Houston is a major city in the US and a leading center of healthcare, energy, aeronautics, transportation, and oilfield equipment.
With a population of over 2.3 million residents, Houston is the largest city in the State of Texas as well as the 6th most populous city in the US housing market, after New York, Los Angeles, and Chicago. Houston is the principal city of the Greater Houston metro area, which with a population of nearly 7 million people is the 2nd largest in Texas after the Dallas-Fort Worth metroplex. This is also one of the largest cities nationwide in terms of area.
In recent years the Houston–The Woodlands–Sugar Land metro area has developed a diverse economy which produces the 6th highest gross domestic product (GDP) as a metropolitan area in the US. By far, one of the most important economic sectors in H-Town is energy, particularly oil and gas, for which Houston is renowned worldwide. The contribution of renewable energy sources such as solar and wind is also increasing. Biomedical research and aeronautics have also been among the leading sectors which have given Houston its national and international significance.
A key factor for the development of the petrochemical industry in specific and the economy in general has been the Port of Houston. The port is not only the largest in the entire US in terms of international commerce but also ranks among the 10 largest ports around the globe. Indeed, Houston is the top US market for exports, even ahead of New York City. About two thirds of the exports comprise of petroleum products, chemicals, and equipment for oil and gas extraction.
The ATKearney 2019 Global Cities Report ranks Houston as a global city. The city has been attracting many foreign companies as well as foreign diplomats. It is also one of the most ethnically and culturally diverse major cities in the US. Furthermore, Houston has the 2nd highest number of Fortune 500 companies within it municipal limits among all US cities, after New York. The diverse economy and the strong performance of Houston are a positive signal for real estate investors interested in rental properties.
Another important sector in the Houston real estate market is tourism. Every year Space City attracts more than 22.3 million visitors including both business travelers and leisure tourists. As mentioned above, Houston is one of the most diverse US cities which features an active visual and performing arts scene as well as numerous exhibitions and special events. Some of the top tourist attractions include Bayou Place, Space Center Houston, the Houston Theater District including the Jones Hall and the Hobby Center for the Performing Arts, the Museum District including the Museum of Fine Arts and the Houston Museum of Natural Science, the Houston Zoo, the Downtown Aquarium, Old Market Square, the Galleria, and nearly 340 parks. The business and commercial opportunities and the tourist, art, and music attractions make Airbnb Houston one of the most successful and profitable short term rental industries in the US real estate market.
With regards to employment, the Houston labor market grew by 3.2% in the past year, and job growth for the next 10 years has been predicted at 30.9%. Moreover, the average income per capita within the Houston housing market is $27,938, just below the US average of $28,555. The median household income, meanwhile, amounts to $45,728, less than the US median level of $53,482.
All these positive factors have positioned the Housing real estate market as one of the best places to invest in real estate in the US for numerous years now. This trend is expected to continue in 2020 and beyond. Thus, investors interested in buying Houston rental properties should hurry up while profitable opportunities last and before prices go up.
Houston Real Estate Market 2019 Overview
- Median Property Price: $401,300
- Average Price per Square Foot: $170
- Real Estate Appreciation: 118% since 2000 (above the Texas real estate appreciation rate and significantly above the US average)
- Days on Market: 76
- Listings for Sale: 1,372
- Price to Rent Ratio: 18 (moderate)
- Buyer’s Market or Seller’s Market: A buyer’s market
- Renters’ Percent of Population: 57%
The Houston housing market is the largest one in the Texas real estate market and one of the most significant ones across the US. Because of its economic, commercial, industrial, and touristic status, Houston has always been one of the best places to invest in real estate in the US housing market.
The Emerging Trends in Real Estate: United States and Canada 2020 report by PwC ranks Houston as #42 among the US Markets to Watch for Overall Real Estate Prospects. In terms of US Markets to Watch for Homebuilding Prospects, Houston is positioned at #3, which means that residential real estate investors will have a large inventory of houses for sale in Houston to choose from to buy an investment property which matches all their criteria and expectations. This also means that Houston will continue to be a buyer’s market, as it is at the moment, where the number of Houston, Texas homes for sale exceeds the number of property buyers. This is particularly important for beginner real estate investors who have no experience in finding good deals and getting them. In Houston new investors will be able to avoid bidding wars and to buy rental properties at fair market value.
Moreover, according to the PwC Houston real estate market analysis, the real estate development and redevelopment opportunities are strong, and so is investor demand. Actually Houston is ranked among the top 10 markets for investment dollar volume as it attracted 2.8% of the US real estate investment money. PwC considers Houston to be an underranked market, rather than an underwhelming one. The prestigious publication praises Space City as the most diverse city in America and highlights the fact that Houston has also become more cosmopolitan, with healthcare, life sciences, and other technology-driven industries replacing the dominance of the energy sector. Meanwhile, the top-performing places for overall real estate prospects in the Texas housing market include Austin (#1), Dallas/Fort Worth (#6), and San Antonio (#24).
Further Houston real estate market analysis shows that Houston property values exceed the median property price in the US housing market of $232,000 by 74%. Nevertheless, buying rental properties in H-Town is much more affordable than in some of the other top locations for real estate investing such as the New York real estate market ($1,128,000), the San Francisco real estate market ($1,649,900), the Los Angeles real estate market ($1,069,400), the Boston real estate market ($875,500), and the San Diego housing market ($813,500). Within the Texas real estate market, property prices in Houston are comparable to those in the Dallas real estate market and below those in the Austin real estate market. This makes houses for sale in Houston, TX a relatively affordable real estate investment opportunity for beginner investors and others with a limited budget.
