### *We don't have a housing shortage. We have a shortage of desirable houses.*

 

In this article, we will explain the difference, and what real estate investors like you can do to profit from this misunderstood reality.

 

## Problem: Shortage Of Houses In Desirable Markets

 

Now that work from home has become widely acceptable, and the new normal, an overwhelming number of people have decided to pick up and relocate to one of several more attractive markets. This includes "sun belt", lower tax, and economically well-positioned destinations such as Phoenix, San Antonio, Jacksonville, Tampa, Orlando, West Palm Beach, Miami, Raleigh, Columbus, etc.

 

The problem is, there simply aren't enough enough homes for all of the people that want to move to these locations. A basic supply and demand imbalance has caused home prices in these markets to skyrocket. 

 

To use emojis, you have people 🧑🏾‍🤝‍🧑🏽 who have the same idea💡 to live some place nice 🌴 so they move there 🚚 and try to buy the same houses 🏠 which causes the houses to dramatically increase in price 📈 💰🚀.

 

## Solution for Investors: Build More Homes

 

If you're a real estate investor, you can profit by increasing the housing supply in these markets. You can use OfferMarket's Ground Up Construction program to fund land acquisition and construction budget -- up to 60% of the land cost and 100% of construction.

 

## Solution for Buyers: Consider Other Markets

 

Make no mistake, there is a housing bubble and mania that has swept through many regions and markets. Fear of missing out is real, and can drive people to make decisions that they later come to regret. Avoid overpaying for your next home. Avoid bidding wars and settling on a home that you otherwise would not be interested in buying in a normal market. 

 

Take a step back and re-evaluate your options:

 

- What are some less well-known markets that offer better value and are fundamentally attractive with good prospects for long term home price appreciation?
- Does it make sense to move right now, or can you afford to be patient and let this housing mania and bubble deflate?
- Are there off market fixer uppers available for a better value? [Subscribe to our off market deal flow](https://www.offermarket.us/survey/subscribe/deal-flow).

 

## Shortage Of Houses In Desirable Condition

 

There is a strong preference among buyers to want turnkey, move-in ready homes. It makes sense: the last thing buyers want to do after paying the down payment on a home is to coordinate moving into a home that needs to be renovated. Not only is it an additional cost, it's a logistical complication figuring out timing to move, contractors, planning the DIY components to save money. The limited housing supply on the market has moved many savvy, daring and well capitalized buyers to consider properties that need fixing.

 

## Solution for Investors: Renovate More Homes

 

Fix and flip investors are important participants in the housing market. It's one thing to encourage investors to flip more homes, it's another to actually find the distressed inventory (i.e. houses in poor condition) required to increase the number of homes being flipped in a given market.

 

To find more inventory:

 

- [Subscribe to off market deal flow](https://www.offermarket.us/survey/subscribe/deal-flow)
- Network with wholesalers
- Drive for dollars -- look for distressed houses in your market and get in contact with the owner

 

To fund your fix and flip projects, [get a bridge loan quote from OfferMarket](https://www.offermarket.us/loans). We fund up to 90% of the purchase price and 100% of the rehab and can close your transaction in 15 days. This type of loan is commonly referred to at "fix and flip" and "hard money".

 

## Solution for Buyers: Consider Fixer Upper Houses

 

Buying a fixer upper is a great way build home equity and wealth. There are loan programs for primary residence homebuyers such as the [FHA 203k]9https://www.offermarket.us/real-estate-glossary/fha-203k-loan) renovation loan that includes the scope of repairs in your mortgage, allowing you to put as little as 3.5% down and have your rehab component added to your mortgage. 

 

## Summary: Focus On Value

 

Think like value investor. Real estate is an asset, and should be thought of as an investment. As with the stock market, if everyone is chasing the same investment strategy, a bubble forms, prices get out of control, animal spirits and FOMO make buyers overpay. 

 

Focus on markets and inventory that is less desirable. That is where the value is. There will be times when the most attractive markets present attractive buying opportunities -- think aftermath of the 2008 financial crisis (2009-12) in South Florida. That time is not now. Cooler heads and a disciplined approach will prevail.

We don't have a housing shortage. We have a shortage of desirable housing and that is an important distinction that real estate investors can profit from.

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Is Houston Good for Investing in Rental Property?

Where in Houston to Invest in Rental Property

Rental Property Financing in Houston

How to Buy a Rental Property in Houston

Final Thoughts

Buy Houston Rental Properties with OfferMarket

**Last updated:** December 27, 2024

 

Investing in rental properties can be a lucrative way to build wealth, and Houston is often highlighted as one of the best markets for real estate investment. With its booming economy, favorable tax environment, and diverse housing market, Houston offers tremendous opportunities for both seasoned and first-time investors. In this comprehensive guide, we will explore how to buy a rental property in Houston, covering everything from market trends to financing options and property search strategies.

