How to Find the Best Houston Income Properties

Time and time again, the Houston real estate market delivers on its promise of high returns for rental property investors- both local and out of state. And the Houston housing market predictions for 2020 all point to a top location where:

• The economy is diverse and the population is growing
• House prices will remain relatively affordable compared to other large metro areas in the US housing market
• Investment properties will appreciate in value by 3.3% (according to Zillow)
• Real estate investors can enter the market with confidence as it will be a buyer’s market
• Demand for long term rental properties is high with over 56% of residents renting out a property rather than buying their own homes (according to NeighborhoodScout)
• Non-owner occupied Airbnb rental properties are legal and in demand with over 22 million tourists expected to visit the city in 2020

Mashvisor’s traditional and Airbnb data confirm these positive trends and place Houston income properties among the top-performing in the US housing market in 2020. Take a look:

• Median Property Price: $405,074
• Price per Square Foot: $171
• Price to Rent Ratio: 15
• Monthly Traditional Rental Income: $1,843
• Traditional Cap Rate: 1.5%
• Average Airbnb Daily Rate: $114
• Monthly Airbnb Rental Income: $2,231
• Airbnb Cap Rate: 1.4%
• Airbnb Occupancy Rate: 50%
• Walk Score: 44

Both traditional and Airbnb Houston income properties will bring a good return on investment. But you may have noticed that the average cap rate by city for either rental strategy is low. A good cap rate for a rental property is somewhere between 8-12%. Because Mashvisor’s real estate market data considers all rental properties, it is normal to see that even some of the best places to invest in real estate have a cap rate ranging between 1-4%. 

Note: While it is generally accepted that a good cap rate is a high one, there is a lot more to consider when analyzing this property metric. A low cap rate property that is in a good neighborhood and promises positive cash flow can also make for a good real estate investment.

And that is precisely why I decided to put together this guide for you on how to find the best Houston income properties- those with a high return on investment that greatly exceeds the city average. These investment properties are out there, you just have to know how to find them!

Let’s start by talking about how to find the best neighborhoods in Houston.

How to Find the Best Neighborhoods in Houston

Naturally, some neighborhoods in the Houston real estate market will have high cap rate properties for sale while others will make you regret ever investing in Houston real estate. You have to be able to distinguish between the good and the bad locations. While there are certain factors you can research like Walk Score, crime rates, and available amenities, nothing is more revealing than Mashvisor’s neighborhood data analysis.

You can conduct neighborhood analysis to find the best Houston income properties using Mashvisor’s Real Estate Heatmap. Simply visit Mashvisor.com, type in Houston, TX, and you’ll be taken to a map of Houston neighborhoods. You will also see all of the investment properties for sale available for Houston real estate investing. To trigger the Heatmap, click the “Explore Data” button in the top left corner of the map of Houston:

This will reveal a set of filters that will help you find the best neighborhoods. They include:

• Listing Price
• Airbnb Cash on Cash Return
• Traditional Cash on Cash Return
• Airbnb Rental Income
• Traditional Rental Income
• Airbnb Occupancy Rate

Note: Cash on cash return and cap rate are equal until you factor in your investment property financing (mortgage vs paying in cash). Mashvisor allows you to find income properties based on your financing as well using other filters. You can click here to give it a try.

Houston real estate investors can set each filter, one by one, to narrow down neighborhoods that will have high cap rate properties for sale that are within their budget. You will be able to easily identify these neighborhoods because the Heatmap analysis tool uses colors to indicate a certain value range. In the above picture, you can see that more affordable Houston investment property can be found in the neighborhoods in red or orange. Likewise, income properties in Houston with a high Airbnb occupancy rate would be found in the neighborhoods in green, once that filter is selected. 

To help you quickly find top-performing Houston income properties today, I actually went ahead and did the neighborhood analysis for you. Here are the best neighborhoods in Houston. You’ll find a top location on this list whether you’re buying an investment property to rent out traditionally or on Airbnb:

The Best Houston Neighborhoods for Traditional Rental Properties

Westwood

• Median Property Price: $110,773
• Price per Square Foot: $74
• Price to Rent Ratio: 8
• Monthly Traditional Rental Income: $1,215
• Traditional Cap Rate: 4.2%

Second Ward

• Median Property Price: $269,714
• Price per Square Foot: $145
• Price to Rent Ratio: 11
• Monthly Traditional Rental Income: $2,118
• Traditional Cap Rate: 3.3%

Iah – Airport Area

• Median Property Price: $159,000
• Price per Square Foot: $83
• Price to Rent Ratio: 11
• Monthly Traditional Rental Income: $1,255
• Traditional Cap Rate: 3.5%

Greater Fifth Ward

• Median Property Price: $227,225
• Price per Square Foot: $165
• Price to Rent Ratio: 12
• Monthly Traditional Rental Income:  $1,607
• Traditional Cap Rate: 3.4%

East Little York – Homestead

• Median Property Price: $137,323
• Price per Square Foot: $79
• Price to Rent Ratio: 9
• Monthly Traditional Rental Income:  $1,265
• Traditional Cap Rate: 2.7%

Start your search for traditional Houston income properties now.