Recent Houston real estate price trends have been encouraging for residential property investors. The total real estate appreciation of 118% between Q1 2000 and Q3 2019 averages to an annual natural appreciation rate of 4.1%, according to NeighborhoodScout. This exceeds both the national and the Texas real estate appreciation rate, which means that investing in real estate in Houston is a good long term strategy to make money. According to Zillow estimates, the prices of homes for sale in Houston, TX will increase by about 3.3% which is close to the expected nationwide appreciation rate. This rate means is an excellent indicator for real estate investors. Those who are able to buy immediately will benefit from a healthy increase in the value of their Houston investment property. At the same time, those who need a few months to figure out how to go about financing their rental property, to get mortgage approved, and to analyze real estate deals, in case they buy it right away will still be able to buy an investment property at a reasonable price.
Investing in rental properties in Houstin is a good way to make money from real estate in the short run as well. This Houston real estate market report shows that traditional Houston rental properties and Airbnb Houston investments yield above-average rate of return in the US housing market. While a cap rate of 1.7% and 2.4% does not seem like a good return on investment, these are just the city-average values, while individual Houston homes for sale yield a much higher rate of return as rental properties. As a first step to find a profitable deal, investors should take a detailed look at the Houston neighborhoods map and conduct careful neighborhood analysis to locate one of the best locations for real estate investing in Space City. Then they need to do targeted property search and conduct diligent investment property analysis to find a top-performing traditional or Airbnb rental property, depending on their preferred rental strategy. The Houston housing market is full of excellent real estate investment opportunities with nearly 1,380 homes for sale in Houston, TX.
The main drivers behind the performance of Houston rental properties are the large population growing at an above-average rate, the diverse economy, the strong labor market, and the multiple tourist attractions. Rental demand is high for both long term and short term rentals due to the fact that 57% of the population rents rather than owns a home and that more than 22.3 million people visit H-Town every year. This means high traditional occupancy rate and high Airbnb occupancy rate in the Houston real estate market, which is one of the prerequisites for a good rental income and high rate of return on a rental property.
So, if you’re looking for a top-performing real estate market with positive perspectives in the coming years, consider investing in rental properties in Houston.
Best Property Types for Investing in the Houston Real Estate Market
- Single Family Homes for Sale in Houston, TX: 1,017
- Median Property Price: $424,000
- Average Price per Square Foot: $167
- Average Monthly Traditional Rental Income: $1,910
- Average Traditional Cap Rate: 1.6%
- Average Monthly Airbnb Rental Income: $2,580
- Average Airbnb Cap Rate: 2.7%
- Condos for Sale in Houston, TX: 98
- Median Property Price: $167,100
- Average Price per Square Foot: $144
- Average Monthly Traditional Rental Income: $1,330
- Average Traditional Cap Rate: 2.8%
- Average Monthly Airbnb Rental Income: $1,640
- Average Airbnb Cap Rate: 2.5%
- Townhouses for Sale in Houston, TX: 163
- Median Property Price: $329,200
- Average Price per Square Foot: $154
- Average Monthly Traditional Rental Income: $2,020
- Average Traditional Cap Rate: 2.1%
- Average Monthly Airbnb Rental Income: $2,350
- Average Airbnb Cap Rate: 2.1%
- Multi Family Homes for Sale in Houston, TX: 12
- Median Property Price: $471,300
- Average Price per Square Foot: $193
- Average Monthly Traditional Rental Income: $1,400
- Average Traditional Cap Rate: 1.30.2%
- Average Monthly Airbnb Rental Income: N/A
- Average Airbnb Cap Rate: N/A
- Foreclosure Homes for Sale in Houston, TX: 81
- Median Property Price: $171,200
- Average Price per Square Foot: $80
- Average Monthly Traditional Rental Income: $1,520
- Average Traditional Cap Rate: 4.7%
- Average Monthly Airbnb Rental Income: $2,320
- Average Airbnb Cap Rate: 9.0%
Single family homes are the most popular type of homes for sale in Houston, TX. This makes the Houston housing market similar to other best places to invest in real estate. Actually about three quarters of all Houston, Texas real estate listings are single family homes, followed by townhouses (12%), condos (7%), and multi family homes (1%).
Why Investing in Houston Single Family Homes
Houston single family homes for sale are not only the most numerous property type but also one of the most profitable ones, especially for Airbnb Houston rentals. Single family homes sell for a bit more than an average Houston real estate property, but with 1,072 single family homes for sale in the Houston housing market, investors are able to find affordable, yet profitable options. As traditional rentals, single family homes attract young professionals and small families, which are generally good tenants who pay rent on time and don’t cause excessive wear and tear. As Airbnb rentals, Houston single family homes bring the highest return on investment.
Why Investing in Houston Condos
Condos for sale in Houston, Texas make for a good real estate investing strategy. They are particularly appropriate for beginner real estate investors as well as others who face a limited budget as they sell for only a fraction of the average Houston real estate prices. At the same time, condos for sale in Houston, TX offer a very high rate of return. They are the most profitable property for traditional Houston rental properties and the second most profitable for Houston Airbnb investment properties. However, before deciding to buy a condo in the Houston real estate market, investors should check the HOA rules in terms of renting out. Many HOAs do not permit operating rental properties, particularly short term rentals.
