House Hacking is Hard

[Andy Oshodi]

I am new to REI. I am finding it really hard to house hack with mid term rentals in the Houston market. The neighborhoods close to the medical center area are not good neighborhoods. My family cannot live around there. I have a little bit of nest egg. Should I just buy a single family home(because I presently still rent) and just find other locations for mid term rentals?

[Jaime Duron]

@Andy Oshodi are looking to go into a SFH or MFH while doing the MTR? What platforms are you currently looking at to post the MTR? What's actually drawing you to MTR, is the cashflow? So many questions to unpacked, but if this is the asset class you want to get into I would go all in.

[Bonnie Low]

Hi, Andy. The neighborhood is critical so you're smart not to purchase in an area that isn't safe to live in. If you wouldn't want to live there, no traveler is going to want to live there, either. That said, the world of midterm rentals is much broader than just travel medical professionals. There are any number of reasons a person would be traveling and looking for furnished housing. In fact, although Furnished Finders has historically catered to travel nurses, searches by non-medical professionals now exceeds that of medical professionals, so the market is really changing. In other words, while renting to medical professionals can be a good niche in the right market, don't limit yourself. Look for other types of renters who aren't necessarily affiliated with hospitals or go just outside the neighborhoods immediately surrounding the hospitals and market it as a good option. For example "SAFE neighborhood only X minutes from Metro Hospital." Most travelers bring their own vehicle so they can manage a drive.

[Andrew Postell]

@Andy Oshodi when we buy our primary home it has to fit our PERSONAL needs. Maybe I personally need a good commute time. Maybe I personally need a certain school zone. Maybe I want this home because of how safe I feel in the neighborhood. Maybe there's some other PERSONAL needs that I'm not mentioning.  And usually I'm willing to pay more to fit those needs.  I mean, what's your kids education worth?  There's no value to that! So, I'm addressing a primary home with a different perspective than an investment property.  

For many of us, we house hacked before we had families...because we had less "personal" needs then.  Now, not everyone could do that - but not everyone can house hack now either.  I certainly could not house hack currently.  I would highly encourage you to think about your family first.  Discuss what you need with your realtor.  And then lean on your realtor if there are any opportunities in the neighborhoods that help your family.  Keep in mind, you are only required to live in that home for 12 months...but you may not be able to move your family every 12 months either.  Family first!  That's what I would suggest.

[Wale Lawal]

@Andy Oshodi

It seems that you're having trouble locating acceptable houses for house hacking in the Houston market, especially in the neighborhoods around the medical center. Considering other choices, including buying a single-family house for your permanent residence and looking into different areas for mid-term rentals, can be worthwhile given your family's needs and preferences.

Think about a few things before making an investing decision. First, pick an area close to colleges, corporate headquarters, or other well-known landmarks that offers superior facilities, education, and overall quality of life. Investigate rental revenue prospects, market trends, vacancy rates, and regulatory issues in possible investment locations second. Third, figure out how much you can afford and what your financing choices are. Look into mortgage, loan, and down payment help programs. Evaluate your capacity for handling the costs associated with investing in and owning a home. Fourth, create a long-term real estate investment plan that complements your preferred lifestyle and financial objectives.

For your next real estate ventures, think about utilizing your primary home as collateral for more loans or as a means of renting out rooms. When it comes to market dynamics, rental demand, property pricing, and investment returns, lastly, get advice from real estate experts and do extensive study. Your particular situation, aspirations, and tastes will determine whether or not you decide to buy a single-family house.

Good luck!

[James Carlson]

@Andy Oshodi

People conflate "medium term rental" with "travel nurse rental." The latter is part of the former, but they're not interchangeable.

I'd think about it as a furnished 3-month-plus type of stay, and there are a lot of people who want that type of stay -- remote workers, students, recent divorcees, new transplants, and yes, travel nurses.

Some of midterm rentals in Denver and Colorado Springs are close to hospitals, some not. Either way, less than half of our tenants in the last few years have been travel nurses.

This is all to say, don't get so focused on proximity to the hospital. This group of renters is no different than any other renter ... they want to be in a good area. Close to restaurants and bars is great, but if not, a nice neighborhood that's walkable, that's close to "stuff."

