What are the best suburbs in Houston to invest in?

[Ody Orad]

Hi Everyone!

I am looking to buy my first property in Houston in a few months and was looking to get some experienced insights of the real estate market over there. I have only visited there once so I dont have enough visual experience or knowledge on the market there. I am really looking for an area that has a high property appreciation potential and high rental yield potential. This is my first buy so I dont want to make any single mistakes lol. I have been able to research a couple areas and so far I am really liking what I see in: 

Katy, Cypress, and maybe Missouri City. My agent also recommended Rosenberg but I can't enough data online to really analyze the area. 

I am open to thoughts, ideas and as many recommendations as possible. 

Thank you!

[Kevin Bazazzadeh]

Hi @Ody Orad , welcome. I think everyone here likes high property appreciation and high rental yield potential! :) Keep in mind that as properties appreciate, so do tax values. You mentioned you aren't from Houston, so I am not sure if that means you aren't from Texas, if that is the case one thing to keep in mind is that we have very high property tax rates. So as our houses appreciate, so do our costs and since we can't homestead a property we aren't occupying, there is no limit as to how high the tax-assessed value can be from one year to the next. 

One thing that is important to understand is that you will make mistakes and that is ok. It is very hard to learn anything if you aren't allowed to make a mistake. You just don't want to make any catastrophic mistakes - something like buying a house without an inspection when you don't know what to look for,  or buying a house with no reserves can put you in a situation with a much worse outcome. 

Since you are just starting out, one of the easiest ways to understand the rent prices and demand for one of the suburbs is just to look on Zillow. It's easy to use and free. There are tools you can pay for, but you still need to put in the reps to get an accurate feel for an area. Here is how you can start getting a feel for an area:

1. Look at the rental demand:

-Start looking at the properties that are listed for rent

-See how long the property has been listed, and how many contacts and applications they have had. Also, look at the price history and see what it has been doing over the years. 

-Look at what rent price the houses are listed at for each size and type (SFH 3bed/3bath and sq. footage)

2. Look at the cost of ownership

-Start looking for houses that are listed for sale for each size and type (SFH 3bed/3bath and sq. footage)

-Look at their tax rate and HOAs

3. If you find an area where houses are getting lots of contacts and applications and you see the rent prices could work with the purchase price and the ownership costs you probably have a good area to dig deeper into.

Last thing to mention -make sure to check if it is in a flood zone, as flood insurance would be an added cost, and make sure to check if there is a MUD tax, as that can be an added cost as well. You can check taxes on hcad.org and flood info for Harris county on harriscountyfemt.org

If this seems like a lot of work, it is. Understanding your market is critical to being a good investor. If you find an area that seems promising, or you get stuck on something while analyzing, let us know and we can give you more specific feedback. Best of luck!