Why Investing in Houston Townhouses
Townhouses are another source of relatively cheap real estate listings in Houston. Despite the lower listing price, the rental income generated by Houston townhouses is comparable to the income which single family homes bring. When rented out on a long term basis, this property type yields the second highest cap rate. Houston Airbnb townhouse rentals are also profitable. With 163 townhouses for sale in Houston, investors can find an income property within their budget which meets their search criteria.
Why Investing in Houston Multi Family Homes
Buying a multi family home is a smart real estate investment strategy in any US housing market. Multi family properties provide investors with the opportunity to diversify their investment portfolio with a single purchase. Being a DYI landlord or Airbnb host is easier when renting out multiple housing units in a single property rather than renting out several different investment properties in various locations. Hiring a professional property manager also makes more financial sense when owning a multi family real estate income property. The disadvantage of deciding to invest in a multi family home for sale in Houston is that currently there are only 12 listings of this type.
Why Investing in Houston Foreclosures
Foreclosure homes for sale in Houston are an excellent choice for investors who are looking for a good deal. Foreclosed homes sell for less than half the listing price of other homes for sale in the Houston real estate market. Meanwhile, they can be rented out at the same rental rate as other properties after some basic fixes and repairs. That’s why their profitability exceeds the average rate of return by 2.8 times for traditional Houston rental properties and by 3.8 times for Airbnb Houston rentals. Foreclosed homes for sale in Houston are an excellent opportunity to buy both cheap and high-yield real estate properties.
Important Stats for Houston Real Estate Investors
Safety in the Houston Real Estate Market
- Crime Rate Index: 4 (100 is highest)
Houston is safer than 4% of US cities only, with a very high overall crime rate of 54 crimes per 1,000 residents.
Access in the Houston Real Estate Market
- Walk Score: 49
- Transit Score: 37
- Bike Score: 48
Houston is the 22nd most walkable large city in the US. H-Town is a car-dependent city where running most errands requires a car. It has some public transportation and does not have many bike lanes.
Affordability in the Houston Real Estate Market
- Cost of Living Index (Excluding Rent): 64
- Rent Index: 43
- Cost of Living Plus Rent Index: 54
The average cost of living in Houston, TX excluding rent is 36% below the average cost of living in New York City. Rent in the Houson housing market is 56% below the level in NYC. The overall cost of living in Houston index including rent is 46% less than the New York level.
Houston, Texas Property Taxes
- Texas State Average Effective Property Tax Rate: 1.83% (above the national average of 1.08%)
- Harris Diego County Average Effective Property Tax Rate: 2.09% (above the national average of 1.08%)
- Houston City Average Effective Property Tax Rate: 2.265% (above the national average of 1.08%)
- County Tax Rate: 0.419%
- City Tax Rate: 0.639%
- School District Tax Rate: 1.207%
Texas real estate taxes exceed the national property tax rate significantly. In the Texas real estate market property tax is paid on the assessed value of the home. Houston real estate taxes are even higher than the prevailing rate in Texas. Even with the relatively affordable Houston property prices, taxes can reach a significant amount. This is why investors should consider the Houston real estate tax rate in their investment property analysis when considering buying rental properties in Space City. Property taxes are a major recurring rental expense which can affect the cash flow, profitability, and rate of return of an investment property.
Meanwhile, real estate investors willing to explore the investment opportunities in states with no property tax in order to minimize their ongoing costs and maximize their return on investment should take a look at Hawaii, Alabama, Louisiana, West Virginia, and Wyoming.
Houston Real Estate Market: Traditional Rentals
- Average Monthly Traditional Rental Income: $1,870
- Average Traditional Cap Rate: 1.7%
- Price to Rent Ratio: 18
- Renters’ Percent of Population: 57%
- Optimal Property Type: Condo or townhouse
- Optimal Number of Bedrooms: 3 and 2
- Traditional Rental Listings: 5,903
- 3 Best Neighborhoods in Houston for Investing in Traditional Rental Properties: Golfcrest – Bellfort – Reveille, Greater Fifth Ward, and Greater Fondren Southwest
- 3 Worst Neighborhoods in Houston for Buying Traditional Rental Properties: Westchase, Spring Branch East, and Woodlake – Briarmeadow
Buying a traditional rental property in Houston can bring Texas real estate investors a very high profitability. Space City has one of the largest populations in the entire US housing market which is continuing to grow. Immigrants are attracted to the Houston real estate market by the numerous job opportunities. More than half (57%) of Houston residents rent a property instead of buying a home, which translates into strong rental demand. Meanwhile, the price to rent ratio is moderate. This means that most people are likely to continue renting as this makes more financial sense from the point of regular people in a moderate price to rent ratio market. Meanwhile, Houston, Texas real estate prices are not too high, and rental rates are not too low to prevent high return on investment.
Speaking of return on investment, traditional rentals yield a cap rate of 1.7% in the Houston housing market. This is significantly more than what other best places to invest in real estate offer at the moment. Of course, this is just a cap rate by city, while the best Houston neighborhood for real estate investing and the most profitable Houston rental properties bring a much higher rate of return. What investors need in order to identify these neighborhoods and properties is to get access to the best real estate investment tools including a heatmap, a Property Finder, and a rental property calculator.
If you think that buying an investment property to rent out on a long term basis is the optimal real estate investing strategy for you in 2019 and 2020, then you should keep in mind in your property search that condos and townhouses are the most profitable rental property types in the Houston real estate market. Also, homes for sale in Houston, TX with 3 and 2 bedrooms generate a higher capitalization rate and cash on cash return than others.
