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Which Neighborhoods in Houston Give Landlords The Highest ROI in 2017

If you’ve never been to Houston and have no idea what this city is about, the legendary ‘Houston, we have a problem’ might be your only association with this amazing spot in Taxes. And that’s ok. It’s even good in some way as it means you’ll learn a lot from reading this article. You’ll get a taste of this city, you’ll understand why it is called the Hustle-Town, and you will learn which of local neighborhoods are especially good for buying income properties.

Why Investing in Houston?

Before listing the best locations for real estate investments in Houston, a smart move would be telling what makes Houston the right city for buying income properties in the first place. To help you see the perks of being a landlord in Houston, we sifted through the information on local rental market and prepared a short overview of the Houston real estate market. Here’s what we’ve managed to discover.

To begin with, Houston is one of America’s most populated cities, and one of its most prospering. Since Houston produces and keeps for itself millions of oil money, it’s at the same time one of the richest cities nationwide. In fact, the local GDP has grown by more than 100 percent between 2001 and 2014. Because Houston has turned into such a powerhouse, people are flocking here in pursuit of unending opportunities for business, employment, education, and entertainment. As a result, rental demand in Houston metro area is increasing steadily. No wonder that it is now considered America’s second most-actively searched rental market. Of course, it is a good sign for potential real estate investors.

Overall, Houston is considered a landlord-favoring market, where property owners can count on a stable cash flow and equity growth. So if you’re planning to spend some money on buying rental properties, Houston might get you the best bang for your housing dollar.

Montrose

Median Rental Price: $1,575/mo
Median Purchase Price: $520,000

One of the greatest spots for real estate investments in Houston, Montrose is also a wonderful place to settle down and live happily ever after. It’s a good fit for those who cannot choose between the avenues brimming with neon lights and calm streets lined with trees. Somehow Montrose has got the best of both worlds. Despite its proximity to Downtown and all its bars and nightclubs and trendy restaurants, Montrose is rather different. Prices for local properties are slightly higher, backyards are slightly larger, while buildings are more historic and eye-catching. Montrose is a neighborhood of townhomes, cottages, bungalows, and renovated mansions. Usually, people interested in rentals in Montrose are well-educated and intelligent adults (Hint at an obvious: such people tend to make the most reliable tenants).

Greater Heights

Median Rental Price: $1,434/mo
Median Purchase Price: $499,000

The next Houston neighborhood you should consider investing in is Greater Heights or simply the Heights. Thanks to the local mix of commercial and residential developments, the area is highly diverse and eclectic. You may want to invest in apartments in a high-rise, buy a cozy bungalow or become the owner of a historic mansion. No matter what you prefer, Greater Heights has all of it and even more. The area is a top choice for families with kids and those who value a moderately-paced life in a beautiful surrounding. Although local properties cost around $500,000, which is slightly above the city’s average, you see what you pay for.

Midtown

Median Rental Price: $1,589/mo
Median Purchase Price: $340,000

We wouldn’t go as far as to call Midtown the best neighborhood for buying income property in Houston, but it sure deserves its place in top five. Thanks to the central location, Midtown boasts a proximity to Houston’s key districts and employment centers. What’s more, Midtown is an amazing place to live. Whether you’re looking for fancy coffee shops, upscale bars, world-renowned retail stores or art venues, you’ll get it all here. As an additional perk, Midtown is the neighborhood with the highest walkability score in the entire city. Of course, as a landlord, you might not be interested in all that, but remember putting yourself in your future tenant’s shoes. Wouldn’t you want to live in such an amazing neighborhood?

Greater Third Ward

Median Rental Price: $1,568/mo
Median Purchase Price: $175,000

If you always choose the historic over the modern and if properties under $200K are your target, take a look at Greater Third Ward. This neighborhood is as old as the city itself. Yes, Greater Third Ward is one of Houston’s six historic districts. Gone are the days when this area was the most vibrant and dynamic part of Houston. Today’s Greater Third Ward is nothing like that. At the moment, the neighborhood is slowly becoming a victim of gentrification but it fights back with all the courage and pride it has. Because of the process taking place in the area, local real estate prices are below the city’s average. At the same time, rental prices for properties in Greater Third Ward are still high (and almost the same as in Downtown or Midtown). What a good news for you as a future landlord, huh?

Downtown

Median Rental Price: $1,611/mo
Median Purchase Price: $369,000

Oftentimes, landlords do not even consider the option of buying income properties in Downtown. The reason for that is simple – cosmic prices and a lack of residential properties for sale. But Houston is not like other major cities. It is different. You might be surprised to learn that Downtown Houston is considered one of the most up-and-coming areas of the city. For many years in a row, the territory of Downtown was predominantly used for building commercial properties, but things have changed. Today an increasing number of people choose Houston as their place of residence. As a result, the local population is growing and expected to double in the next five year. Grab your chance to get the best piece of that housing pie before somebody else outsmarts you. Although apartments for rent in Houston Downtown are among the priciest in the city, median purchase prices are even lower than in Montrose or Greater Heights. Can you believe that?

To Conclude All Said Above

Investing in real estate is not as simple as it may seem. After any successful investment usually stands the weeks of analysis and deliberations. Just like renters want to get more space for their dollar, real estate investors aim for the higher interest rates for their income properties. Everyone just wants to secure a great deal. That’s why you should make all real estate investments with your potential renters in mind. If that’s possible, choose rentals you’d like to be living in yourself. Select neighborhoods you’d like your kids to be growing up in. Pick the best properties in terms of price-quality ratio. This way, you’ll never be on the losing side.

If you feel like Houston is the right choice for you but want to learn more about the current state of the housing market, don’t shy away from talking to professionals. Get in touch with real estate investment associations. They say The Realty Investment Club of Houston and Houston REIA are the most well-versed in the topic.

Don’t feel like investing in apartments for rent in Houston is what you need? Maybe you should just consider another location. We’ve got plenty of articles to help you find the right city for your next real estate investment. Maybe it’s Atlanta or Boston or even New York City you should be looking at right now?

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