The popular home-sharing platform Airbnb has delivered great returns for real estate investors across the United States. Airbnb Houston, in particular, has been very lucrative. In the Greater Houston area, Airbnb hosts earned over 72$ million in supplemental income in 2018. Moreover, in one Houston suburb, Airbnb has brought about significant financial benefits thus promoting the town to be among the top 50 best-ranked cities for making money with Airbnb short-term rentals.
The Houston real estate market, predominantly, the Houston short-term rental market, has been a hot market for many real estate investors. This article will walk you through the reasoning behind why many real estate investors are investing in Airbnb Houston rental properties today and why you should too. We will also provide you with a list of the top neighborhoods in Houston for Airbnb real estate investing to help you get started.
Why Invest in a Houston Investment Property?
The Houston housing market is one of the most promising markets in the United States today. It’s a booming market providing healthy and secure real estate investments. Unlike New York and other fully developed cities, Houston and its neighborhoods show more prospects in regard to housing development. The Houston real estate market has a low-density sprawl; there is a plethora of land for the construction of more residential housing.
As for the city’s demographics, Houston is the 4th largest city in the US with a population of 2.2 million. Houston’s population is growing at a rate higher than the national average; from 2010 to 2015, Houston’s population grew 12.4%. Houston demographers, in addition, speculate Texas’ population will double to more than 54 million people by 2025– most of which is forecast to be concentrated in its metropolitan cities like Houston.
Moreover, Houston’s economy is one of the most important economies in the United States, ranking the 2nd in manufacturing GDP in the US. Houston also has the largest medical complex in the US, providing clinical health care, research, and education at over 50 institutions. The healthy economy accompanied by population and job growth have contributed to the vitality of the real estate market making Houston one of the most attractive cities in the United States for investing in real estate.
Why Invest in an Airbnb Houston Rental Property?
While the Houston real estate market overall is a promising market, the Houston short-term rental market, particularly, is more promising with investment properties scoring high returns. In 2018, Airbnb short-term rentals welcomed over 510,000 guests with hosts earning about $5,000 annually. Rental growth of Airbnb Houston rental properties has increased by 25%, with an average daily rate of $115.
Moreover, according to one Airbnb public policy director, Airbnb aims to increase its listings in the Houston area. The presence of the Medical Complex where many tourist patients seek short-term rentals has incentivized Airbnb officials to increase listings in areas near the institution.
So, it’s clear that Airbnb will continue to grow and investors and hosts will continue to profit in Houston. Therefore, we recommend that you start looking into Airbnb Houston rental properties today. To start browsing properties, resort to Mashvisor’s property finder tool. The tool will help you find investment properties that have high cash on cash return and thus, a high return on investment. With the tool, you can even set your own preferences and it will match properties accordingly.
Airbnb Regulations in Houston
Airbnb has had disputes over taxes and regulations in many locations across the globe including some states in the US where many have lobbied that the company be regulated. In some cities in the US, regulations have been enforced restricting the use of Airbnb rentals- whether they be primary residences or non-owner occupied rentals.
Most major cities in Texas, however, side with Airbnb hosts as no regulations have been enforced against its use. Houston, specifically, has not enforced any laws to prevent the use of Airbnb. Airbnb Houston has, as a matter of fact, added much financial benefit to the city, so much so, that legislators are siding with home-sharing platforms like Airbnb and opting out from regulating them.
While there are no regulations restricting the use of Airbnb rental properties, short-term rental taxes have been enforced in recent years. In 2017, Airbnb made an agreement with the state of Texas to start levying an occupancy tax. The tax stipulates that hosts must collect a 6% occupancy tax from guests. Airbnb reasoned that such an agreement would allow Texas to rightfully benefit from the economic impact of home sharing.
While there are no regulations governing Airbnb Houston, we still recommend that you contact the local city council within your desired neighborhood and inquire about the latest laws and regulations.
What Are the Best Neighborhoods in Houston for Airbnb Investing?
Below, using Mashvisor’s investment calculator, we have assessed the most profitable locations to buy an Airbnb Houston rental property.
Greater Fifth Ward
- Median Property Price: $127,450
- Airbnb Rental Income: $1,543
- Airbnb Cash on Cash Return: 5.8%
- Airbnb Occupancy Rate: 38%
Golfcrest – Bellfort – Reveille
- Median Property Price: $204,238
- Airbnb Rental Income: $3,170
- Airbnb Cash on Cash Return: 8.6%
- Airbnb Occupancy Rate: 55%
- Median Property Price: $267,314
- Airbnb Rental Income: $2,678
- Airbnb Cash on Cash Return: 4.5%
- Airbnb Occupancy Rate: 64%
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
- Median Property Price: $138,880
- Airbnb Rental Income: $1,655
- Airbnb Cash on Cash Return: 4.1%
- Airbnb Occupancy Rate: 46%
- Median Property Price: $431,380
- Airbnb Rental Income: $2,665
- Airbnb Cash on Cash Return: 2.3%
- Airbnb Occupancy Rate: 61%
The population and job growth of Houston accompanied by a resilient economy have contributed to the growth of the Houston real estate market. The tourist attractions along with the presence of the largest Medical Complex in Houston have advanced the Airbnb business in the city. As a real estate investor, given the positive financial metrics in regard to Houston short-term rentals, investing in an Airbnb Houston rental property is recommended.
To learn more about Airbnb Houston rental properties and how you could make money investing in them, visit Mashvisor’s real estate investment blog.