If you’re looking to house-hack your way into the world of real estate, then investing in a Duplex for sale in Houston, TX, might be your best bet!
In this blog, I want to talk about the Houston housing market, house-hacking using a Duplex, and how finding a Duplex for sale in Houston at an affordable price can be a sound investment plan for both traditional and Airbnb rental strategies.
Why Invest in Houston, TX?
Despite being affected negatively by the first year of the pandemic, the Texas multi-family market has seen significant growth in terms of rental rates and occupancy rates which even surpassed its pre-pandemic levels.
This means that the Texas housing market is becoming more and more favorable to real estate investors who are looking to house-hack using short-term and long-term rental properties, as this trend is expected to continue in 2022.
However, with a relatively low inventory, and investors flocking from all over the country, the competition in top markets like Austin is making it harder for smaller investors to compete over the little inventory that exists in these markets.
One market, however, isn’t attracting as much attention yet due to a relatively smaller growth, and that market is the Houston housing market.
This doesn’t mean that there aren’t some hidden gems that are worth investing, especially when it comes to finding a duplex for sale in Houston, TX.
So, before talking about the investment strategy that you should use as a beginner investor when you want to invest in the Houston market, let’s first take a look at some of the best neighborhoods to invest in within the Houston housing market:
Top Markets for Investing in Houston, TX
Based on Mashvisor data, if you’re looking to invest in a house in Houston, TX, then these are the neighborhoods that you should pay attention to:
#1 Washington Avenue Coalition – Memorial Park:
Median Property Price: $313,042
Occupancy Rate: 49.06%
Traditional Monthly Rental Rate: $2,612
Airbnb Monthly Rental Rate: $2,918
Daily Rate: $172
Traditional Cash on Cash: 5.93%
Airbnb Cash on Cash: 4.66%
Washington Avenue is probably the single best market to invest in when it comes to the Houston, TX housing market.
This market stands out in every aspect: it is one of the most affordable markets in Houston, it has the highest traditional and Airbnb cash on cash return, it has the second-highest walk-score, and it has a slightly above average occupancy rate of 49.06%.
If you’re a beginner investor and you can afford properties at around the $300,000 mark, then this is the perfect market for you to invest in.
If you’re searching for a duplex for sale in Houston, TX, then this is where you should start your search, as the inventory is limited and the demand is rising.
Median Property Price: $285,000
Size: 141.93 Sq. Ft
Occupancy Rate: 58.97%
Traditional Monthly Rental Rate: $1,802
Airbnb Monthly Rental Rate: $2,040
Daily Rate: $118
Traditional Cash on Cash: 3.76%
Airbnb Cash on Cash: 2.65%
Carverdale is actually an incredible market to invest in at the moment, based on this data.
With the highest occupancy rate in Houston, as well as the second-highest cash on cash returns for both traditional and Airbnb rentals; combine that with a very affordable median property price of $285,000, this market is an amazing opportunity for any beginner investor who doesn’t have a large amount of money to spend.
The downsides of this market, however, are the low walk-score and the small size of properties there. This means that you’ll need to find a niche market of guests and tenants whether you’re looking to use a traditional or a short-term rental strategy.
Also keep in mind that if you’re looking to buy a duplex and house-hack with it (more on that later in the blog), then you’ll also have to be willing to live in a relatively small-sized property and share it with your guests, and you’ll have to hope that the walk-score will improve in the upcoming years.
#3 Woodlake – Briarmeadow:
Median Property Price: $220,000
Size: 144.74 Sq. Ft
Occupancy Rate: 39.29%
Traditional Monthly Rental Rate: $1,216
Airbnb Monthly Rental Rate: $1,051
Daily Rate: $121
Traditional Cash on Cash: 2.71%
Airbnb Cash on Cash: 0.11%
Woodlake – Briarmeadow is a unique market in Houston, TX, because it has excellent cash on cash return for traditional rentals, but a very low CoC for short-term rentals.
Additionally, this is the cheapest market in Houston to invest in.
Ofc your options are limited when it comes to short-term rentals, but investing in a traditional multi-family rental is a viable strategy. It might be difficult at the start to find tenants for your property, especially considering the small average size of properties in this neighborhood.
If you’re looking for a duplex for sale in Houston to use as a traditional rental, this might be the most affordable market that you can find!
However, the relatively good walk-score makes up for it and makes your life, as well as your tenants’ lives much easier.
#4 Greenway – Upper Kirby Area:
Median Property Price: $968,500
Size: 464.51 Sq. Ft
Occupancy Rate: 41.79%
Traditional Monthly Rental Rate: $2,860
Airbnb Monthly Rental Rate: $3,380
Daily Rate: $162
Traditional Cash on Cash: 0.58%
Airbnb Cash on Cash: 0.32%
At first glance, Greenway – Upper Kirby Area might not seem like the best neighborhood to invest in due to its low traditional and Airbnb cash on cash returns.
