Is Houston, TX a good place for buying rental properties

Member since 2022 · 5 posts · 2 votes

Hello All - I am new here as a member, but I've been watching Bigger Pockets videos on YouTube for quite some time. I am very interested in Rental Properties and know that the Midwest is one of the best areas to do so, but I am wondering if Houston offers the same? Thank you!

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Blaine Gerick

Developer · Houston, TX · Member since 2019 · 19 posts · 17 votes

Hi Ali, in my opinion, Houston offers more appreciation than the Midwest with lower cash flow (lower cap rates). Of course, if you get a good off-market deal and rehab it, you can get some nice cash flow. When looking at properties in Houston, make sure you check the tax rate and know your home insurance cost. Both of these can kill a deal when compared to the Midwest. Good luck and don't forget about ADUs or Opportunity Zones.

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Richard Damian
Rental Property Investor · Houston, TX · Member since 2020 · 71 posts · 13 votes
4y
Ali , i live in Houston , great place for rentals , the rents in all areas are great , but alot of competition right now , alot of investors and companies bringing up the prices to flip or rehab , i have 4 rentals here , but started investing out of state about 3 years ago , but i am always looking to find a deal here in Houston , you just have to react quickly , hope that helps , thanks
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Blaine Gerick
Developer · Houston, TX · Member since 2019 · 19 posts · 17 votes
4y
Hi Ali, in my opinion, Houston offers more appreciation than the Midwest with lower cash flow (lower cap rates). Of course, if you get a good off-market deal and rehab it, you can get some nice cash flow. When looking at properties in Houston, make sure you check the tax rate and know your home insurance cost. Both of these can kill a deal when compared to the Midwest. Good luck and don't forget about ADUs or Opportunity Zones.
3 Reply
Jasmine H.
Rental Property Investor · Houston, TX · Member since 2014 · 139 posts · 140 votes
4y
@Ali Al-Khafaji we moved from DMV to Houston in 2021 to grow our investments and take advantage of the lower cost of living (though not that low anymore). It's a great place to invest. There's so much development going on in the area and with folks moving here from others countries, I think the opportunities will continue. Recommend avoiding flood zones as they'll eat into your profit.
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Ali Al-Khafaji
OP
Member since 2022 · 5 posts · 2 votes
4y
Thank you all for the insightful information!
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Barrett Bridgewater
Surveyor · Member since 2021 · 54 posts · 38 votes
4y
@Jasmine H. What if I told you that actually Flood Zone properties are the BEST investment? That flood zone properties are hidden deals? In most cases you are correct... the flood zone creates additional yearly costs and eats into NOI. However, flood zone designations can be removed. And we are doing a ton of this in Houston especially.

The problem is the FEMA Flood Maps are highly inaccurate. If a building sits above the flood level then it can be removed off the FEMA Flood Map. As an engineering firm our work is to qualify it and prove it FEMA. That results in removing the lender mandate to purchase flood and thus could eliminate the yearly flood expense.

We even help investors review a flood zone property and tell you if that is possible before you make an offer. So you can buy a property at the depressed value (because of the flood zone), we remove the flood zone designation after closing, and now you a ton of previously hidden NOI and property value that the current owners didn't know was possible.

@Ali Al-Khafaji Our message is don't rule out a flood zone property until we can provide our complimentary review to see what is possible.

@Blaine Gerick this is even possible on land too.
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Lauren CutchenBusiness Member
Real Estate Agent · The Woodlands, TX · Member since 2019 · 223 posts · 84 votes
4y
@Barrett Bridgewater I'd be interested in speaking with you about this. I see many homes that were located outside of flood zones that did flood, and some houses in flood zones that didn't flood during Harvey. Can you explain this to me further about what you do? You mentioned you can do this before a client makes an offer - do you visit the place or go by elevation?
[email protected]832-406-4239
Lauren Cutchen 513 Reviews
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Raynisha Washington
Member since 2021 · 4 posts · 0 votes
4y
Quote from @Ali Al-Khafaji:

Hello All - I am new here as a member, but I've been watching Bigger Pockets videos on YouTube for quite some time. I am very interested in Rental Properties and know that the Midwest is one of the best areas to do so, but I am wondering if Houston offers the same? Thank you!
Whenever you are ready to buy I have turn key rentals for sale in Houston and other locations in TX. Let’s connect

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Raynisha Washington
Member since 2021 · 4 posts · 0 votes
4y
Quote from @Richard Damian:

Ali , i live in Houston , great place for rentals , the rents in all areas are great , but alot of competition right now , alot of investors and companies bringing up the prices to flip or rehab , i have 4 rentals here , but started investing out of state about 3 years ago , but i am always looking to find a deal here in Houston , you just have to react quickly , hope that helps , thanks
Are you currently investing in turn key properties in Houston 77048? I have one at 6210 El Granate. 4 beds 2 ba!
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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
4y
Quote from @Barrett Bridgewater:

@Jasmine H. What if I told you that actually Flood Zone properties are the BEST investment? That flood zone properties are hidden deals? In most cases you are correct... the flood zone creates additional yearly costs and eats into NOI. However, flood zone designations can be removed. And we are doing a ton of this in Houston especially.

The problem is the FEMA Flood Maps are highly inaccurate. If a building sits above the flood level then it can be removed off the FEMA Flood Map. As an engineering firm our work is to qualify it and prove it FEMA. That results in removing the lender mandate to purchase flood and thus could eliminate the yearly flood expense.

We even help investors review a flood zone property and tell you if that is possible before you make an offer. So you can buy a property at the depressed value (because of the flood zone), we remove the flood zone designation after closing, and now you a ton of previously hidden NOI and property value that the current owners didn't know was possible.

@Ali Al-Khafaji Our message is don't rule out a flood zone property until we can provide our complimentary review to see what is possible.

@Blaine Gerick this is even possible on land too.
This is good advice - Houston has some great opportunities but be extra careful on the flooding risk, need to do strong research in how it was affected not just in Harvey, but in the two other recent "500-year floods"
[email protected]
Harpoon Capital514 Reviews
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