Airbnb Houston: Is It Worth Investing In?

Should you be investing in Airbnb Houston? Or is it a better idea to run a traditional rental instead? Find out more in this guide.

Houston is the fourth biggest city in the United States and boasts one of the most robust economies. Because of its thriving international trade and population expansion, Houston assets have attracted the attention of several market investors as it is among the top-rated cities to live in.

Table of Contents

1. 2023 Houston Texas Housing Market Recap
2. Airbnb Houston, TX Housing Market in 2023
3. 3 Best Areas in Houston for Airbnb
4. Is Airbnb Legal in Houston?
5. Is Airbnb Profitable in Houston, TX?
6. Biggest Tourist Attractions in Houston
7. How to Find Airbnb Investment Property

Experienced real estate investors will often look for opportunities to invest in vacation rentals in the Texas real estate market. This is due to the higher average rate of return that short-term rentals have compared to traditional rentals.

So, is Houston any different in this regard?

In this article, we will look into the Houston Airbnb market, its past and present performance, and other details about owning a vacation rental there.

2023 Houston Texas Housing Market Recap

In the past few years, the Texas housing market has become one of the top markets for real estate investing.

As the hype and fear of a real estate crisis fades, homebuyers and sellers will start buying and selling at pre-pandemic levels, predicts Jennifer Wauhob, the 2022 chair of the Houston Association of Realtors (HAR).

The level of education and job prospects in Houston are likewise predicted to improve. This provides investors with additional practical reasons to invest.

According to several sources, an Airbnb host in Houston can expect to make $25,190 per year. And that is only for running a 2-bedroom home with a reasonable 49% occupancy rate.

1. The Rental Market Held Strong

If you’re a rental investor in Houston, you’ll be happy to know that the market is strong.

Despite the impact of the pandemic on home prices and unemployment rates, rental vacancies were at their lowest point in many years.

Median rents were also steady in the past couple of years, increasing by only about $100 over the last five years.

Strong consumer demand continues to support the single-family rental market. Due to persistent uncertainties regarding interest rates and inflation, many prospective homeowners are opting for rentals.

2. Recovering Supply and Growth

Similar to the rest of the country, Houston suffered from a housing supply shortage in 2020 and early 2021.

However, the Houston housing market recovered better than most other markets near the end of 2022.

At that point, the city had a 2.5-month supply of houses, which was a significant jump over the national average. Construction also resumed in the area, especially for single-family homes.

Moreover, based on current trends and market data, the Houston housing market is expected to maintain its upward pace in 2023 and the following year. Home prices are expected to rise 3.2% over the next year, indicating a favorable climate for both buyers and sellers.

3. Suburbs Will Continue to Grow in Popularity

Houston is expanding outwards, and there has been significant growth in the suburbs as individuals seek larger estates.

The Woodlands and Katy are hot suburb markets, while northeast suburbs like Kingwood, Atascocita, and Crosby are all doing well.

There’s simply no doubt that Houston has a natural charm that draws visitors. Its many job areas, ranging from aerospace to aviation, encourage more scholars and professionals to visit the city. Aside from that, other investment properties are accessible to take advantage of.

Airbnb Houston, TX Housing Market in 2023

Of course, if you’re looking to invest in a property in Houston in 2023, you’ll want to know how the market is performing this year.

To understand how this city is doing, let’s take a look at Mashvisor’s market data regarding Houston Airbnb property prices, rental rates, and other stats:

Houston, TX

According to Mashvisor’s May 2023 data, these are the numbers investors will likely get on an Airbnb property in Houston: 

• Median Property Price: $443,881
• Average Price per Square Foot: $330
• Days on Market: 8
• Number of Airbnb Listings: 7,251
• Monthly Airbnb Rental Income: $1,976
• Airbnb Cash on Cash Return: 1.37%
• Airbnb Cap Rate: 1.40%
• Airbnb Daily Rate: $144
• Airbnb Occupancy Rate: 35%
• Walk Score: 46

As you can see from this data, on the surface level, vacation rental in Houston’s performance doesn’t seem outstanding.

Compared to traditional rentals, with a cash on cash return of 3.49%, the Airbnb projected returns don’t look very high.

