High days on market for rentals in Houston market

[Bryan T.]

I am looking at rentals on Har.com and I just see so many rentals available on the market all over inside the loop (Midtown, Montrose, Third Ward, etc.). I also see high days on market for many rentals on Har.com (100-140+ days on market!).

If I were to invest in a multifamily or SFH inside the loop, how do I compete against all of these available rentals and all of the apartment buildings in the area? I can lower the rents but by how much (and if I were to lower too much it would not be good either right?)? I just don't see how you can make money from rentals in the area with all of the existing rentals, high days on market, etc.

Anyone have any insight/advice? I am scared if I buy a rental property that it will not rent out well and I will lose money in this market even if it meets the 1% rule, etc. 

[Elias Camhi]

Hi Bryan,

Hope you are well.  We lease and manage properties in Houston and surroundings and I can tell you that the market now, is much better in leasing than it was a few months (4-5) ago.  This is the time when a whole lot of activity and inventory gets moved.  Summer time a lot of the listings go, but a lot get moved as well.  

On another note, I can tell you that properties priced $2000 and above have suffered tremendously over the last 2-3 years.  Many of the Oil jobs were moved out of Houston and were replaced with medical and technology jobs that simply don't pay as high as the oil industry.  This has caused some of the higher priced rental properties to suffer in price.  Whereas we would lease a home for $2400, we may only get closer to $2100.   There is a lot of construction in the midtown section and many people turned to leasing, so there is a lot of inventory and will need to price accordingly.

On the other hand properties leasing from $1000-$1800 are doing very well and move relatively quickly, so depending on your investment levels, this is what we are seeing here.

6 months ago, I had 8%-9% vacancy, I am down to about 3%.  I hope this addresses some of the concerns. We are moving a whole lot of properties right now.