How to Invest in Rental Properties in Houston

September 09, 2022

The allure of rental property investment is obvious. By generating income from owned assets rented or leased to others, many investors experience predictable cash flow, healthy returns, attractive tax advantages, and asset diversification that can all build wealth.

If you’re considering this step, you may want to look at Houston’s many rental property investment advantages through the PadSplit filter.


How to invest in rental property
How to invest in rental property

Houston is a city with a reputation for affordable housing, ranking third most affordable among major metro areas in the U.S. According to Council for Community and Economic Research statistics, the cost of living in Houston is 4.4% lower than the nationwide average. That means living in Houston costs less than 25.6% of the average of the most populous U.S. metro areas. And its attractive cost of living means that students, professionals, families, and retirees continue to pour into Houston.

People flock to Houston for reasons other than just the low cost of living. The city offers career opportunities in high-skill fields such as healthcare and education. Residents can enjoy the warm weather and thousands of acres of parks and nature. Houston even boasts a prominent art scene. And when it comes to the culinary arts, Houston’s iconic Tex-Mex, Louisiana Creole, Vietnamese, barbeque, and other diverse dining options are a foodie’s dream.

In recent years, Houston has seen the same affordable housing crisis as countless other major cities in the U.S. For lower-income individuals like students, retirees, and young professionals, a long-term lease may be out of reach. Failing to meet the threshold for rent and lease approval can hinder people from acquiring safe and affordable housing, stymying their hopes of a better, more comfortable, and stable lifestyle.

With urban living costs going up in cities like Houston, affordable housing options are increasingly limited. While subsidized housing is an option for some, such as those on Social Security or disability, wait lists can leave people in a lurch. That’s why property owners are discovering how providing safe, attractive, and affordable housing makes sense not just for them but for Houston’s countless renters as well.

In the business of providing affordable housing options since 2017, PadSplit professionals have compiled resources to help you determine whether taking that first step toward rental property investment is right for you and how to invest in rental property.

Do the math

For most of us, the idea of purchasing property raises uncertainty. A glance at headlines shows that the time is ripe for rental property investment. Houstonia magazine reports that Houston rents have increased as rent freezes and pandemic eviction moratoriums expire, paving the way for property owners to leverage assets that ease the affordable housing shortage while reaping profits.  

         Begin the decision-making process by asking yourself how much you can afford to spend and how much income that investment will generate. Sound complicated? It’s simplified with PadSplit’s earning calculator. They’ve also done the research for you to locate the most promising properties that meet the criteria for success. You’ll want to offer renters a safe, well-maintained residence in a desirable neighborhood close to major employers and schools with access to transportation hubs. PadSplit has those locales mapped out for you.  

Decide how to rent it

How to invest in rental property
How to invest in rental property

Today’s rental markets include many more options than traditional single-family residences, but some have drawbacks. PR Newswire reports profit margins on three-bedroom, single-family home rentals are declining year after year across most of the U.S., including Houston, as rents aren’t rising as quickly as property prices. Short-term home rentals like Airbnb and Vrbo are perfect for temporary lodging during vacation or corporate travel, but unless renters have deep pockets, the costs quickly add up making them a poor solution for residents needing longer tenancy.

         During the rental crisis, PadSplit’s business model has proven fruitful for property owners, known as Hosts. Investopedia outlines the pros and cons of renting by the room and concludes that under the right conditions, the potential returns on investment far outweigh the risks.

Landlords and renters alike are fond of Airbnb and Vrbo’s no-fuss, streamlined processes, but managing guests can be quite time-consuming. However, this gap is currently being bridged with the likes of PadSplit on the scene. PadSplit has developed front-end, rigorous guidelines and procedures that increase the success of rental property investment. PadSplit acts as the middleman to eliminate much of the hassle of managing residents and takes control of Member management. With PadSplit support, you can focus on growing your portfolio or your other responsibilities while generating passive income.

Spur neighborhood redevelopment

Another big factor when deciding to develop a co-living property is neighborhood redevelopment. Brittany and Derrick enjoy a robust income generated from their PadSplit units while providing affordable housing to those who need it most. Rental property investment for them has segued away from Airbnb, toward PadSplit’s business model. While bolstering the charm of quaint neighborhoods they’ve built a loose-knit network with other like-minded landlords who rebuild their places with the same ethic.  This results in the improvement of entire neighborhoods which, in turn, protects the value of everyone’s investment. It’s a win-win for Hosts and Members.

Brittany and Derrick’s experience in Airbnb ownership and management made them recognize its disadvantages. Income based on short-term reservations is driven by such variables as holidays and traditional vacation season making occupancy and resultant income sporadic at best. They invested a lot of valuable time into cleanup after each tenant’s departure, meaning their family time suffered. And, speaking of time, they had to monitor online queries at all hours and be available to turn over keys and instructions to renters. PadSplit’s model—based on longer occupancy—means Brittany and Derrick now spend less time in costly turnover activities.

How to invest in rental property

If you don’t already own property to convert into co-living units but recognize rental property investment is a viable way to earn income, PadSplit has prepared questions to ask when choosing a real estate agent to purchase a prospective dwelling.

         They’ve also made it easy for you to determine the best location for PadSplit properties; it’s just a matter of selecting what’s right for you and your residents. The Houston market has a growing population that needs proximity to jobs and its many secondary and graduate educational facilities. Some Members may not own cars and must live near public transportation to get to jobs and shopping. And, of course, safe neighborhoods are essential.

         Although PadSplit completes many of the details for you, you may still be unsure where to start. If that’s the case, it may be time to connect with realtors from the PadSplit Vendor Network. They know its model and can help you find the ideal location and property for your investment.

Houston continues to provide opportunities to not only the thousands who stream there every month but to the property owners whose mission is to shelter them in safe, affordable housing. Take a moment now to discover how PadSplit makes rental property investment such a profitable endeavor and develop a straightforward plan of action as you journey toward financial growth.

Explore our posts

10 rental property tax deductions to maximize profits
PadSplit Impact Report
The Las Vegas housing crunch: Is coliving the answer?