Houston is considered one of the strongest markets for traditional rental investors as it offers a stable demand and low vacancy rates.

This, however, doesn’t mean that buying a vacation rental here is a bad investment.

3 Best Areas in Houston for Airbnb

As you will see when looking at neighborhood data in Houston, some neighborhoods show promising projections for short-term renting.

According to Mashvisor’s Airbnb data from May 28, 2023, these are the best areas in Houston for Airbnb and investing in short-term rentals.

The following neighborhoods are both affordable and have above-average monthly Airbnb rental income and a reasonable Houston Airbnb occupancy rate.

Fourth Ward

• Median Property Price: $443,266
• Average Price per Square Foot: $277
• Monthly Airbnb Rental Income: $2,072
• Airbnb Cash on Cash Return: 1.38%
• Airbnb Cap Rate: 1.40%
• Airbnb Daily Rate: $144
• Airbnb Occupancy Rate: 44%

Second Ward

• Median Property Price: $443,239
• Average Price per Square Foot: $235
• Monthly Airbnb Rental Income: $2,125
• Airbnb Cash on Cash Return: 1.11%
• Airbnb Cap Rate: 1.12%
• Airbnb Daily Rate: $161
• Airbnb Occupancy Rate: 31%

Midtown

• Median Property Price: $443,554
• Average Price per Square Foot:  $262
• Monthly Airbnb Rental Income: $2,033
• Airbnb Cash on Cash Return: 1.05%
• Airbnb Cap Rate: 1.06%
• Airbnb Daily Rate: $147
• Airbnb Occupancy Rate: 43%

As you can see, finding a Houston investment property in one of these locations can be lucrative.

While the Second Ward has the lowest median property prices in Houston, the other two neighborhoods on the list have good Airbnb estimate returns. Moreover, the Fourth Ward is the strongest when it comes to Airbnb cash on cash return.

Now, let’s first briefly talk about the Houston Airbnb laws.

Is Airbnb Legal in Houston?

No rules or regulations oversee short-term rental operations in Houston. There are also no limitations on the number of nights a home can be rented out. Local neighborhoods, instead, are in charge of controlling the activity through HOA bylaws, commitments, and deed restrictions.

Moreover, such conditions allow property owners to generate money from short-term rentals without worrying about legal ramifications. More good news, Airbnb arbitrage Houston is also legal and totally fine to focus on if you want to broaden your portfolio.

These are the two things you should keep in mind when thinking about how to start an Airbnb in Houston, Texas.

Building and Housing Standards

This includes all the standard rules and regulations the city enforces regarding construction, design, and maintenance standards for buildings.

These rules are relevant since they include regulations on the habitability, health, and safety of a dwelling.

Since specific rules apply to residential and non-residential uses and may be relevant to your listing, we recommend contacting the Customer Assistance & Code Development Office.

The Hotel and Motel Ordinance

This ordinance can be found in the Houston Code of Ordinances, and it regulates short term rentals in the city.

It includes important terms that include bed and breakfast facilities, hotels, and residences.

We advise you to review the ordinance to ensure your property meets its requirements and to see what permits you might need to operate it.

Is Airbnb Profitable in Houston, TX?

The good thing is that Airbnb makes money in Houston. It varies depending on your desired location, home type, amenities, and hosting abilities, among other factors.

In addition, Houston’s rental market will be solid in 2023, with significant demand for both long-term and short-term leases. As a result, Airbnb rentals in Houston are an appealing investment option for property owners wishing to produce rental revenue.

Biggest Tourist Attractions in Houston

Another important factor you should consider when investing in Airbnb Houston is the attractions that bring people to stay in the city.

Since short-term guests are mostly tourists or vacationists, the attractions your Airbnb rental has access to will play a huge factor in its performance.

Luckily, Houston has plenty to offer in terms of attractions and activities that bring in tourists from around the globe.

Here are a few you can use to your advantage when trying to find an Airbnb for sale.

1. Space Center Houston

“Houston, we have a problem.” Remember this famous line from Oscar-winning film Apollo 13?

It is no secret that Houston and NASA share a history.

