How To Buy Rental Property In A New Market

Are you planning on buying rental property in the Houston Texas area for the first time but you’ve never purchased property or lived here before? If so, you’ve come to the right place!

The Houston TX area is a great place to buy rental properties because there’s been tremendous growth here over the last six months that’s why in this article we will share with you the things that you should be searching for in an investment property in a new market.

Here’s What You Should Look For

  1. Job Growth Compared To Vacancy

We look deeply at the job growth of an area and compare those figures to the local vacancy rates. When you can find an area that is growing without an oversupply of rental homes, it is in most cases a good indication of not only fewer days on market, but also potential rental rate escalators. – Mike Tamulevich, Marketplace Homes

  1. Standard Local Market Demographics

When we get an investment financing request in a new market, the three local market demographics we focus on are appreciating versus depreciating neighborhoods, school ratings and crime ratings. While we also look at household median income and access to jobs, those factors can be harder to compare from one market to another. School rankings and crime rates are easier to compare on a national basis. – Beth O’Brien, CoreVest Finance

  1. Economic And Population Growth

An area that is growing economically, in population or even just in demand as a destination will offer far better chances for appreciation. The fastest appreciating areas are those that have been recently “discovered,” that many people now desire and often where there is a backlash against further growth. “Nimbyism” has a lot of downsides, but price appreciation is not one of them. – Sean O’ToolePropertyRadar

  1. Major Retail Trends

A few of the indicators I look at are what retailers are existing and what new ones are coming to the market. If it’s a new development, I validate with the actual retailer to make sure they are coming. Do your homework. Another great resource is the local building department, where you can learn what stage a development is in and if they have actually submitted their plans. – Jill Szymanski, Bar Louie

  1. State Of Infrastructure

The infrastructure should be strong enough to support the market. For example, how’s the access in and out of the market, what kinds of schools are located nearby, is there additional transit, are there growing companies, are there amenities, etc. If these are all relatively strong, then this is a market that should continue to be attractive because it has good “bones.” – Vinny DiMeglio, colliers.com

  1. Metro Rail Development

Look for metro rail development in a given city to see what infrastructure commitments have been made. Find the stations/stops. Fan out and have fun. Look for properties where the density has been increased and which cleared the major regulatory requisites. Ride the rails — as long as they lead somewhere. – Michael J. Polk, Polk Properties

  1. Absorption Rate, DOM, Median Sales Price

On specific areas, I recommend my investors look at the absorption rate (the number of months of inventory) versus the days on market (DOM) versus the median sales price. These three factors are what I call “health of the market” indicators. If the number of months of inventory over the past couple of years appears to be changing and minimally impacting the other two, then the market is healthy. – Michelle Ames, HorsePower Team Texas/Independent Realty

  1. Rent Trends

In a new market, the investor should look at rent trends. The best check is a recently purchased property that is being renovated. Find out what the rents were at the time of sale (if the property was marketed, ask the broker for the offering memorandum — it will most likely have a rent roll). Then check to see what rents are being advertised now. 

Get Property Management In The Houston Texas Area

At Vestpro Residential Services we serve Houston and the surrounding areas including Liberty, Dayton, Humble and Atascocita. To learn more about our services contact us at (832) 971-1841 or click here to connect with us online.

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