[V.G Jason]

Welcome to reality, 3rd ward Houston is not investable. Any "ward" in Houston should get some questions going, but majority of Houston based agents will push this ad nauseum especially the one's on here and have been the better part of the last 2 years. 3rd ward for MTRs, STRs, and travel nurses and 5th ward for fix & flips; but only an idiot would buy a 5th ward property without doing their diligence. They target OOS that have no idea what the 5th ward is really like, but on a map see it's proximity to downtown and think it's up next.

Think you should focus on a solid SFH for your family if you have some money you can put down, and worry about investing when you are in a position of strength. Spring Branch, meyerland are solid areas.

[Cody L.]

Quote from @V.G Jason:

Welcome to reality, 3rd ward Houston is not investable. Any "ward" in Houston should get some questions going, but majority of Houston based agents will push this ad nauseum especially the one's on here and have been the better part of the last 2 years. 3rd ward for MTRs, STRs, and travel nurses and 5th ward for fix & flips; but only an idiot would buy a 5th ward property without doing their diligence. They target OOS that have no idea what the 5th ward is really like, but on a map see it's proximity to downtown and think it's up next.

Think you should focus on a solid SFH for your family if you have some money you can put down, and worry about investing when you are in a position of strength. Spring Branch, meyerland are solid areas.

When I hear "near med center", I don't jump to "3rd ward". I have some nice properties near med center (my highest NOI property, on Brompton, is near med center. As are several of mine in the 'good' parts of 77004 (i.e. west of 288). Properties on Binz, Jackson, Wentworth, etc.)

THat said, I also have properties in 3rd ward (Truxillo), 5th ward (Wipprecht).  Even Montrose is one of the 'wards' depending on how strict you use the names (4th ward I think?)

Personally I'd suggest AGAINST areas like Spring Branch, Meyerland, etc.  I'd stick to midtown, montrose, museum district, etc.  

[V.G Jason]

Quote from @Cody L.:

Quote from @V.G Jason:

Welcome to reality, 3rd ward Houston is not investable. Any "ward" in Houston should get some questions going, but majority of Houston based agents will push this ad nauseum especially the one's on here and have been the better part of the last 2 years. 3rd ward for MTRs, STRs, and travel nurses and 5th ward for fix & flips; but only an idiot would buy a 5th ward property without doing their diligence. They target OOS that have no idea what the 5th ward is really like, but on a map see it's proximity to downtown and think it's up next.

Think you should focus on a solid SFH for your family if you have some money you can put down, and worry about investing when you are in a position of strength. Spring Branch, meyerland are solid areas.

When I hear "near med center", I don't jump to "3rd ward". I have some nice properties near med center (my highest NOI property, on Brompton, is near med center. As are several of mine in the 'good' parts of 77004 (i.e. west of 288). Properties on Binz, Jackson, Wentworth, etc.)

THat said, I also have properties in 3rd ward (Truxillo), 5th ward (Wipprecht).  Even Montrose is one of the 'wards' depending on how strict you use the names (4th ward I think?)

Personally I'd suggest AGAINST areas like Spring Branch, Meyerland, etc.  I'd stick to midtown, montrose, museum district, etc.  

Third ward is generally UH and the med center. I know where you're properties are, at least that Brompton one, that's just at the borderline of south West U/Rice and into 3rd ward. You're solid, but go any more east or south or both and I'd avoid. I'm not touching Truxillo or the 5th ward ones, each to their own. I'm invested primarily in the heights & airline heights(e&w of 45), a little in midtown, little in acres homes, and a little in the camp logan area. Acres home stinks, but I'll swallow it till 2035 and see what shakes. 

 Spring Branch and Meyerland are where a lot of younger millennials are moving to for family formation, so the schools will get better. Memorial is already the cream of the crop public high school.  I know a ton, not a few but ton, moving to these two areas that are trying to start families and raise them in these two areas. And builders are slowly catching up with some new devs in these areas. 

If we are talking about better areas in general-- I'd say Camp logan, heights, piney point, West U, river oaks, and parts of Bellaire are the best. Then montrose and the museum district. But all these areas are much tougher to afford. 

[Luciano A.]

Quote from @Andy Oshodi:

I am new to REI. I am finding it really hard to house hack with mid term rentals in the Houston market. The neighborhoods close to the medical center area are not good neighborhoods. My family cannot live around there. I have a little bit of nest egg. Should I just buy a single family home(because I presently still rent) and just find other locations for mid term rentals?