 

## **Is Houston Good for Investing in Rental Property?**

 

Houston is one of the fastest-growing cities in the United States, making it an attractive location for real estate investment. Here are some key factors that make Houston a great choice for buying rental properties:

 

### **Population Growth**

Houston has experienced consistent population growth over the past decade. With over 2.3 million residents and a metropolitan area of more than 7 million people, the demand for rental properties remains strong. This growth is fueled by:

 

* A robust job market 
* Affordable cost of living 
* The city's position as a hub for immigrants and young professionals

 

### **Economic Development**

Houston’s economy is diverse and dynamic, driven by key industries such as energy, healthcare, technology, and aerospace. The presence of major corporations and a growing tech scene ensures a steady influx of job seekers who need housing. Additionally, Houston’s port and infrastructure investments have solidified its role as a major trade hub.

 

### **Favorable Tax Environment**

Texas is known for its investor-friendly tax policies:

 

* **No state income tax**: This significantly increases your potential cash flow compared to states with high income tax rates. 
* **Property taxes**: While Houston’s property taxes are slightly higher than the national average, the lack of state income tax and the strong rental demand often offset this cost.

 

### **Affordable Property Prices**

Compared to other large cities, Houston offers relatively affordable housing. This allows investors to enter the market with less capital while still enjoying good cash flow and appreciation potential.

 

## **Where in Houston to Invest in Rental Property**

 

Houston is a sprawling city with diverse neighborhoods. Your choice of location will depend on your investment goals, whether that’s cash flow, appreciation, or a balance of both. Here are some areas to consider:

 

<div style="display: grid; grid-template-columns: repeat(1, minmax(0, 1fr)); overflow: auto; white-space: nowrap;">
<table>
 <thead>
 <tr>
 <th>Neighborhood</th>
 <th>Median Home Value</th>
 <th>Zip Code</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td>The Heights</td>
 <td>$550,000</td>
 <td>77008</td>
 </tr>
 <tr>
 <td>Midtown</td>
 <td>$370,000</td>
 <td>77004</td>
 </tr>
 <tr>
 <td>Montrose</td>
 <td>$485,000</td>
 <td>77006</td>
 </tr>
 <tr>
 <td>Katy</td>
 <td>$320,000</td>
 <td>77494</td>
 </tr>
 <tr>
 <td>Cypress</td>
 <td>$290,000</td>
 <td>77429</td>
 </tr>
 <tr>
 <td>Sugar Land</td>
 <td>$365,000</td>
 <td>77479</td>
 </tr>
 <tr>
 <td>Third Ward</td>
 <td>$250,000</td>
 <td>77021</td>
 </tr>
 <tr>
 <td>East End</td>
 <td>$260,000</td>
 <td>77023</td>
 </tr>
 <tr>
 <td>Uptown/Galleria</td>
 <td>$450,000</td>
 <td>77056</td>
 </tr>
 <tr>
 <td>Spring Branch</td>
 <td>$310,000</td>
 <td>77080</td>
 </tr>
 </tbody>
</table>
</div>

 

### **1\. Inner Loop (Near Downtown)**

Neighborhoods such as Midtown, Montrose, and the Heights are close to downtown Houston and attract young professionals. These areas are ideal for short-term rentals or luxury apartments, with higher rental rates and strong appreciation potential.

 

### **2\. Suburbs with Strong Rental Demand**

* **Katy**: Known for its excellent schools and family-friendly atmosphere, Katy attracts long-term renters. 
* **Cypress**: A growing suburb with affordable properties and good rental yields. 
* **Sugar Land**: Offers a mix of high-end and mid-range rental properties and strong demand from families.

 

### **3\. Affordable Emerging Markets**

* **Third Ward**: This historically significant area is undergoing revitalization, offering opportunities for investors seeking properties with strong appreciation potential. 
* **East End**: Proximity to downtown and ongoing redevelopment projects make it attractive for rental investors.

 

### **4\. High-Rise and Multifamily Properties**

For those with a higher budget, neighborhoods like Uptown/Galleria offer luxury condos and high-rise apartments that cater to business professionals and affluent renters.

 

## **Rental Property Financing in Houston**

 

Securing the right financing is a critical step in purchasing a rental property. Here’s how investors often approach financing in Houston:

 

### **The BRRRR Method**

The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy is popular among investors who want to scale their rental portfolios quickly. Here’s how it works:

 

1. **Buy**: Acquire a distressed or undervalued property using a short-term loan, such as a fix-and-flip loan. 
2. **Rehab**: Renovate the property to increase its value and make it rental-ready. 
3. **Rent**: Find tenants and secure a steady rental income stream. 
4. **Refinance**: Use a [DSCR loan](https://www.offermarket.us/dscr-loan?ref=content-how-to-buy-a-rental-property-in-houston​) to cash-out refinance. This allows you to pay off the initial loan and access the property’s increased equity. 
5. **Repeat**: Use the refinanced funds to invest in your next rental property.

