Are you looking to invest in short term rental Houston? Keep reading to find out what the Houston real estate market looks like.
Smart real estate investors know that Houston, Texas is a hot housing market. Many consider it one of the most beautiful and serene places to bring up a family. Real estate investors shouldn’t miss out on the diverse opportunities the city offers.
Table of Contents
- Why Invest in the Houston Housing Market?
- Why Short Term Rentals in Houston?
- Short Term Rental Ordinances in Houston
- How to Find a Profitable Short Term Rental Property in Houston
- Top 4 Houston Neighborhoods for Short Term Rentals
As an investor looking at the market, we strongly advise you to look into short term rentals. And it is for many reasons.
In today’s article, we’ll look at why you should invest in short term rentals in Houston. We’re also going to see which of the locations in Houston are best for short term rental investment.
Why Invest in the Houston Housing Market?
We saw significant growth in the Houston real estate market in Houston in the last few years. The growth is expected to stay constant in the coming years. Many people are moving to Houston due to affordability in the cost of living and the availability of job opportunities.
So, why should you consider investing in the Houston housing market?
1. Strong Housing Market
Unlike already established big cities like New York and Washington, there’s a lot of room for growth in Houston. First, the city is characterized by low-density urban development, meaning that there’s a lot of space left for new development.
Second, there’s a wide range of real estate investment options for investors to choose from. The favorable housing costs allow developers to build various types of properties for investors to select from.
In 2022, a total of 2,493 homes were sold every month in Houston, according to the Houston Association of Realtors (HAR). Though the number represents a 22.1% decrease from 2021, investment activity in the city remains strong. Median property prices of $315,000 monthly, which is an 8.6% increase from the previous year.
2. Robust Economy & Job Opportunities
The economy is one of the strongest pillars of any real estate market. When the economy is strong, the market does well.
Houston region’s manufacturing GDP ranks second in the US. The area also boasts the largest medical complex globally, the Texas Medical Center. It hosts over 6,400 manufacturers who produce $80 billion annually and employ over 240,000 skilled workers.
The best thing is that the job market remains strong despite the pandemic. The low cost of living is encouraging many companies to relocate to Houston. You can expect the city to add more than 150,000 jobs.
Due to the positive economic outlook, many new residents are moving to Houston to live and work there, hence boosting the demand for housing.
3. Population Growth
Greater Houston is the most rapidly growing metropolitan area in the US. It is mainly due to immigration. Being the largest city in Texas, it is home to more than seven million people. It’s also the fourth most populous city in the US.
Houston’s population growth is mainly fueled by the strong economy and the availability of job opportunities. Immigrants make up more than a third of the workers. Due to the diverse residents, the city enjoys thriving business, sports, fashion, education, and technology sectors, among many others.
All the above factors are part of the reason why Houston attracts millions of visitors and tourists every year. Remember, tourists and visitors are your target market when investing in short term rentals in Houston.
Why Short Term Rentals in Houston?
One of the major questions you should ask yourself before investing in short term rentals in Houston is what brings people to Houston, Texas?
Remember, many short term rental guests are tourists and vacation-goers. As such, the number of tourist attractions accessible to your rental will play a huge role in determining the number of your bookings every year.
Fortunately, Houston city isn’t short in terms of attractions and activities that attract tourists and visitors every year. If you’re looking for reasons to invest in short term rentals in Houston, here are a few:
Space Center Houston
The Space Center Houston is a must-visit attraction in the city. The huge complex allows visitors to walk through a replica of the space shuttle Independence.
Visitors can also walk through a replica of the first space station in the US and touch a rock from the moon. They can also learn about any upcoming missions from NASA.
Lucky visitors who visit on Friday around noon can even meet an astronaut.
Houston Museum District
The Houston Museum District is one of the city’s best cultural attractions. You can find over 19 museums in the beautiful downtown area, with 11 of them being free to the public.
Some museums your guests can check out include the Museum of Fine Arts, Houston, the Children’s Museum of Houston, the Holocaust Museum, and the Houston Museum of Natural Science.
The best thing about the said cultural attractions is that they’re mostly within a walking distance. Investing in a short term rental in the district can guarantee high booking rates year-round.