 Personally living in an area versus investing in my opinion are two different worlds. I have made more money, especially these last few years with the appreciation in areas like Third Ward/5th Ward/EADO than investing in safer areas like Katy, Cinco Ranch, and Cypress. I remember what the 3rd and 5th wards were like back in 2010. There are still pockets in those areas but if you screen and give a good product you can attract great tenants. However, with that being said you have to figure out what is best for you and your family. 

If you are looking to invest so it can help offset some of your mortgage or other housing costs you can always buy a nice home and add an ADU to help generate income. Of course, you will want to make sure there are no deed restrictions. With the City's new ordinance, it is making it easier to add a second unit to your existing property. I have friends in CA who converted their two-car garage into an apartment and used it for additional income. Duplexes are mostly in upcoming neighborhoods. I've seen a few in the suburbs but with their HOA fees, and mandatory PM fees, it is not an investment. It's for those with 1031 money to park it.

Don't have FOMO and just rush to buy. Make sure the numbers work and by work I mean don't be too optimistic and hope for future appreciation or rent growth to make numbers work. This market has gone up like crazy. Be patient and keep looking. Find one or two neighborhoods you and your family like and become an expert. Get your loan approval in place and once you see a great deal jump at it. 

Best of luck 

[Cody L.]

Quote from @V.G Jason:

Quote from @Cody L.:

Quote from @V.G Jason:

Welcome to reality, 3rd ward Houston is not investable. Any "ward" in Houston should get some questions going, but majority of Houston based agents will push this ad nauseum especially the one's on here and have been the better part of the last 2 years. 3rd ward for MTRs, STRs, and travel nurses and 5th ward for fix & flips; but only an idiot would buy a 5th ward property without doing their diligence. They target OOS that have no idea what the 5th ward is really like, but on a map see it's proximity to downtown and think it's up next.

Think you should focus on a solid SFH for your family if you have some money you can put down, and worry about investing when you are in a position of strength. Spring Branch, meyerland are solid areas.

When I hear "near med center", I don't jump to "3rd ward". I have some nice properties near med center (my highest NOI property, on Brompton, is near med center. As are several of mine in the 'good' parts of 77004 (i.e. west of 288). Properties on Binz, Jackson, Wentworth, etc.)

THat said, I also have properties in 3rd ward (Truxillo), 5th ward (Wipprecht).  Even Montrose is one of the 'wards' depending on how strict you use the names (4th ward I think?)

Personally I'd suggest AGAINST areas like Spring Branch, Meyerland, etc.  I'd stick to midtown, montrose, museum district, etc.  

Third ward is generally UH and the med center. I know where you're properties are, at least that Brompton one, that's just at the borderline of south West U/Rice and into 3rd ward. You're solid, but go any more east or south or both and I'd avoid. I'm not touching Truxillo or the 5th ward ones, each to their own. I'm invested primarily in the heights & airline heights(e&w of 45), a little in midtown, little in acres homes, and a little in the camp logan area. Acres home stinks, but I'll swallow it till 2035 and see what shakes. 

 Spring Branch and Meyerland are where a lot of younger millennials are moving to for family formation, so the schools will get better. Memorial is already the cream of the crop public high school.  I know a ton, not a few but ton, moving to these two areas that are trying to start families and raise them in these two areas. And builders are slowly catching up with some new devs in these areas. 

If we are talking about better areas in general-- I'd say Camp logan, heights, piney point, West U, river oaks, and parts of Bellaire are the best. Then montrose and the museum district. But all these areas are much tougher to afford. 

Interesting commentary.  Thank you.  I'm curious how you know which Brompton property I have (if we've met, or talked outside of this site, I apologize for not recalling)

I, like you, don't love the areas you're talking about where some of my properties are located.  I have a ton in south east inner loop.  However, they also make a ton as I paid $20k-$30k/door.  So if it's buy a truxillo for $30k/door, and rent for $800, or pay $100k/door in Montrose and rent for $1000, it's an easy call.  In fact, there is a building on Truxillo across the street from my current Truxillo property.  I used to own that one as well but sold it.  I tried to buy it back recently but they wanted too much.  They got foreclosed rather than work something out. 

