Should you invest in Airbnb Houston? Or is it a better idea to run a traditional rental instead?
Experienced real estate investors will often look for opportunities to invest in vacation rentals in the Texas real estate market.
This is due to the higher average rate of return that short-term rentals have compared to traditional rentals.
So, is Houston any different in this regard?
In this article, we will look into the Houston real estate market, its past and present performance, and other details about owning a vacation rental there.
Houston Housing Market Recap
In the past few years, the Texas housing market became one of the top markets for real estate investing.
And although Texas was affected like every other state by the COVID-19 pandemic, it managed to recover more quickly in 2021.
The Houston housing market in particular suffered from the financial impact that the pandemic had as we saw unemployment levels peak at 14.3%, which is above the national average of 6.7%.
This was mainly due to job losses in the oil and gas fields in Texas.
That being said, three major trends took place in the Houston market:
The Rental Market Held Strong
If you’re a rental investor in Houston, then you’ll be happy to know that the market is holding strong.
Despite the impact of the pandemic on home prices and unemployment rates, rental vacancies were at their lowest point in many years.
Median rents were also steady in the past couple of years, increasing by only about $100 over the last five years.
Similar to the rest of the country, Houston suffered from a housing supply shortage in 2020 and early 2021.
However, the Houston housing market recovered better than most other markets near the end of last year.
At that point, there was a 2.5-month supply of houses in the city, which was a significant jump over the national averages.
Construction also resumed in the area, especially for single-family homes.
Oil & Gas Unemployment Levels Rose
The biggest wildcard affecting the Houston real estate market is the unemployment rates from the oil and gas industries.
This is because the economy in Texas relies heavily on these industries, which were hit hard by the pandemic.
While the employment rates have recovered slightly since then, it is still struggling to get these industries back on their feet under a more environmentally concerned White House administration.
Houston, TX Housing Market in 2022
Of course, if you’re looking to invest in Airbnb Houston in 2022, you’ll want to know how the market is performing this year.
To understand how Houston is doing, let’s take a look at Mashvisor’s market data regarding property prices, rental rates, and other stats:
- Median Property Price: $619,380
- Average Price per Square Foot: $377
- Number of Airbnb Listings: 1,836
- Monthly Airbnb Rental Income: $2,228
- Airbnb Cash on Cash Return: 1.33%
- Airbnb Daily Rate: $148
- Airbnb Occupancy Rate: 48%
- Days on Market: 208
- Walkscore: 44
As you can see from this data, on the surface level Airbnb Houston’s performance doesn’t seem outstanding.
Compared to traditional rentals, which have a cash on cash return of 2.10%, the Airbnb projected return doesn’t look very high.
Related: 10 Best Places for Buying a Vacation Home in Texas in 2022
Houston is considered one of the strongest markets for traditional rental investors as it offers a stable demand and low vacancy rates.
This, however, doesn’t mean that buying a vacation rental here is a bad investment.
As you will see when looking at neighborhood data in Houston, some neighborhoods show promising projections for short-term renting.
According to Mashvisor’s Airbnb data, these are the top choices for investing in short-term rentals.
The following neighborhoods are both affordable and have above average cash on cash return compared to Airbnb Houston:
- Median Property Price: $413,420
- Average Price per Square Foot: $239
- Monthly Airbnb Rental Income: $3,300
- Airbnb Cash on Cash Return: 3.87%
- Airbnb Cap Rate: 3.96%
- Airbnb Daily Rate: $165
- Airbnb Occupancy Rate: 45%
Greater Third Ward
- Median Property Price: $370,135
- Average Price per Square Foot: $206
- Monthly Airbnb Rental Income: $2,694
- Airbnb Cash on Cash Return: 3.35%
- Airbnb Cap Rate: 3.44%
- Airbnb Daily Rate: $172
- Airbnb Occupancy Rate: 45%
- Median Property Price: $171,344
- Average Price per Square Foot: $168
- Monthly Airbnb Rental Income: $1,601
- Airbnb Cash on Cash Return: 1.79%
- Airbnb Cap Rate: 1.90%
- Airbnb Daily Rate: $102
- Airbnb Occupancy Rate: 52%
As you can see, finding a Houston investment property in one of these locations can be lucrative.
While the Astrodome Area has the lowest median property prices in Houston, the other two neighborhoods on the list have the highest Airbnb estimate returns.
Related: The Best Rental Markets in Texas—The 2022 Guide
Now, let’s first briefly talk about the legality of Airbnb Houston.
Is Airbnb Houston Legal?
When you consider investing in vacation rentals, it is very important to make sure that Airbnb is legal in the market that you’re investing in.
Luckily, when it comes to Airbnb Houston, there aren’t many restrictions to hinder you.
Related: Short Term Rental License—What Real Estate Investors Need to Know
These are the two things that you should keep in mind when starting an Airbnb business in the Houston housing market:
Building and Housing Standards
This includes all the standard rules and regulations enforced by the city regarding the specifics of construction, design, and maintenance standards for buildings.