Landlord-Tenant Law and Regulations in the Houston Real Estate Market
Similar to the Dallas real estate market, the Austin real estate market, and the San Antonio real estate market, most aspects of the relations between landlords and tenants in the Houston housing market are governed and regulated by the Landlord-Tenant Laws in Texas. While there is a Tenant Law in Houston, it’s most equivalent to the Texas real estate law.
Both the state and the city landlord-tenant regulations aim to ensure the safety and security of people living in rental properties in Houston. However, in general Texas is considered a landlord-friendly state.
In specific, whereas landlords in the Houston real estate market are not required to collect a security deposit, they are definitely allowed to do so, and there is no limit on the maximum amount. Moreover, Houston real estate investors are not obliged to pay an interest on security deposits they collect from tenants. The security deposit has to be returned to the renter within 30 days after moving out of the rental property. If any deductions have been made to cover beyond normal wear and tear, the landlord has to provide a written itemized list of the damages as well as receipts for all the costs.
In addition, written rental agreements are not a must in the Houston housing market for tenancies of less than 12 months, but they are required for tenancies above 12 months. Nonetheless, real estate investors in long term rental properties in any location are always advised to have a written lease agreement signed by both the landlord and the tenant in order to make clear what is required from both sides and what they can expert from their counterpart. This is the best way to avoid future problems with your renters.
For written month-to-month lease agreements, the landlord has to provide the tenant with a 30-day notice of any changes in the conditions including a rent raise. In case of a year-to-year lease agreement, the notice period is one month if rent is paid monthly and one week if rent is paid weekly.
Speaking of rent, there aren’t many specific regulations in the Texas real estate market in general. Rent receipts have to be provided to renters only in case of cash rent payments. While landlords are not required to charge late fees, they can choose to do so based on a fixed amount and/or a fixed percentage. In case you decide to charge a late fee, you have to include this in the rental agreement.
In the Houston real estate market, landlords are obliged to maintain their rental property in a good and healthy condition for tenants. Renters can inform landlords of any issues in their investment property, after which landlords have 7 days to repair the problem.
Eviction is possible and not too difficult in Houston, Texas real estate. The process starts with a 3-day notice to vacate.
In conclusion, the landlord-tenant laws and regulations in Texas in general and in Houston in specific favor landlords and assure the protection of their rights. That’s one of the reasons why investing in traditional rentals in the Houston housing market is a top real estate investing strategy.
If you’d like to explore investment opportunities in other landlord friendly states as well, you can do an investment property search in Indiana, Colorado, Georgia, Kentucky, and Alabama. Buying an investment property to rent out on long term basis in any of these top locations is a money-making real estate strategy as long as you have access to the best real estate investment tools to find and analyze deals.
Best Houston Neighborhoods for Investing in Traditional Rentals
1. Golfcrest – Bellfort – Reveille
- Median Property Price: $202,100
- Average Price per Square Foot: $136
- Average Monthly Traditional Rental Income: $1,520
- Average Traditional Cap Rate: 3.5%
- Walk Score: 68
According to the analysis for this Houston real estate market report, the best neighborhood for buying a long term rental property here is the Golfcrest – Bellfort – Reveille neighborhood. This is a diverse area with a mix of urban and suburban features where most people rent a property. The high rental demand combined with the low prices of Houston homes for sale make Golfcrest – Bellfort – Reveille such a profitable location for investing in real estate. Buying an investment property in Golfcrest – Bellfort – Reveille could easily turn into one of the best real estate strategies in 2020 as long as you use a Property Finder and a rental property calculator to estimate the expected return on investment.
2. Greater Fifth Ward
- Median Property Price: $190,600
- Average Price per Square Foot: $145
- Average Monthly Traditional Rental Income: $1,350
- Average Traditional Cap Rate: 3.4%
- Walk Score: 58
The Greater Fifth Ward neighborhood is ranked as #2 among the best neighborhoods in Houston for real estate investments in traditional rental properties. This place offers its residents a suburban lifestyle while featuring numerous parks, restaurants, and bars. The real estate market in Greater Fifth Ward is a mix of condos, townhouses, and single family homes which provides investors with the opportunity to choose the most appropriate property type for their budget and preferences. This neighborhood is also one of the best places to find cheap houses for sale in Houston with a median property price much below the city average. Investing in a long term rental in Greater Fifth Ward promises a high rate of return in 2019 and beyond.
3. Greater Fondren Southwest
- Median Property Price: $162,900
- Average Price per Square Foot: $83
- Average Monthly Traditional Rental Income: $1,260
- Average Traditional Cap Rate: 3.4%
- Walk Score: 44
Houston housing market analysis shows that the Greater Fondren Southwest neighborhood emerges as the 3rd top Houston neighborhood for traditional investment properties. Among all Houston neighborhoods included in this Houston real estate market report, Greater Fondren Southwest has the lowest listing prices at the moment. This makes the area an excellent location for buying cheap homes for sale in Houston, TX. while the traditional rental income is less than in other areas, the rate of return on a rental property is much above the average. Thus, buying rental properties in Greater Fondren Southwest could help investors make money in real estate in 2019 and beyond.
4. South Main
- Median Property Price: $283,500
- Average Price per Square Foot: $169
- Average Monthly Traditional Rental Income: $1,910
- Average Traditional Cap Rate: 2.7%
- Walk Score: 30
According to Houston real estate data analysis, South Main is the 4th top neighborhood for investing in real estate here. The South Main neighborhood is one of the best places to live in the Houston housing market which offers residents an urban lifestyle accompanied with numerous parks and coffee shops. Most people here rent which means a high rental demand, one of the prerequisites for a successful traditional rental property business. All in all, as long as you have access to the best real estate investment tools for 2020, buying a profitable traditional rental property in South Main is easy.
