According to the 2018 English Private Landlord Survey, rental income accounts for 42% of landlords’ total gross income. As the trend of renting homes doesn’t seem to cease, standing firmly at around 40 million house units for the past eight years, renting a property might prove to be a financially savvy opportunity.
However, spending loads of money on purchasing a newly built property will take decades to pay off. On the other hand, buying an older property and refurbishing it might not be the most time- and money-efficient choice.
Yet, with the right tricks up your sleeve, insightful information, and an expert helping hand, your rental investment can pay off with little time, hassle, and money.
So, without further ado, let’s dive into the tips on how to find the perfect rental investment property in Houston, TX.
Why choose Houston in the first place?
As the 4th largest and the fastest-growing city in the US, Houston is a real estate investment haven. First of all, its real estate market is booming, as many of Space City’s neighborhoods are being rebuilt after the 2017 Hurricane Harvey.
Besides, analysts predict Houston will have the largest population growth in the following years, thanks to its flourishing job market and one of the lowest living costs in the US.
Houston’s neighborhoods are very diverse – from hectic business centers to calm and cozy areas perfect for raising a family – and thus provide immense opportunities for rental investing.
Tips for rental property investing in Houston
Choose your investment vehicle
Purchasing property directly and renting it to an individual or a company is only one of many different strategies of earning via rental.
There are other, more passive strategies, such as buying real estate-related stocks on a public exchange, investing in Real Estate Investment Trusts, or financing through a real estate crowdfunding platform.
Of course, the good old buy and rent method might be the most straightforward one, especially if you’re not keen on taking chances in unfamiliar turf.
Check the neighborhood
For the most part, the neighborhood you choose will determine what your rental property is most suitable for, and what type of tenants it’ll attract.
For example, if you choose a property near a university campus, you’ll probably have college students flock to the area, however, you might have a hard time filling the vacancies over the summer.
It’s advisable you check the vacancy rates in the surroundings. A vacancy rate going above the national average of 7.4% might indicate problems in the area that will dishearten the potential tenants and leave you with no income.
Moreover, investigate crimes happening in the neighborhood. Check with the local police records what type of crimes occur there, whether crime rates are declining or are on the rise, and how often the police are called to the area.
You can check the map of crimes across neighborhoods on Houston PD’s official website.
Last but not least, Houston is vulnerable to flooding and hurricanes, so discuss the best options with your local real estate broker.
Research the local amenities
No one wants to walk two miles to the nearest store, nor take a 45-minute drive to their kids’ school. Thus, the ideal rental property investment is the one near a school/kindergarten, movie theater, supermarket, public transportation, local market, parks, gyms, etc.
Luckily, Houston’s public transportation is regarded as one of the best and safest bus systems, with extensive bus routes and more than 1,200 buses.
Some of the Houston communities boast a luxury golf course designed by Tiger Woods, a local garden where neighbors can learn how to grow their own products, and a complex with white-sand beaches.
Look into the future
Before putting your signature on any paper, make sure to thoroughly check the plans for your desired area. Are there any major development plans, demolitions, construction of buildings that could damage the view, or factories that would drop the rental price?
No matter how state-of-the-art your rental property looks, if it’s surrounded by noise or smell, it definitely won’t be able to match your desired price.
For Houston, checking the neighborhood’s future is especially important because many communities are growing, with others being rebuilt after the 2017 hurricane. Moreover, Houston is transforming into an industrial center, so it’s wise to consult with a local city planner where these factories are intended to be built.
Set the right rental price
Ensure your property is profitable by defining the price that matches all monthly expenses but includes your own cash flow as well.
The key to setting the best price is research. Take a look at the rental prices of similar properties within the area, and do so even before buying the property.
Houston is generally known for its rather low living costs, and during the pandemic, the prices of rental properties have actually gone down even more.
Count in the taxes
Be aware of the taxes and other additional costs of buying and later renting a property. Check with Houston’s real estate renting experts who can fill you in with details on how to pay your dues to the state.
Are you cut out to be a landlord?
Being a landlord is not a full-time job, but it does require investing time and money. You’ll have to be patient as it’ll take time for your property to start bringing money. Besides, there’ll be various profiles of prospective tenants, and your task is to determine who is the most reliable and responsible occupant.
Moreover, if you want to save money on property managers and handymen, you should brush up on your skills such as unclogging a toilet or replacing the oven heater.
Finally, you’ll need to have time for occasional visits to the apartment and renters, to make sure your property is in order and adequately taken care of by your tenants.