Top 5 Houston Rental Property Investments by Zip Code

Spring, Pasadena, and Friendswood are some of the top areas for single family property investors to find the highest-yielding real estate investment properties.

Identifying the best neighborhoods to invest in real estate requires data about population growth, income growth, home prices, and rental properties. We've collected that data and identified the top neighborhoods and zip codes in Houston for single-family property investors.

Awning is able to find properties with far better returns than the median using its algorithms, meaning, when you buy an investment property via Awning, you're likely to find yourself well above the median rental yield for a given area.

We've identified our favorite zip codes to invest in in Houston, taking into consideration the availability of deals with great yield / returns, risk, and the appreciation potential of an area.

The top 5 zip codes for rental property investors in Houston include:

1. Spring, TX (77373)

  • Quick access to I-45, 99, and Hardy Toll Road. Hardy Toll Rd is a 25 minute drive to downtown Houston from 77373; I-45 is a major highway to Dallas, I-99 newest loop in Houston with a lot of growth. Very quick commute considering its the outskirts of the city.
  • New Exxon Campus and recently relocated HP Headquarters are 10 minutes away.
  • Near Woodlands, with Anadarko's Headquarters and other major companies in the area.
  • Only 1.5 months of rental inventory available — super hot rental market, with leasing times below one month.
  • Families looking to take advantage of the amenities of The Woodlands at an affordable price or rent, move to Spring. With quick access to downtown, they get the benefits of both The Woodlands and downtown.

Good for investors looking for:

  • Proximity to downtown from the outskirts of Houston: less than a 30 minute drive to downtown.
  • Passive Income, with good cap rates and rental yields.
  • Lower price points at a $180,000-$225,000 purchase price.

2. Pasadena, TX (77503)

  • Zip Code at the intersection of Beltway 8 and 225.
  • High projected growth in the area due to Pasadena's adjacency to the port. In fact, there is a $176.8 million project expanding beltway 8 in the Pasadena area to support this growth. There's great job stability because the port is necessary no matter what industry is flourishing. The heart of Houston's growth is its major port.
  • 1 out of 5 Houston jobs are in the manufacturing industry. This zip code is located on the south east side of town where you can find major refineries like Shell, Chevron, and Valero, chemical plants, and the 50 mile long port of Houston.
  • Sits at the inside of the loop with a median listing price under $200,000.
  • Younger families are moving to Pasadena for the job opportunities in the Pasadena area.

Good for investors looking for:

  • Passive income in a rapidly growing area near an abundance of employment opportunities.

3. Friendswood, TX (77546)

  • A+ Overall Niche Grade while still having a median listing price at just $254,900, which is incredibly hard to find.
  • $106,287 median household income is incredibly high for the median home value.
  • Great family-friendly attractions: quick access to NASA's Space Center; 15 minute drive to Kemah boardwalk with food, roller-coasters, and carnival games; near Bay Brook area with malls, fine dining & restaurants, outside entertainment, and Lago Mar — the largest man-made lagoon.
  • Schools in Friendswood are highly rated.

Good for investors looking for:

  • Property in a lower risk bracket, great school district, and the possibility for passive cash-flow.

4. Houston, TX (77040)

  • Inside of the Beltway 8 loop — NW corner, with an A- graded school at a low median listing price of $235,000, 77040 is the only place you can get a school this good inside of the loop at that price point.
  • Zoned to Cy-Fair school district, one of the most desired school districts in the Houston area.

Good for investors looking for:

  • Affordable passive income property inside of the outer loop in a A-  rated neighborhood, with plenty of upside.

5. Spring, TX (77379)

  • Zoned for the Klein ISD school district, one of the best school districts in the state. Homes in a school district this great will find a tenant in any market environment.
  • High median household income of $98,476.
  • Median listing price of $254,000.
  • Overall neighborhood grade of an A+.
  • Rapidly growing area due to the recent development of 99.

Good for investors looking for:

  • Appreciation over cash-flow and looking for a home that will attract families in the best or worst of economic times.

Statistics Across All Houston Zip Codes

Houston Rental Yield

  • Median: 8.3%
  • Range: 3.9% to 11%

Houston 3 BR Listing Price

  • Median: $242,450
  • Range: $149,990 to $837,450

Houston 3 BR Rent

  • Median: $1,670
  • Range: $1,280 to $3,640

Houston Household Income

  • Median: $54,151
  • Range: $26,303 to $169,170

Houston Population Growth

  • Median: 3.12%
  • Range: -3.3% to 38.9%

Houston Income Growth

  • Median: 9.58%
  • Range: 9% to 14%

Methodology

  • We use 3 bedroom homes as they are usually the most favorable for investors. Smaller homes tend to have tenants who move more frequently (since they're occupied less often by families with school age children) and larger homes are often unnecessarily large for most families, making it take longer to find tenants for them.
  • We only look at Houston area zip codes with populations over 10,000 people to remove outliers / zip codes with very limited inventory.
  • We included 145 zip codes that made up the Houston MSA from Harris, Liberty, Wharton, Galveston, Waller, Walker, Matagorda, and Brazoria Counties.

Legend & Data Sources

Rental Yield: Annualized median 3 bedroom rent, from the last 6 months, divided by the median 3 bedroom listing price, from the last 6 months. (Source: Awning proprietary rent data + Awning analysis of Houston MLS data)

Median Listing Price, 3 Bedroom: Median 3 bedroom listing price, from the last 6 months. (Source: Awning analysis of Houston MLS data)

Median Rent, 3 Bedroom: Annualized median 3 bedroom rent, from the last 6 months. (Source: Awning proprietary rent data)

Population: Number of individuals living in the zip code. (Source: US Census)

Median Household Income: Median household income of the zip code. (Source: US Bureau of Labor Statistics)

Projected Population Growth: Expected population growth of the zip code over the next 5 years. (Source: US Census)

Projected Income Growth: Expected household income growth of the zip code over the next 5 years. (Source: US Bureau of Labor Statistics)

About Awning

Awning is a platform that helps individuals find, buy, and manage the best single family rental homes on the market. Awning provides this service by analyzing every listing on the market to surface the best investment opportunities at any point in time and pairing its customers with expert real estate agents, known as Awning Advisors, who help customers through the process of identifying the best strategy & markets for them.

About this report

For this report, Awning has used its proprietary data to determine which Houston zip codes have the best yield for rental property investors. Awning brings additional color to the story with the help of Houston local Humberto Marquez, who is Awning's most expert Texas agent.

Awning is a licensed real estate broker in California (DRE#02120175), Florida, and Texas. TREC Information About Brokerage Services.

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