5. Greater Eastwood
- Median Property Price: $243,500
- Average Price per Square Foot: $184
- Average Monthly Traditional Rental Income: $1,660
- Average Traditional Cap Rate: 2.7%
- Walk Score: 65
Another one of the best neighborhoods in Houston, TX for buying long term rentals is Greater Eastwood. Just like the rest of the areas mentioned so far in this Houston real estate market report, property prices in the Greater Eastwood neighborhood are very affordable, close to the national median home value. This location is particularly good for young professionals and families which is one of the factors that make it a top choice for traditional rental properties. Even beginner real estate investors can buy a traditional rental property in Greater Eastwood with high return on investment.
6. South Acres-Crestmont Park
- Median Property Price: $232,500
- Average Price per Square Foot: $124
- Average Monthly Traditional Rental Income: $1,490
- Average Traditional Cap Rate: 2.6%
- Walk Score: 13
The last on this list of the best Houston neighborhoods for investing in traditional rental properties in 2019 and 2020 is South Acres-Crestmont Park. The South Acres-Crestmont Park neighborhood is a suburban location which provides residents with a quiet lifestyle with lots of park areas, so it’s a good choice for families. Investing in real estate in South Acres-Crestmont Park should be one of the options which investors consider in the Houston real estate market 2019.
Houston Real Estate Market: Airbnb Rentals
- Average Monthly Airbnb Rental Income: $2,400
- Average Airbnb Cap Rate: 2.4%
- Average Airbnb Occupancy Rate: 55.4%
- Optimal Property Type: Townhouse or condo
- Optimal Number of Bedrooms: 3 and 4
- Airbnb Rental Listings: 1,660
- 3 Best Neighborhoods in Houston for Investing in Airbnb Rental Properties: Hunterwood, Golfcrest – Bellfort – Reveille, and Edgebrook Area
- 3 Worst Neighborhoods in Houston for Buying Airbnb Rental Properties: Greater Third Ward, Spring Branch Central, and Greater Uptown
- Airbnb Houston Legal Status: Both owner-occupied and non-owner occupied Houston vacation rentals are legal and face no regulative restrictions. Houston Airbnb hosts have to pay a 13% hotel occupancy tax.
- Annual Events in Houston with the Highest Airbnb Occupancy Rate:
- Martin Luther King Jr. Grande Parade: mid-January
This is the largest and most widely visited annual commemoration of the civil rights leader and activist which attracts more than 300,000 supporters and participants each and every year.
- Chevron Houston Marathon: mid-January
Established over 40 years ago, this turned into the most important single-day sports event in Houston. More than 20,000 runners participate in the marathon, who are watched and cheered by more than 200,000 spectators.
- Texas Lunar Festival: February
This is the largest celebration of the Lunar New Year in all of Texas featuring music, dance, and performances.
- Mardi Gras Galveston: late February-early March
In proximity to Houston, the Mardi Gras celebration in Galveston is among the largest and most exciting celebrations of Fat Tuesday after the events in New Orleans, Louisiana and Mobile, Alabama. The event brings together over 300,000 participants and features parades, concerts, masked balls, art exhibitions, and food.
- Houston Livestock Show and Rodeo: late February-early March
This is by far one of the most popular annual events in Houston, attracting over 2 million visitors in the 3-week long activities.
- Bayou City Art Festival: late March
For more than 40 years this event has been attracting hundreds of artists from all over the US to Memorial Park to celebrate spring. In addition to see different forms of art, visitors can also buy pieces.
- Comicpalooza: May
Every May Houston hosts the largest pop culture convention in the State of Texas. Comicpalooza is a multi-format event featuring gaming, cosplay, a literature conference, a film festival, and more.
- Southwest Airlines Freedom Over Texas: 4th of July
The Mayor’s Official 4th of July Celebration in the Eleanor Tinsley Park on Buffalo Bayou has turned into one of the most spectacular and popular ways to celebrate the national holiday in Texas.
- Houston International Jazz Festival: August
Established about 25 years ago, this music event has been celebrating jazz music, history, and education at the House of Blues. Many famous local, regional, national, and international jazz musicians perform each year.
- Puerto Rican and Cuban Festival: October
Annually Houston celebrates the Puerto Rican and Cuban culture with live music, a car show, and lots of food.
- Texas Renaissance Festival: October-December
This is the absolutely largest fair celebrating the Renaissance era in all of the US. Houston has been attracting thousands of visitors for 38 years to see the costumed actors as well as to enjoy Renaissance era entertainments such as polka dancing.
- City of Houston Thanksgiving Day Parade: Thanksgiving
More than 200,000 visitors come each year to enjoy the 65-year-old Thanksgiving Day Parade in Downtown Houston, featuring floats, balloons, marching bands, and various sorts of live entertainment.
- Uptown Holiday Lighting: November night
Thousands of families and individuals both from Houston and other areas come get together to see the lighting of 80 Christmas trees along Post Oak Boulevard as well as the electric light parade, fireworks, a holiday stage show, and the appearance of Santa Claus.
