Whether you’re thinking of flipping houses part-time or buying a rental property, investing in real estate is such a fantastic way to increase your income and put your money to work for you.
If you’re a first-time investor, though, you’ll first need to learn how to plan ahead, the pros and cons of flipping vs renting, and how investing can differ from buying a home as an owner-occupant.
From there, you can determine the best course of action for reaching your goals, and you’ll be ready to confidently invest in property!
How To Invest In Houston Real Estate
1. Determine your budget, timeline, and projected ROI
Any cash you invest will be tied up in the property, so you need a realistic idea of how long you’ll be waiting to earn a profit, as well as an estimate of what your earnings and ROI will look like. Keep in mind, if you don’t intend to make an all-cash investment, your financing options as an investor will not be the same as the typical mortgage loans you’re already familiar with.
2. Decide how you’d like to earn a profit
You have a couple of options in terms of how you’ll earn a return on your investment: namely, you can either become a landlord and rent out your property, or you can “flip” it, and sell for more money.
Obviously, when compared to renting, flipping a house is a faster way to earn a profit. Doing so, however, typically requires extensive remodeling to increase the property’s value. Plus, the amount of time during which the property is under construction and, subsequently, listed for sale, could easily last for months; that means you could be waiting quite awhile before you can earn back a profit.
On the other hand, should you decide to rent out the home, you’ll start earning back a return on your investment as soon as you find a qualified tenant (though of course, it will take some time before you can start collecting a profit). It’s also worth noting that being a landlord is not exactly a hands-off job; as the owner of a rental property, it’s your responsibility to ensure the home is properly maintained and in a safe, livable condition for your tenants. Of course, you can outsource these duties to a property management firm, though doing so will inevitably cut into profits.
3. Thoroughly research local neighborhoods
Even before you start looking at properties, you’ll want to start researching neighborhoods in your area. As an investor, there are a few different lenses you’ll want to use when analyzing an area. First, you should research the neighborhood as if you were planning to move there yourself; factors like crime, infrastructure, and local school ratings will all play a role in your ability to attract tenants or buyers to your income home.
Next, be sure to assess local market conditions to determine how much you can expect to list or rent your investment home for. Find out how the market has changed over the past few years, and whether or not there have been any significant shifts in terms of demand. Generally speaking, certain neighborhoods will attract more renters than owner-occupants, or vice versa; whether you’d prefer to flip your investment property or rent it out, be sure to identify a neighborhood whose market aligns with your intentions.
And of course, don’t be afraid to talk to a Realtor for more insight on the latest market updates!
Additional Resources For First-Time Investors In Houston
Top-rated Houston property managers*
- Rental Management Group
- ULR Properties
- Evan Howell Properties
- AREA Texas Realty & Management
- Light Hill Partners
*based on Yelp reviews
Top-rated Houston home building contractors*
- Ramirez Home Remodeling
- Victor Gonzalez Painting & Remodeling
- Ashwood Designs & Custom Homes
- Up To Date Decor
- Houston Remodel Pros
*based on Yelp reviews
Resources for local market data
- Zillow Market Reports
- HAR Market Updates
- Trulia Real Estate Data
- Movoto Real Estate Trends and Statistics
Are You Ready to Invest in Houston Real Estate?
As an experienced Realtor who’s served the Houston area for nearly 30 years now, I’m more than happy to help you find the perfect investment property!
If you’re interested in the Tanglewood, Memorial, Uptown, or Galleria neighborhoods and would like assistance in your search, please send me a message today to get started!