If you’re in the market for investment properties, Houston has some of the most profitable opportunities to be found in the U.S. right now. The housing market in Houston has been hot for a good while, with a 21% year-over-year growth occurring in 2020.
Thus far in 2021, the market has remained plenty hot, but the supply has understandably been dwindling. The reduction in supply has been driven by low interest rates and the high demand for new homes, as well as a recent increase in lumber prices and a labor shortage.
However, lumber prices have most recently begun to drop again, and experts predict they will soon return to normal. So we’re still living in a great time to buy real estate in Houston; if you’re in the market, here’s how to find some great deals.
1. Make offers for properties off the market
You’d be surprised to learn how many people sell their home when it’s off the market. If you find a property you like, it can’t hurt to make an offer.
The worst that can happen is that your offer gets rejected. There’s always a chance your offer might be accepted, however.
When you know what you’re looking for in a hot market with low inventory, sometimes making offers on homes that are off the market is one of the best ways to find your next investment. If you work with a real estate agent, he or she might be able to point you toward homeowners who recently took their home off the market for any number of reasons.
Such people may not require much persuasion to sell, if you make the right offer. If you find an unbeatable deal for an off-market property, but you need to gather funds to close, consider selling an existing property to fund your purchase.
However, under such circumstances, it’s a smart move to avoid putting your property up for sale by yourself just to save money. Instead, partner with a property management company like Green Residential to sell your Houston home for a flat-rate commission fee.
2. Look for luxury homes
When you can get approved for a loan to buy a luxury home, it can be worth the extra expense. Luxury homes in Houston have seen the largest increase in single-family home sales, having risen to 291% as of May 2021.
Home values are nearly always on the rise, but right now they’re climbing more rapidly than usual. You’ll do well by acquiring at least one luxury home before prices escalate even more.
Your investment will grow more valuable over time. If you can swing the mortgage payments, it’s worth considering.
3. Look for “FSBO” signs
Some of the best deals will come from people who want to sell their home without using a real estate agent. It’s harder for the seller, but if they’re desperate to unload the property, they will accept the first reasonable offer that comes their way.
Without a real estate agent to advise the homeowner what he should list the home for, you might get lucky and pay a discounted price on Houston’s hot market. Of course, it could go the other way: A homeowner might be trying to sell his home for more than it’s worth, and without an agent’s coaching, the seller might reject all reasonable offers.
4. Go to showings to meet agents
With the housing market booming in the greater Houston area, you can find showings just about anywhere across the metro area. According to Channel 2 news, one Realtor reported showing 81 homes in 36 hours and receiving 27 offers up to $30,000 above asking price.
That’s a hot market. But you shouldn’t go to showings to make overinflated offers. Go to showings to connect with agents who are tasked with selling an enormous number of houses.
If you’re lucky, you’ll meet an agent with a client just about to put the home on the market – and if your timing is right, you might get first dibs.
5. Drive around to find vacant properties
Find vacant properties by driving around, gathering addresses, and researching them online to see if any are for sale. When you find land for sale, buy it and build a new home.
Although there are exceptions, most families won’t be interested in buying vacant land to build a new home at this time. Under the current situation with the pandemic, most people can’t wait around for a new home to complete construction.
This means there is likely to be more vacant land available for purchase in spite of the low housing inventory.
Buy what you can before home values are too high
Whether the market remains hot or not, home prices will only continue to rise. Buy your next investment before they go sky-high. If the economy slows down, you’ll have income-generating assets that will serve you well through another recession.