In 2018 Airbnb Houston welcomed 512,000 guests and generated a total revenue of $72 million. This positions the Houston short term rentals industry among the top-performing Airbnb locations in the entire US housing market. One of the most important factors for the major growth and success of Houston Airbnb properties is the fact that local authorities have not imposed any restrictions and regulations on renting out entire homes as well as parts of homes on short term basis. Actually, both owner-occupied and non-owner occupied short term rentals are legal in the Houston real estate market. This means that buying an investment property for the sole purpose of renting it out on Airbnb or another vacation rental platform is feasible in Houston. This is no longer the case in some of the top Airbnb locations in the US such as Airbnb New York, Airbnb Las Vegas, Airbnb San Diego, Airbnb Los Angeles, Airbnb San Francisco, Airbnb Chicago, Airbnb Boston, and others.
Another factor which supports the expansion of the Airbnb Houston, TX business is tourism. Houston’s numerous tourist places attract 38 million visitors per year, many of whom prefer to stay in a short term rental rather than in a hotel. Furthermore, Space City is a major economic, educational, and commercial hub which means that it attracts millions of business travelers as well.
Houston real estate market analysis reveals that the Airbnb rental strategy enjoys a high return on investment here. The average Airbnb cap rate in Houston amounts to 2.4%. This might not seem like a profitable real estate investing strategy to experienced real estate investors as traditionally a good cap rate is placed in the range 8-12%. Nevertheless, if you are considering investing in a Houston Airbnb property, you should consider the fact that this is only a city-level capitalization rate, while the top Houston neighborhoods for short term rentals offer a significantly higher cap rate. The rate of return on individual Airbnb Houston investment properties reaches double digits. The key to buying a profitable rental property in Houston, just is in any other of the best places to invest in real estate, is to conduct careful neighborhood analysis and investment property analysis with the right real estate investment tools.
According to the analysis conducted in this Houston real estate market report, the most profitable property type for Houston short term rentals is a single family home, followed by a condo. Furthermore, analysis of Houston Airbnb data reveals that vacation rental homes with 2 and 4 bedrooms bring the highest return on investment.
Airbnb Houston Laws and Regulations
The vast majority of the US housing market has been impacted by strict short term rental rules and regulations imposed by local city, county, and state authorities. Generally speaking, Airbnb Texas has been one of the least affected nationally. For example, Airbnb Dallas is fully legal, and so is Airbnb Houston.
Currently there are no Houston Airbnb regulations. All types of short term rentals are permitted and legal in the Houston housing market for an unlimited time. Both owner-occupied and non-owner occupied short term rentals can be operated in Houston. Importantly, it is possible to buy an Airbnb investment property in Houston with the sole purpose of renting it out on short term basis.
As of the summer of 2019, Houston Airbnb hosts are expected to pay a 13% hotel occupancy rate. The standard hotel occupancy rate in the Houston housing market is 17%, including a 7% Houston city tax, a 2% Harris County tax, a 2% tax going to the Harris County Houston Sports Authority, and a 6% Texas state tax. However, Airbnb only collects 13% from Houston hosts.
While this tax rate might seem high, it doesn’t prevent Houston real estate investors from making a significant profit on Airbnb rental properties. The Houston Airbnb rental income and Airbnb occupancy rate are high enough to compensate for the hotel occupancy tax.
Best Houston Neighborhoods for Investing in Airbnb Rentals
- Median Property Price: $175,100
- Average Price per Square Foot: $97
- Average Monthly Airbnb Rental Income: $4,420
- Average Airbnb Cap Rate: 17.9%
- Average Airbnb Occupancy Rate: 49.5%
- Walk Score: 3
Our Houston real estate market report highlights the Hunterwood neighborhood as the most profitable location for Airbnb rentals here based on cap rate and cash on cash return. Actually Hunterwood is ranked is one of the best places for buying a house in Houston, which makes it a top location for real estate investing in general. On average, Houston vacation rentals here bring a double-digit return on investment, which is significantly above the recommended good cap rate and good cash on cash return. Buying an Airbnb property in Hunterwood is a top choice for real estate investors in the Houston housing market in 2019 and beyond.
2. Golfcrest – Bellfort – Reveille
- Median Property Price: $202,100
- Average Price per Square Foot: $136
- Average Monthly Airbnb Rental Income: $4,370
- Average Airbnb Cap Rate: 14.3%
- Average Airbnb Occupancy Rate: 56.0%
- Walk Score: 68
The Golfcrest – Bellfort – Reveille neighborhood is the 2nd best location for investing in Houston short term rentals based on the expected rate of return. The cheap property prices are accompanied by very high Airbnb income, which is the perfect combination for a successful and profitable investment in a vacation home rental. Another important benefit of investing in real estate in Golfcrest – Bellfort – Reveille is the fact that this is also one of the best places to buy a traditional rental property. This means that real estate investors will have the option to switch between rental strategies if Airbnb rentals turn out to not be a good match for them. Buying a real estate investment property in Golfcrest – Bellfort – Reveille is an option worth considering in 2019.
3. Edgebrook Area
- Median Property Price: $178,900
- Average Price per Square Foot: $109
- Average Monthly Airbnb Rental Income: $3,520
- Average Airbnb Cap Rate: 11.3%
- Average Airbnb Occupancy Rate: 77.8%
- Walk Score: 26
This Houston real estate market report ranks the Edgebrook Area neighborhood as the 3rd best neighborhood in Houston to buy an Airbnb investment property. Homes for sale in Houston, TX here sell for under $200,000 on average, which makes this location ideal for new real estate investors as well as other property investors facing limited financing options. Importantly, Edgebrook Area features a particularly high Airbnb occupancy rate of 77.8%, which is one of the chief factors for high profitability of Houston short term rentals in this neighborhood. Overall, after conducting careful investment property analysis, investing in an Airbnb property in Edgebrook Area can be one of the best Airbnb Houston investment choices in the upcoming months.