 

### **Financing Options**

 

* **Fix-and-Flip Loans**: Short-term loans designed for property acquisition and renovations. 
* **DSCR Loans**: These loans evaluate the property’s rental income rather than the borrower’s personal income, making them ideal for investors. 
* **Conventional Mortgages**: Suitable for investors with a strong credit score and a steady income. 
* **Private Lenders**: Offer flexible terms but often come with higher interest rates.

 

## **How to Buy a Rental Property in Houston**

 

Here is a step-by-step guide to help you navigate the process of purchasing a rental property in Houston:

 

### **1\. Research the Market**

Start by understanding the Houston real estate market. Analyze trends such as rental rates, property prices, and neighborhood growth.

 

### **2\. Determine Your Investment Strategy**

Decide whether you’re looking for cash flow, appreciation, or a combination of both. This will help you choose the right neighborhoods and property types.

 

### **3\. Work with Local Experts**

* **Real Estate Agents**: Partner with a buyer’s agent who specializes in investment properties to help you navigate the MLS and find suitable listings. 
* **Property Managers**: If you’re planning to hold the property long-term, a local property manager can help with tenant screening, maintenance, and rent collection.

 

### **4\. Find Properties**

* **On-Market Listings**: Use the MLS to find properties listed for sale. This is where having a buyer’s agent is invaluable. 
* **Off-Market Listings**: Many great deals come from [off-market properties](https://www.offermarket.us/blog/off-market-properties). Look for wholesalers, auctions, and direct-to-seller marketing campaigns.

 

[![Off Market Properties Houston](https://cms.offermarket.us/uploads/Off_Market_Properties_Houston_b9124fe99a.png)](https://www.offermarket.us/listings?mapBounds=-93.36681651017213,-97.26627852406259,30.627842356482674,29.105440209300042&limit=25&)

 

### **5\. Analyze the Deal**

Use metrics such as:

 

* **Cap Rate**: Net operating income divided by the property’s purchase price. 
* **Cash-on-Cash Return**: Annual cash flow divided by your initial investment. 
* **Rent-to-Value Ratio (1% Rule)**: Monthly rent should be at least 1% of the property’s purchase price.

 

### **6\. Secure Financing**

Choose the financing method that aligns with your investment strategy, whether that’s a fix-and-flip loan, DSCR loan, or conventional mortgage.

 

### **7\. Close the Deal**

Work with a title company to ensure a smooth closing process. Be sure to perform due diligence, including property inspections and appraisals.

 

### **8\. Prepare the Property**

Renovate the property as needed to make it attractive to tenants. Focus on upgrades that offer a high return on investment, such as kitchen and bathroom improvements.

 

### **9\. Rent the Property**

Market your property effectively to attract quality tenants. Utilize online platforms, social media, and local networks.

 

## **Final Thoughts**

 

Buying a rental property in Houston can be a rewarding venture, thanks to the city’s growing population, diverse economy, and favorable tax policies. By carefully researching the market, choosing the right location, and leveraging smart financing strategies like the BRRRR method, you can build a profitable rental portfolio.

 

Whether you’re a first-time investor or looking to expand your holdings, Houston’s real estate market offers opportunities to achieve your financial goals. With the right approach and local expertise, you can make a strong entry into one of the best rental property markets in the country.

 

## **Buy Houston Rental Properties with OfferMarket**

 

OfferMarket is a rental property investing platform. Membership is entirely free and provides you with the following benefits:

 

🏚️ **[Off market properties](https://www.offermarket.us/listings)**
💰 **[Private lending](https://www.offermarket.us/loans?ref=content-do-rental-properties-lower-home-values​)**
☂️ **[Landlord insurance rate shopping](https://www.offermarket.us/insurance?ref=content-do-rental-properties-lower-home-values)**
💡 **[Community & Insights](https://www.offermarket.us/login?ref=content-do-rental-properties-lower-home-values)**

Learn how to buy a rental property in Houston, explore top neighborhoods, financing tips, and strategies for successful real estate investment.

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How to buy a rental property in Houston

* Takes 2 minutes, no credit pull

*Quote takes 1 minute, no credit pull

*1 quote from 40+ carriers

*New listings daily

How to buy a rental property in Houston​

* Takes 2 minutes, no credit pull

How to buy a rental property in Houston