The Space Center Houston is the visitor center of NASA’s Johnson Space Center, a must-see attraction in the city.

2. Houston’s Museum District

It is one of the city’s most significant cultural attractions.

The district contains 19 museums in the beautiful downtown area, with 11 of these being free to the public.

Since this is a concentration of museums that are primarily within walking distance from one another, Airbnb rentals around the area can be in very high demand.

3. The Houston Livestock Show and Rodeo

It is Houston’s biggest annual event.

The 19-day event, which takes place in February or March, brings out the whole city to celebrate.

Of course, this also brings in a lot of visitors to the city to celebrate the event, which means short term rentals are probably at their hottest during this period.

4. Houston Zoo

The Houston Zoo is a 55-acre attraction located in Hermann Park.

It is one of Houston’s star attractions and is as popular with the locals as it is with visitors.

Home to over six thousand exotic and indigenous animals, the zoo also contains an education center and a children’s zoo.

Visitors from all over come to the Houston Zoo to feed the giraffes, see marine life in the aquarium, and watch sea lions and otters.

It makes the area surrounding Hermann Park an excellent location for owning a short term Houston investment property.

5. Other Attractions

As mentioned, many attractions in Houston bring in tourists from around the globe – especially in Downtown Houston.

The city is known for its outdoor activities as well as its numerous cultural centers and attractions, whether your guests are looking to bike in the Buffalo Bayou Park, go to the Houston Zoo, or go on a day trip to Galveston.

The charm of the city, its wonderful street art, and the vintage stores on 19th Street in The Heights are all guaranteed to keep the flow of visitors going.

How to Find Airbnb Investment Property

If you’re searching for an Airbnb for sale, a few online tools can help you find what you’re looking for.

But if you’re looking for a platform that will help you search for Houston investment properties while also providing you with Airbnb analysis and data, then Mashvisor is the tool for you.

Mashvisor is a real estate platform designed to help investors find and analyze rental properties.

With a focus on Airbnb data, the platform includes several tools to help you find homes for sale that match your criteria and help you meet your goals.

Airbnb Calculator

Mashvisor’s Airbnb calculator is a powerful tool that gives investors insights about each property they consider.

This Airbnb analysis tool calculates the return on investment for each property using metrics like the cap rate and the cash on cash return.

It will also compare the results between traditional and short-term rentals to give you an idea of which strategy is better for each property.

The Airbnb estimates are based on data that we get from Airbnb, which is then processed by our AI using a sophisticated algorithm.

If you’re looking to run an Airbnb business, then this tool is something that you should consider using.

Investment Property Search

If you’re still in the process of looking for a place to buy, and you want to find data about Texas investment properties, for example, then this is the tool for you.

Mashvisor’s search tool is equipped with all the features that you will need to locate your next great investment.

The map UI includes several filters that you can adjust based on your:

• Your budget
• Desired cap rate
• Desired cash on cash return
• Type of property (single-family, multifamily, townhouse, condo, etc.)
• Age of property
• Number of bedrooms
• Number of bathrooms

Doing this will change the listings you see on the map to match your search criteria.

You can hover your cursor over any of the listings on the map to view that property’s details, such as its price and return on investment.

By clicking on one, you will be taken to that property’s Airbnb analysis page, where you will find the Airbnb calculator and rental comps.

Airbnb Houston: Conclusion

Investing in Airbnb Houston can be an excellent investment if you do it correctly: from choosing the neighborhood you want to invest in to picking prime locations near local attractions. Using the right tools for finding Airbnb for sale is a big help, too.

The many attractions in the city have brought in plenty of tourists and visitors from around the country and the globe. This makes Houston investment properties profitable as vacation rentals.

However, if you ever decide that Airbnb isn’t the right strategy for you, then you’ll always have the backup plan of switching to a traditional rental instead.

Since Houston is a very stable market, there are many traditional tenants in the area, and you will not struggle to get your property rented out.

Regardless of what you choose, whether it is a short-term or a long-term rental, Mashvisor is here to help you with traditional and Airbnb analysis tools and insights that will enable you to make smart Airbnb business decisions. 

To learn more about how Mashvisor can support your Airbnb investing journey, sign up today.