Houston Zoo
The Houston Zoo is set on 55 acres in Hermann Park. It’s popular with locals and visitors as well, making it one of the city’s greatest attractions.
The zoo is home to more than 6,000 indigenous and exotic animal species. You can also find a children’s zoo and education center.
Visitors will enjoy feeding the giraffes, watching sea lions, seeing marine life in an aquarium, and taking leisure walks.
Other Attractions
As we mentioned before, the city of Houston boasts several tourist attractions that bring visitors from various places around the world. The other attractions include:
- The Menil Collection
- Miller Outdoor Theatre
- Japanese Garden
- Herald D. Hines Waterwall Park
- National Museum of Funeral History
Short Term Rental Ordinances in Houston
One of the mistakes that some investors, especially newbies, make is forgetting to factor in a real estate market’s laws and regulations for short term rentals.
As short term rentals became popular, most government authorities passed laws to regulate the short term rental industry. Some did so to bring some order while others banned them completely.
You don’t want to invest in a promising rental property only to find out that short term rentals are illegal in your preferred city or get into legal trouble for something you could’ve avoided.
Fortunately, when it comes to investing in short term rental properties in Houston, there aren’t many laws or restrictions. You only need to keep in mind two things, namely:
1. Building Standards
All buildings, whether short term rentals or not, must adhere to the laws and regulations set by Houston with regard to the designs, construction, and maintenance of buildings. The guidelines serve to ensure that all buildings in the city are habitable, safe, and healthy.
You can contact the Houston’s Customer Assistance & Code Development Office to find out whether there are certain laws that apply to your short term rental listing.
2. Hotel and Motel Ordinance
The ordinance regulates short term rentals and can be found in the Houston Code of Ordinances. You can find important guidelines for hotels, bed and breakfast facilities, and residences.
Carefully review all relevant laws to ensure that your rental property adheres to the guidelines.
How to Find a Profitable Short Term Rental Property in Houston
At this point, you might already be interested in investing in short term rentals in the Houston real estate market. But how do you actually find lucrative vacation rental properties in Houston?
There are many online platforms that promise to help you access profitable properties. However, the only platform you can truly rely on is Mashvisor.
Let’s look at how Mashvisor will help you find profitable Airbnb rental properties in Houston:
Find a Profitable Neighborhood
You must first consider your investment location even before you invest. Your location determines how much rental income you can expect from your short term rental.
Narrow down your location analysis to specific neighborhoods since different neighborhoods within the same city offer different rates of return on investment. Besides, you want to find a neighborhood where the median property price matches your budget.
Mashvisor’s real estate heatmap is the best online tool to help you find lucrative neighborhoods in Houston. First, it is a color-coded heatmap that uses different colors to show how different neighborhoods perform based on the metrics you’ve set.
The color green represents active and hot neighborhoods, while red shows dormant ones. Orange is for neutral ones.
You can set your criteria on the heatmap using different filters, such as listing price, rental income, cash on cash return, and short term rental occupancy rate.
You can use Mashvisor’s real estate heatmap to find lucrative neighborhoods in Houston based on your chosen metrics.
Find Lucrative Properties
After obtaining a list of some profitable neighborhoods in Houston, it’s time to find properties with a good return on investment. The best way to find a lucrative property in your neighborhood of choice is by using an online database search. We provide the right tools to help you with that.
Our investment property search will allow you to search for and spot profitable investment properties in Houston and across the US housing market.
The tool comes with other features to help you customize your search based on the following:
- Your budget
- Expected cap rate and cash on cash return
- Property type
- The number of bedrooms and bathrooms
- Age of the property
After setting up the filters to match your requirements, the property results will change according to your criteria. You can hover the cursor over any property to reveal more details about it.
The reality about looking for a property in a hot housing market is that you might not find undervalued properties. You’ll need to compromise on your budget expectations or wait for a perfect property.
Once you have a list of potential investments, it’s time for you to analyze them further.
Related: What’s a Good Cap Rate for Investment Properties?
Conduct Investment Property Analysis
Carrying out an investment property analysis is essential in helping you determine whether a listing is truly worth your time and finances. You need to ascertain that it does make financial sense and that you can afford it despite low bookings.