However, if you’re a new investor but you can afford to buy a duplex in this market and use it to do a house-hacking strategy, you can easily generate a positive cash flow and cover your mortgage payments using the very high rental rates that this market offers.
Coupled with the fact that the overall Texas housing market is growing, you’re looking at excellent long-term investment opportunities in this neighborhood, as long as you can afford it.
#5 Eldridge – West Oaks:
Median Property Price: $289,000
Occupancy Rate: 38.05%
Traditional Monthly Rental Rate: $1,844
Airbnb Monthly Rental Rate: $2,040
Daily Rate: $141
Traditional Cash on Cash: 3.83%
Airbnb Cash on Cash: 2.58%
Not much to say about Eldridge – West Oaks.
Although it is a generally promising market in terms of average returns and property prices are lower than Washington Avenue Coalition – Memorial Park, it is generally a worse market in every other aspect.
The walk-score in particular is a major downfall and coupled with a low occupancy rate, it might be very challenging to find tenants or guests if you invest in this market.
House-Hacking a Duplex
Up to this point, I’ve mentioned multiple times the strategy of house-hacking using a duplex.
But what exactly is house-hacking? And why do you need a duplex to do it?
House-hacking is a real estate investment strategy that revolves around buying a multifamily property (duplex, triplex, or fourplex), and living in a unit in this property while renting out the other units to generate a positive cash flow that you can then use to pay your monthly mortgage payments as well as the other expenses of the property.
In other words, when you house-hack a duplex, you’re basically buying a house and living in it while your tenants pay your mortgage and bills.
While this is an excellent strategy for beginner investors who are looking to start their investment careers, it is considered challenging since it involves multifamily homes, which are more expensive than single-family homes, and also require you to be more involved in terms of property management.
House-hacking can be done with both rental strategies:
House-hacking with a traditional rental strategy is slightly harder when you do it with a duplex since traditional rentals have lower potential returns than short-term rentals.
However, as the number of units in the property increases, a traditional rental strategy becomes better, as multiple monthly rents are almost guaranteed to cover all the expenses as well as your mortgage payments and still have more positive cash flow left for your pockets.
Contract to traditional renting, short-term, or Airbnb rental strategy is great to use with a duplex and do house-hacking with it.
Of course, while Airbnb rentals have a higher potential for profit, they also require a lot more effort in management, and sometimes things can get more complicated depending on the laws and regulations in your city or state.
Additionally, the Airbnb occupancy rate is very seasonal, and you will face low seasons where your monthly cash flow might drop significantly.
When that happens, you should have enough finances to make your mortgage payments and cover other expenses until the occupancy rate goes back up.
Luckily, in terms of laws in Houston, TX, the restrictions are mostly placed on un-hosted Airbnb rentals (where the host doesn’t live or isn’t present on the premise of the rented unit).
This means that if you’re doing house-hacking using duplexes in Houston, you probably have nothing to worry about. However, it is always recommended to do your research and make sure there are no legal hurdles in your way.
Finding a Duplex for Sale in Houston, TX
If you’re looking to find a duplex for sale in Houston, TX, then your best place to start your search is here: Mashvisor.
Mahvisor is a real estate investment platform that was designed with beginner investors in mind to help them learn about everything in real estate and to give them the tools that are necessary to help them make smart investment decisions with ease.
The platform comes with a wide selection of tools that allow you to:
- Search and find properties for sale using a wide range of filters
- Use an interactive map, heatmap, and range filters to find the best markets for investing
- Visit the property marketplace to find off-market properties for sale in your market of choice
- Analyze properties and neighborhoods and compare several properties to find the best investment opportunities in the market
Using Mashvisor to find a duplex for sale in Houston means that you will also be able to see each neighborhood and each property’s analytics, which include all the values that I listed in the top markets above.
You can easily narrow down your search to only include multifamily properties or based on the size of the property, in addition to using filters to set the price range that you’re looking for and the projected returns that you’re hoping to achieve.
Investing in a duplex for sale in Houston, TX, can be a great opportunity for beginner investors who may not have the budget to invest in other Texas markets.
Due to affordable prices and growing occupancy and rental rates, the Houston housing market is shaping up to be an excellent market to do house-hacking in, and it has great options for both traditional and Airbnb rental strategies.
So, if you’re a beginner investor and you’re looking to ride the wave of Texas real estate market investing, then Houston is where you should start your search, and Mashvisor is of course the tool that you should be using to do so!