Rental Investment in Houston Texas with 5% Cap Rate

Listing Description

Listing: Awning - Redfin - Zillow

Looking for a charming rental property in the heart of Houston? Look no further than this stunning 3 bedroom, 2 bathroom home located in the desirable historic district of Glenbrook Valley. Boasting 1,663 square feet of living space, this single-story brick home offers plenty of room for you and your family to spread out and relax. The walls have been freshly painted and laminate floors throughout add a modern touch to the home's classic design.

You'll love the spacious living areas and large covered patio, perfect for entertaining guests or simply enjoying the beautiful Texas weather. Plus, the friendly neighborhood is filled with mature trees and is just a stone's throw away from the William P. Hobby Airport.

But what really sets this property apart is its excellent investment potential. With an expected cap rate of 5.0% and a 10-year return of 16.6% per year, this property is an excellent opportunity for any savvy rental investor. And with flood insurance not required thanks to its X flood zone rating, you can rest easy knowing your investment is protected.

Investment Financials

How much does the home cost?

$205,000 

How much will it earn in rent?

$1,700 per month

‍How much will it cost to renovate?

Based on the information provided, it is difficult to estimate the cost of renovation accurately. Awning estimated that the cost of partially repainting the interior of the home to neutral colors will be $1,663, and they have budgeted $4,500 for any major items that may need replacing due to the home being more than 15 years old.

‍How much cash can you take home in the first year?

According to the Awning Analysis provided in the listing information, the estimated cash flow for the first year is negative $589. This means that you would not be able to take any cash home in the first year, and would instead need to invest additional funds to cover the negative cash flow. 

‍What is the cap rate for this property?

The estimated cap rate for this property is 5.0%.

‍All of the cap rates and returns for this property are estimates and are not intended as a guarantee of income or returns. Every investment has risks. It's important to discuss any investment, returns, regulations, laws and projections with a financial advisor, attorney or another fiduciary.

Why People Rent In Houston, Texas

Where is Houston, Texas?

Houston is a city located in the southeastern part of the state of Texas in the United States. It is the largest city in Texas and the fourth-largest city in the United States.

What companies are the major employers in and around Houston, Texas?

• The Texas Medical Center: the world's largest medical center, employing over 100,000 people.
• ExxonMobil: an oil and gas company that employs around 13,000 people in the Houston area.
• Chevron: another major oil and gas company with around 9,000 employees in Houston.
• Shell Oil: a global energy company that employs over 10,000 people in the Houston area.
• Memorial Hermann Health System: a healthcare system with over 27,000 employees across the Houston area.
• United Airlines: the largest airline in Houston with around 17,000 employees.
• BP America: an energy company that employs around 7,000 people in the Houston area.
• HCA Houston Healthcare: a healthcare system with over 15,000 employees in the Houston area.
• The University of Texas MD Anderson Cancer Center: a cancer treatment and research center with around 21,000 employees.
• Amazon: the e-commerce giant has several warehouses and distribution centers in the Houston area, employing thousands of people.

What are the demographics of Houston, Texas?

Houston is the largest city in the state of Texas in terms of both population and area. According to the United States Census Bureau, as of 2020, the population of Houston was 2,304,580 people living in 859,892 households. The racial and ethnic makeup of Houston is diverse, with various ethnic and racial groups represented. The demographic breakdown of Houston's population is 23.9% non-Hispanic white, 22.6% Black or African American, 43.8% Hispanic or Latino, 7.5% Asian, and 2.3% other races or multi-racial. Houston has a relatively young population with a median age of 33.9 years old and a higher percentage of foreign-born residents compared to the national average, with 28.3% of residents being born outside of the United States. These facts are reported by Crain's Cleveland Business, Census.gov, and World Population Review.

‍What is the Niche neighborhood grade and school grade in Houston, Texas?

There are multiple neighborhoods and schools in Houston, Texas that have been graded by Niche.

For neighborhoods in the Houston metro area, you can visit the Niche website and search for the best neighborhoods in the Houston metro area. Each neighborhood is graded on multiple factors including safety, schools, and amenities. However, there is no specific mention of a Niche grade for Houston neighborhoods.

As for schools in Houston, Niche provides grades for public schools in the Houston metro area based on factors such as academics, teachers, and diversity. The top-rated school listed is in the Woodlands area, which received an A+ grade. However, there is no mention of a Niche grade for schools in Houston as a whole.

‍What is the property tax rate in Houston, Texas?

The property tax rate in Houston, Texas can vary depending on the location within the city and the type of property being taxed.

According to SmartAsset, Harris County, which includes Houston and its suburbs, has some of the highest property taxes in Texas and the country. The average effective property tax rate in Harris County is 2.13%, which is significantly higher than the national average. However, this is an average rate and the actual property tax rate in Houston may vary depending on the specific property and its location within the city.

SmartAsset also provides a Harris County property tax calculator that can give an estimate of the property tax rate for a specific property based on its value and location within the county. The median property tax payment in Texas is $3,797, and the median home value is $237,400, but these values may vary based on the location within the county.

In addition to county property taxes, various municipalities, such as the City of Houston, also levy property taxes. According to Direct Tax Loan, property tax rates are determined by creating tax rates, estimating property worth, and then bringing in the tax. Taxing authorities for property taxes include Houston, county governments, and various special districts such as public schools.

‍How many rental listings and vacancies are in Houston, Texas?

There is no specific information on the number of rental listings and vacancies in Houston, Texas. However, there is information available on the rental vacancy rate in Houston and the state of Texas as a whole.

According to the Department of Numbers, the rental vacancy rate in Houston peaked at 13.76% in 2010 and has since fallen to 8.59% as of the latest data recorded in the series. The rental vacancy rate has increased by 2.13% since its 2015 post-peak low of 6.46%. This information gives an idea of the overall rental market in Houston, but it does not provide a specific number of rental listings or vacancies.

Similarly, the iPropertyManagement website provides information on the statewide rental vacancy rate in Texas. As of the end of 2022Q3, the rental vacancy rate in Texas is 8.1%, which is 35.0% above the national average. The rental vacancy rate in Texas has decreased by 1.22% year over year, but increased by 9.46% between 2022Q2 and 2022Q3. From 2015 to 2020, Texas's rental vacancy rate declined by 8.79%. Again, this information provides an overview of the rental market in Texas, but not a specific number of rental listings or vacancies in Houston.

Realtor.com lists over 13,000 apartments and houses for rent in Houston, but there is no information on the number of vacancies or listings available.

‍What's the average rent in Houston, Texas?

The average rent in Houston, Texas can vary depending on the type of rental property and the specific location within the city.

According to RentCafe, the average size for an apartment in Houston is 882 square feet, but the average rent can vary depending on the neighborhood and type of apartment. Therefore, it is difficult to determine the average rent for Houston without specifying the type of rental property.

Zillow reports that the median rent price in Houston as of May 2023 is $1,800. Houses in Houston rent between $150 and $29,500, with a median rent of $1,800. This information gives an idea of the median rent for houses in Houston, but does not provide the average rent for apartments.

Zumper provides data on the average rent for studio apartments in Houston. According to their report, the average rent for a studio apartment in Houston decreased by 3% over the past month, but the specific average rent is not provided.

From Listing to Rental

1. Place an offer on this property: If you want help finding the best representation, simply submit your information by pressing "I'm Interested in this Property"
2. Close on the property: Closing on this property should be simple. An agent will help you review the contract and confirm that everything in the inspection report makes this a good deal.
3. Hire a property manager to manage your property: If you choose to use Property Management we can help you select the best service and get you a deal on management in the area.