Houston Neighborhoods for Rental Investment Properties
Houston is a fantastic city for real estate investors wanting to buy homes that they lease. There a many factors that make this a vibrant area for owning rental properties. Many of the investors are from other states. A national real estate investment company that searches America for great investment opportunities in rental properties thinks Houston is the top market in the country.
The factors that make Houston a great city for rental properties include:
- Houston has a growing job market.
- The population of Houston is increasing.
- People who work in the oil/energy industry sector often transfer after a few years, so they prefer to rent a home rather than to buy one.
- Many students at colleges and universities like to share a home with roommates, rather than live in an apartment, because each individual’s cost reduces by sharing.
- The median sales prices for homes are modest.
- The median rents are high enough to give investors a good return.
- There is a high level of interest from investors from many other parts of America as well as from foreign countries.
Areas to consider include Katy, Cypress, Conroe, Spring Valley/Spring Branch, and near the Exxon Company in Woodlands or near other major corporations, especially those in the oil/energy sector. Also, take at look at any of the housing areas near any of the universities in Houston or close to the medical centers.
The One Percent “Rule”
A good rule to follow is the one percent rule. Profits are possible when investing in rental properties that can rent for at least 1% of the sales price to buy the property. Homes are for sale in many Houston neighborhoods that meet these criteria. Homes that sell for up to $200,000 are usually the best candidates. Fixer-uppers that sell for bargain prices of $100,000 that can be renovated for no more than $50,000 may also qualify. Homes that have a very low price might lose value. Homes that have a price that is too high, cannot rent for enough.
Bank Rate reported at the end of 2013 that the median asking price for a three-bedroom home in Houston was close to $150,000. During that same period, the median rental price for one of those homes was $1,400 per month. Excluding taxes, renovation expenses, and insurance costs, buying a home at the median price and renting it for the median rent, would create an annual gross return of 11.2%.
Conclusion
Houston is an excellent market for those real estate investors interesting on owning rental properties. ACRES Solutions specializes in helping real estate investors locate, acquire, renovate, and manage such rental properties. Whether you live in the Houston area or are from out of state, give us a call at 281-972-5535.