All of that said, as I've grown, I've started to stay away from bad areas.  I just don't need the cash flow.  Or rather, it's not as important.  Now I just want nicer properties in nicer areas even if the cap isn't as high.  But that's a luxury to be able to decide that's what you want as I couldn't have done that without the 'bad area' properties helping to get me to this spot. 

[Cody L.]

Quote from @Luciano A.:

Quote from @Andy Oshodi:

 Personally living in an area versus investing in my opinion are two different worlds. I have made more money, especially these last few years with the appreciation in areas like Third Ward/5th Ward/EADO than investing in safer areas like Katy, Cinco Ranch, and Cypress. I remember what the 3rd and 5th wards were like back in 2010.

I totally agree.  I have bought in areas I wouldn't live.  In some of the areas you mention, the price per unit may be 50%+ less cost, but 20% less rent.  It makes it hard to say no to.

[V.G Jason]

Quote from @Luciano A.:

Quote from @Andy Oshodi:

I am new to REI. I am finding it really hard to house hack with mid term rentals in the Houston market. The neighborhoods close to the medical center area are not good neighborhoods. My family cannot live around there. I have a little bit of nest egg. Should I just buy a single family home(because I presently still rent) and just find other locations for mid term rentals?

 Personally living in an area versus investing in my opinion are two different worlds. I have made more money, especially these last few years with the appreciation in areas like Third Ward/5th Ward/EADO than investing in safer areas like Katy, Cinco Ranch, and Cypress. I remember what the 3rd and 5th wards were like back in 2010. There are still pockets in those areas but if you screen and give a good product you can attract great tenants. However, with that being said you have to figure out what is best for you and your family. 

If you are looking to invest so it can help offset some of your mortgage or other housing costs you can always buy a nice home and add an ADU to help generate income. Of course, you will want to make sure there are no deed restrictions. With the City's new ordinance, it is making it easier to add a second unit to your existing property. I have friends in CA who converted their two-car garage into an apartment and used it for additional income. Duplexes are mostly in upcoming neighborhoods. I've seen a few in the suburbs but with their HOA fees, and mandatory PM fees, it is not an investment. It's for those with 1031 money to park it.

Don't have FOMO and just rush to buy. Make sure the numbers work and by work I mean don't be too optimistic and hope for future appreciation or rent growth to make numbers work. This market has gone up like crazy. Be patient and keep looking. Find one or two neighborhoods you and your family like and become an expert. Get your loan approval in place and once you see a great deal jump at it. 

Best of luck 

 2010? That's like yesterday. Go check those areas out back in the 90s. The areas are ****, and still for the most part are. Back in the 90s and late 80s, the area that is now highland village was former Little India. Go check out how that's progressed versus 5th ward and 3rd ward, and even parts of Eado. Go check out almost every area surrounding the loop versus 3rd/5th ward in the last 40 years in Houston, and you'll see why the progress has been paltry. Should've seen what West U was 30 yrs ago, it was pretty much like 3rd ward. Do you think there's a difference between the two?  Even amidst the 21-22 airbnb surge for mtrs/strs in 3rd ward, still nothing compared to almost 99% of these other pockets. 5th ward that's a joke. The momentum there is simply OOS investors with novice understanding. 

As for not investing in areas where you live and vice versa, imagine if you did that in the heights or piney point originally. Bottom line is the best places to raise a single family will likely appreciate better than areas that are not ideal for that. Katy vs piney point, cypress vs. the heights is more of a locational speculation from years out and why you follow the businesses. Also suburbia versus city centric will always come at a discount, I am sure in some areas it doesn't but for the most part it will.  You're going to want to be closer to the businesses, so if you had the same funds today and you're trying to speculate where the momentum will go, go where the businesses are forming. Business forms usually near downtown or a particular area that's generally centrally located to popular functions and the hub of the city.  You want to be in that latter area. 

[Ivan Chavez]

Hi Andy! When house hacking it’s definitely a challenge to find the right balance between investing and lifestyle. House hacking may not be the best choice for everyone. There’s definitely sacrifices you have to make, but if you’re willing to make those sacrifices, it’s probably the best way to get started. However, there’s plenty of other ways to get your start in real estate investing if house hacking doesn’t fit with your current situation.

As was mentioned earlier, buying a SFH with an ADU or adding an ADU sounds like it could be a good option.