4. Greater Fifth Ward
- Median Property Price: $190,600
- Average Price per Square Foot: $145
- Average Monthly Airbnb Rental Income: $2,620
- Average Airbnb Cap Rate: 10.7%
- Average Airbnb Occupancy Rate: 61.7%
- Walk Score: 58
Greater Fifth Ward emerges as another top location for investing in real estate in Houston. The most important quality of the Greater Fifth Ward neighborhood is that it offers a high return on investment for both traditional Houston investment properties and Airbnb Houston rentals. The cheap houses for sale in Houston available here is another factor which attracts investors in the Houston real estate market. Buying an investment property in Greater Fifth Ward to rent out on Airbnb or even traditionally is definitely one of the options which smart real estate investors should consider in 2020.
5. Pecan Park
- Median Property Price: $240,500
- Average Price per Square Foot: $186
- Average Monthly Airbnb Rental Income: $3,450
- Average Airbnb Cap Rate: 8.6%
- Average Airbnb Occupancy Rate: 54.2%
- Walk Score: 43
Houston real estate market analysis shows that Pecan Park is #5 among the top neighborhoods in Houston for starting an Airbnb business in 2019. Property prices in the area are equivalent to the national median home value, which makes real estate investing accessible even for investors with somewhat limited financing options. The Pecan Park neighborhood is ideal for those who want to invest in Houston single family homes for sale as this is the predominant property type in the area. The average Airbnb rental income is high and brings an excellent rate of return for this rental strategy. Buying an Airbnb investment property could turn into a profitable real estate investment strategy for investors who do the right real estate market analysis before closing a deal.
6. Independence Heights
- Median Property Price: $414,600
- Average Price per Square Foot: $206
- Average Monthly Airbnb Rental Income: $2,130
- Average Airbnb Cap Rate: 6.0%
- Average Airbnb Occupancy Rate: 48.5%
- Walk Score: 40
If you still haven’t decided where to buy an Airbnb rental property in the Houston real estate market, you should also consider Independence Heights. This location is yet another profitable place for the Houston short term rentals industry in 2019 and 2020. While Houston real estate prices here are a bit higher than in the rest of the neighborhoods included in this Houston real estate market report, the Airbnb income is good enough to provide above-average return on investment. So, you should definitely look into Houston homes for sale in the Independence Heights neighborhood if you are looking for lucrative options. Investing in an Airbnb rental property in Independence Heights can bring a high rate of return as long as a real estate investor conducts diligent investment property analysis.
Investing in Houston Real Estate Properties: Optimal Rental Strategy
As highlighted in this Houston real estate market report, both traditional, long term rentals and Airbnb, short term investment properties can turn into lucrative options for savvy investors. The key to success to any location including the Houston housing market is being supplied with the top real estate investment tools for finding and analyzing real estate deals.
When looking at the average return on investment, however, Airbnb Houston rental properties are definitely the more profitable real estate strategy in this Texas real estate market. Taking into consideration the recurring rental expenses for both types of income properties, Houston vacation rentals yield a better rate of return.
The reasons for the large success of the Houston Airbnb rental industry have been the strong economy, the status of Space City as a major commercial hub, and the numerous tourist attractions. H-Town attracts more than 22.3 million leisure and business travelers annually, and many of them choose the comfort and prices of Houston short term rentals rather than hotels. This is the main reason for the high Airbnb occupancy rate in the Houston real estate market, which in turn drives profitability up.
Another important factor for the growth of Airbnb Houston has been the stance of the local authorities. Similar to some other cities in the Texas housing market, Houston remains one of the relatively few major US cities where short term rentals are allowed for all property types, for both owner-occupied and non-owner occupied homes, and for an unlimited period. This support from the local authorities is of indispensable help at times when most major counties and cities in the US housing market decide to restrict and even prohibit vacation rental homes.
So, while making money in real estate is possible with both long term Houston investment properties and Houston short term rentals, the latter is the more profitable real estate investing strategy in most cases.
Why You Should Invest in Real Estate in Houston in 2019: The Pros
The main reason why real estate investors should consider buying a rental property in the Houston housing market is the high return on investment. After all, the ultimate goal of any property investor – whether new or experienced – is to make as much money as possible. As this Houston real estate market report shows, profitability in Space City exceeds profitability in many of the other best places to invest in real estate in the US. This holds true for both rental strategies: traditional and Airbnb.
The relatively affordable Houston real estate prices are another factor which favors investments in H-Town. No matter what rate of return a certain market offers, if property prices are skyrocketing, it will remain beyond the reach of regular individual real estate investors.
Moreover, natural appreciation in the Houston housing market is at healthy levels. While it is enough to make long term real estate investments beneficial, it does not threaten to undermine affordability any time in the near future.
Both traditional and Airbnb rental demand in the Houston real estate market is strong. The large population and the high proportion of renters vs. homeowners assures that traditional investment properties will continue to be demanded. At the same time, the 22.3 million visitors who come to Houston each and every year translate into millions of Houston Airbnb guests in the eyes of real estate investors. This assures a high Airbnb occupancy rate and an excellent return on investment, in turn.
Last but not least, the conscious choice of the authorities of the City of Houston to not restrict the short term rentals industry is a major factor contributing to the success of the Houston real estate market. This sets Space City apart from many other major US cities such as New York, Boston, Chicago, Los Angeles, Las Vegas, and more, which decided to limit the growth of vacation rentals, especially as investment properties.