The Best Houston Neighborhoods for Airbnb Rental Properties

Edgebrook Area

• Median Property Price: $194,600
• Price per Square Foot: $121
• Price to Rent Ratio: 15
• Average Airbnb Daily Rate: $85
• Monthly Airbnb Rental Income: $2,961
• Airbnb Cap Rate: 6.9%
• Airbnb Occupancy Rate: 70%

Golfcrest – Bellfort – Reveille

• Median Property Price: $185,760
• Price per Square Foot: $103
• Price to Rent Ratio: 12
• Average Airbnb Daily Rate: $116
• Monthly Airbnb Rental Income: $2,675
• Airbnb Cap Rate: 6.1%
• Airbnb Occupancy Rate: 55%

East Little York – Homestead

• Median Property Price: $137,323
• Price per Square Foot: $79
• Price to Rent Ratio: 9
• Average Airbnb Daily Rate: $143
• Monthly Airbnb Rental Income: $2,050
• Airbnb Cap Rate: 5.9%
• Airbnb Occupancy Rate: 53%

Iah – Airport Area

• Median Property Price: $159,000
• Price per Square Foot: $83
• Price to Rent Ratio: 11
• Average Airbnb Daily Rate: $127
• Monthly Airbnb Rental Income: $1,540
• Airbnb Cap Rate: 5.7%
• Airbnb Occupancy Rate: 55%

Braeburn

• Median Property Price: $187,349
• Price per Square Foot: $103
• Price to Rent Ratio: 11
• Average Airbnb Daily Rate: $130
• Monthly Airbnb Rental Income: $3,013
• Airbnb Cap Rate:  5.5%
• Airbnb Occupancy Rate: 55%

Related: Airbnb Rentals: Finding Income Properties Using a Heatmap

At the time of this writing, these are the best neighborhoods for buying rental property in Houston. But with the Real Estate Heatmap, you will always be able to find the top-performing neighborhoods in the market at any time.

Find and analyze the best neighborhoods in Houston now.

How to Find the Best Houston Income Property for Sale

The next step in your search to find the best Houston income properties for sale may seem overwhelming. Even if you are only interested in investing in Houston real estate in one neighborhood, you may still find that you have 10 or 20 options. How do you choose one? Well, there are two real estate investment tools that you can use.

The first is Mashvisor’s Rental Property Finder. This property search tool for investors allows you to set a few filters, including one for the location. It will then instantly provide a list of Houston real estate investment properties with the highest return on investment. The filters you can use are:

• Location (type in Houston, TX)
• Miles From
• Budget
• Rental Strategy (Airbnb vs Traditional)
• Type of Investment Property (single-family home, multi-family home, condo/coop, other)
• Number of Bedrooms/Bathrooms

Related: The Best Way to Find Rental Property for Sale: AI

With that, you’ll be looking at the best Houston income properties along with a quick investment property analysis for each one. You’ll be able to see the listing price, estimated value, and the traditional and Airbnb cash on cash return. You can then choose a few of the best ones to use with the next tool- the Investment Property Calculator.

Clicking on an Investment Property Card from the Rental Property Finder will take you to a Property Analysis Page where the calculator can be found. How will Mashvisor’s Investment Property Calculator help you find the best income property in Houston? Well, this powerful tool uses traditional and Airbnb predictive analytics to display pre-calculated ROI metrics for you. This complete analysis includes:

• Comparable Rental Income
• Estimates of Monthly Rental Property Expenses
• Rental Property Cash Flow
• Cash on Cash Return
• Cap Rate
• Occupancy Rate
• Real Estate Comps
• Investment Payback Balance

And all of this data is presented to you for both the traditional and Airbnb rental strategy. This will help you quickly decide if you want to invest in Houston short term rentals or long term rentals. You will also have access to a mortgage calculator where you can enter in your financing information (loan type, amount, interest rate, down payment, loan term). Any change you make here will immediately impact the return on investment metrics in the calculator. That way, you can see if you’ve found the best Houston income property based on your personal financing.

Find and analyze the best Houston income properties now.

What About Off Market Properties in Houston?

If you prefer to buy investment property that is off market, you should still be using data to find the top income properties. With Mashvisor, there are two ways to find off market properties in the Houston real estate market.

The first is the Mashvisor Property Marketplace. This real estate marketplace is home to a vast supply of foreclosed homes, short sale properties, and bank owned homes. And because you’ll need to perform an investment property analysis on any property that appeals to you, you can easily access the Investment Property Calculator through Marketplace properties.

The second way to find off market properties in Houston is by finding out who owns a house. You can then get in touch with them to see if they are willing to sell and make an offer. Experienced real estate investors often use this tactic to find the best real estate deals. But now anyone can use this approach with the property ownership data available on Mashboard. You don’t even need to have a property address in mind. Simply search for property owners in a certain location and you can get access to names, addresses, emails, and phone numbers within minutes.

Related: How to Find Out Who Owns a Property for Off Market Deals

Find High Return Houston Income Properties Today

The Houston housing market may be one of the best places to buy a rental property, but not every property for sale will turn a profit here. It’s best not to take any major risks- do the needed analysis beforehand with Mashvisor’s real estate investment tools. You can get access to all of these tools and more by signing up for a 7-day free trial now.