These rules are relevant since they include regulations on the habitability, health, and safety of a dwelling.
Since certain rules apply to residential and non-residential uses and may be relevant to your listing, we recommend contacting the Customer Assistance & Code Development Office.
The Hotel and Motel Ordinance
This ordinance can be found in the Houston Code of Ordinances, and it regulates short-term rentals in the city.
It includes important terms that include bed and breakfast facilities, hotels, and residences.
We advise you to review the ordinance to make sure that your property meets its requirements and to see what permits you might need to operate it.
Biggest Tourist Attractions in Houston
Another important factor that you should consider when investing in Airbnb Houston is the attractions that bring people to stay in the city.
Since short-term guests are mostly tourists or vacationists, the attractions that your Airbnb rental has access to will play a huge factor in its performance.
Luckily, Houston has plenty to offer in terms of attractions and activities that bring in tourists from around the globe.
Here are a few that you can use to your advantage when you’re trying to find an Airbnb for sale:
Space Center Houston
You know the popular line “Houston, we have a problem here!”?
It is no secret that Houston and NASA share a history.
The Space Center Houston is the visitor center of NASA’s Johnson Space Center, and it is a must-see attraction in the city.
Houston’s Museum District
This is one of the city’s greatest cultural attractions.
The district contains 19 museums in the beautiful downtown area, with 11 of these being free to the public.
Since this is a concentration of museums that are mostly within walking distance from one another, Airbnb rentals around the area can be in very high demand.
The Houston Livestock Show and Rodeo
This is Houston’s biggest annual event.
The 19-day event, which takes place in February or March, brings out the whole city to celebrate.
Of course, this also brings in a lot of visitors to the city to celebrate the event, which means Airbnb Houston is probably at its hottest during this period.
The Houston Zoo is a 55-acre attraction located in Hermann Park.
It is one of Houston’s star attractions, and it is as popular with the locals as it is with visitors.
Home to over six thousand exotic and indigenous animals, the zoo also contains an education center and a children’s zoo.
Visitors from all over come to the Houston Zoo to feed the giraffes, see marine life in the aquarium, and watch sea lions and otters.
This makes the area surrounding Hermann Park a great location for owning an Airbnb Houston investment property.
As mentioned, there are plenty of attractions in Houston that bring in tourists from around the globe.
The city is known for its outdoor activities as well as its numerous cultural centers and attractions, whether your guests are looking to bike in the Buffalo Bayou Park, go to the Houston Zoo, or go on a day trip to Galveston.
The charm of the city, its wonderful street art, and the vintage stores on the 19th street in The Heights—these are all guaranteed to keep the flow of visitors going.
How to Find Airbnb Investment Property
If you’re searching for an Airbnb for sale, there are a few online tools that can help you find what you’re looking for.
But if you’re looking for a platform that will help you search for Houston investment properties while also providing you with Airbnb analysis and data, then Mashvisor is the tool for you.
Mashvisor is a real estate platform that was designed to help investors find and analyze rental properties.
With a focus on Airbnb data, the platform includes several tools that can help you find homes for sale that match your criteria and help you meet your goals.
Mashvisor’s Airbnb calculator is a powerful tool that gives investors insights about each property that they’re considering.
This Airbnb analysis tool calculates the return on investment for each property using metrics like the cap rate and the cash on cash return.
It will also compare the results between traditional and short-term rentals to give you an idea of which strategy is better for each property.
The Airbnb estimates are based on data that we get from Airbnb, which is then processed by our AI using a sophisticated algorithm.
If you’re looking to run an Airbnb business, then this tool is something that you should consider using.
Investment Property Search
If you’re still in the process of looking for a place to buy, and you want to find data about Texas investment properties, for example, then this is the tool for you.
Mashvisor’s search tool is equipped with all the features that you will need to locate your next great investment.
The map UI includes several filters that you can adjust based on your:
- Your budget
- Desired cap rate
- Desired cash on cash return
- Type of property (single-family, multifamily, townhouse, condo…etc.)
- Age of property
- Number of bedrooms
- Number of bathrooms
This will change the listings that you see on the map to match your search criteria.
You can hover your cursor over any of the listings on the map to view that property’s details, such as its price and return on investment.
By clicking on one, you will be taken to that property’s Airbnb analysis page where you will find the Airbnb calculator and rental comps.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Investing in Airbnb Houston can be a great investment if you do it correctly: from choosing the neighborhood that you want to invest in, to picking prime locations that are near local attractions. Using the right tools for finding Airbnb for sale is a big help, too.
The many attractions in the city have brought in plenty of tourists and visitors from around the country and the globe. This makes Houston investment properties profitable as vacation rentals.
However, if you ever decide that Airbnb isn’t the right strategy for you, then you’ll always have the backup plan of switching to a traditional rental instead.
Since Houston is a very stable market, there are many traditional tenants in the area and you will not struggle to get your property rented out.
Regardless of what you choose, whether it is a short-term or a long-term rental, Mashvisor is here to help you with traditional and Airbnb analysis tools and insights that will enable you to make smart Airbnb business decisions. To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.