To sum up, investing in Houston homes for sale in 2019 and 2020 is an excellent way to make money from real estate in both the short term and the long run.
Why You May Not Want to Invest in Real Estate in Houston in 2019: The Cons
While the benefits of investing in the Houston real estate market are many, there are a few things which investors should keep in mind before buying a rental property here. The most important consideration to keep in mind is the relatively high crime rate in Space City. This is not something unusual for major cities in the US housing market. It just means that Houston, Texas real estate investors should install the necessary safety and security systems in their rental properties in order to protect their tenants or Airbnb guests and income property. Consequently, the cost of such a system needs to be factored in the rental property analysis before deciding on a property to buy to assure positive cash flow and good cap rate.
Houston Real Estate Market Forecast
In brief, the Houston housing market predictions for 2020 and beyond are very positive. Natural real estate appreciation is estimated at 3.4% for next year, which is close to the US average rate. This means that Houston investment properties will continue to provide a hedge against inflation and to offer a long term return on investment.
Another important Houston real estate market trend is the expected high rental demand for both traditional and Airbnb investment properties. In turn, this will lead to above-average rate of return on a rental property in the Houston, Texas real estate market in 2020.
The Houston housing market forecast predicts that single family homes will remain the dominating property type as they will constitute the majority of houses for sale in Houston. This is good news for all real estate investors as single family homes are one of the best rental properties in any location.
Furthermore, Space City will remain a buyer’s market in 2020. This makes it an ideal location for beginner real estate investors who want to be able to purchase an income property easily, without entering into a bidding way with more experienced investors or motivated homebuyers. Working with a top-performing Houston, TX real estate agent will further facilitate the work of first-time investors.
Last but not least, no Houston real estate market forecast for 2020 can skip the fact that Airbnb Houston is expected to remain fully legal in all its forms. The importance of Houston short term rentals is expected to rise for real estate investors as more and more major US housing markets decide to restrict the home sharing industry on their territory.
Additional Resources for Houston Real Estate Investors
Best Houston Investment Properties
This Houston real estate market report shows that buying an investment property in Space City can be a profitable strategy, regardless of the preferred rental option. However, beginner real estate investors find it challenging and even overwhelming to find and analyze deals and to compete with more experienced investors. However, with the help of the best real estate investment tools, they will be able to buy top-performing rental properties in the Houston housing market or any other location of their choice.
A heatmap will allow even new real estate investors to find the best locations for investing in traditional and Airbnb rental properties with a single look at the map of Houston neighborhoods. This real estate investing tool with color-code the neighborhoods in Houston based on average listing price, traditional or Airbnb rental income, traditional or Airbnb cash on cash return, and Airbnb occupancy rate.
Once real estate investors have identified the best neighborhoods in the Houston housing market for their preferred rental strategy and according to their budget, they can use an investment property calculator. This tool will provide a detailed neighborhood analysis as well as individual rental property analysis of any of the 1,372 homes for sale in Houston, TX. some of the metrics which investors will have immediate access to include the property listing price, comparable rental income, average rental expenses, expected cash flow, cash on cash return, and cap rate, and the optimal rental strategy: traditional or Airbnb.
Using a Property Finder will speed up the process of locating Houston houses for sale which match the budget and other search criteria of real estate investors.
Conducting Houston real estate market analysis and investment property analysis with these tools will give a competitive edge to any real estate investor, no matter how much or how little experience he/she has.
Top Houston Real Estate Agents
Experienced and full-time real estate investors are usually capable of finding and buying properties on their own. However, beginner investors as well as part-time ones face challenges in this regard. To address these challenges and stand on an equal footing with professional investors, they can hire one of the best real estate agents in Houston. The top-performing Houston, Texas real estate agents will not only help new investors find profitable deals but also help them negotiate the best possible price, as close to the fair market value as possible. Some of the best real estate agents in Houston, TX are:
Houston Real Estate Auctions
Buying foreclosures is one of the easiest and most efficient ways to invest in cheap real estate in the Houston housing market as well as any other location. Foreclosed homes, bank-owned homes, and short sales are listed for only a fraction of the regular property prices which gives investors the option to push their short term and long term return right away. If you’d like to consider this real estate investing strategy in Houston, you can have a look at the Texas real estate auction calendar.
Property Management of Traditional Houston Rental Properties
Many potential investors refrain from attempting to make money in real estate with rental properties because they don’t want to become a landlord. However, investing in real estate does not have to be equivalent to being a landlord. Nowadays investors can hire a professional property manager who will not only take care of all the aspects of owning and managing a long term rental property but also increase the rate of return by optimizing the rental property management process. Working with a rental property management company can turn investing in income properties into a passive real estate strategy.
Property Management of Houston Short Term Rentals
Not everyone is excited about becoming an Airbnb host because of the multiple tasks associated with this job. Thus, if you’d like to invest in Airbnb Houston and want your Airbnb income to be a passive income, you can hire a vacation rental property manager. Such a professional will not only do all the work of an Airbnb host but also increase the Airbnb occupancy rate and Airbnb rental income, for the benefit of the investor.
Our Top Real Estate Blogs for Investors in Houston
- Houston Housing Market Predictions 2020
- 5 Texas Real Estate Market Trends to Expect in 2020
- Where to Find the Best Houston Real Estate Investment in 2019
- The 4 Top Neighborhoods for Houston Real Estate Investing
- Where to Buy an Investment Property in the Houston Real Estate Market in 2018?
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