The truth is that carrying out a short term rental property analysis manually can be arduous. In addition, it’s time-consuming and prone to errors.
Fortunately, Mashvisor makes the process easier for you. Firstly, the property page offers you all the property details you need to make an investment decision.
Once you’ve found a property that interests you, simply click on it to open the property page. The page gives you an insight into all essential property data, such as monthly rental income, cap rate, cash on cash return, and estimated property expenses. Also, you get an overview of the real estate comps and short term rental analytics.
Secondly, you can use our investment property calculator to estimate the property’s rental income and return on investment after financing costs and expenses.
Using Mashvisor’s Investment Property Calculator
The calculator is interactive, which means you can tweak different values to see what the returns would look like under different circumstances. It is very important, especially if the house is in need of repairs or your mortgage terms are different from the average.
The best thing about Mashvisor’s tool is that it shows you the estimated returns for both long term and short term rental strategies. It is important since you can choose the strategy that matches your financial and investment goals.
You don’t need to worry about data accuracy and reliability since we pull our data from reliable sources, such as the Airbnb platform. We also regularly carry out our own market research and update our market and property data.
To learn more about Mashvisor, sign up for a 7-day free trial and start your journey to successful real estate investing.
You can use Mashvisor’s investment property calculator to estimate an investment property’s rental income and ROI after deducting financing costs and expenses.
Top 4 Houston Neighborhoods for Short Term Rentals
Let’s now look at some of the most profitable neighborhoods for short term rentals in Houston. The neighborhoods are ranked from the highest to the lowest cash on cash return, based on Mashvisor’s end-November location data.
1. Macgregor
- Median Property Price: $408,860
- Average Price per Square Foot: $222
- Days on Market: 9
- Number of Short Term Rental Listings: 562
- Monthly Short Term Rental Income: $2,047
- Short Term Rental Cash on Cash Return: 1.64%
- Short Term Rental Cap Rate: 1.67%
- Short Term Rental Daily Rate: $182
- Short Term Rental Occupancy Rate: 33%
- Walk Score: 52
2. South Main
- Median Property Price: $288,319
- Average Price per Square Foot: $162
- Days on Market: 11
- Number of Short Term Rental Listings: 602
- Monthly Short Term Rental Income: $2,313
- Short Term Rental Cash on Cash Return: 1.56%
- Short Term Rental Cap Rate: 1.57%
- Short Term Rental Daily Rate: $129
- Short Term Rental Occupancy Rate: 33%
- Walk Score: 30
3. Second Ward
- Median Property Price: $461,216
- Average Price per Square Foot: $231
- Days on Market: 15
- Number of Short Term Rental Listings: 507
- Monthly Short Term Rental Income: $2,190
- Short Term Rental Cash on Cash Return: 1.19%
- Short Term Rental Cap Rate: 1.21%
- Short Term Rental Daily Rate: $165
- Short Term Rental Occupancy Rate: 37%
- Walk Score: 64
4. Greater Eastwood
- Median Property Price: $412,751
- Average Price per Square Foot: $274
- Days on Market: 11
- Number of Short Term Rental Listings: 513
- Monthly Short Term Rental Income: $1,970
- Short Term Rental Cash on Cash Return: 1.09%
- Short Term Rental Cap Rate: 1.10%
- Short Term Rental Daily Rate: $167
- Short Term Rental Occupancy Rate: 37%
- Walk Score: 75
Follow this link to begin your search for a lucrative short term rental in Houston today.
Key Takeaways
Investing in a short term rental in Houston, Texas can be a lucrative investment if done properly. Houston boasts an active housing market that is expected to grow even more in the coming years. Also, there are many tourist attractions to ensure that you maintain a good occupancy rate throughout the year.
Before investing in a short term rental, you must ensure you find the right neighborhood, spot lucrative investment properties, and carry out an in-depth property analysis using the right tools.
Fortunately, Mashvisor offers the best tools to walk with you in your investment journey. We provide the right data and analytics to help you make smart investment business decisions.
Schedule a demo with us today and see how our tools can help you.