a seller’s market great for house flipping.
Rental prices are very high here, with some fantastic schools in the area. House prices here are fairly stable, so you can expect to get good prices, but it is a popular area for families so rental demand can be high compared to stock.
This is a major shopping area with some sought-after private schools. As such, it attracts young professionals and families alike, with people prepared to pay high rent to be in this affluent area. It’s a buyer’s market with high rental demand.
This area is close to great entertainment and employment prospects and is popular because it has a low crime rate. This makes it popular among students and young professionals, so there is always a lot of demand for both rental properties and homes to buy.