Houston

Cities often grow organically. This is doubly true for Houston. With such lax zoning laws and recent infrastructure developments within the city, Houston is growing in a very particular direction. Today we are speaking with Pete Neubig, Regional Director for Mynd Property Management in Texas, about how Houston is growing and what factors are ultimately determining this growth.

‍Steve Rozenberg: Hey everyone, this is Steve with Mynd Property Management. I am here in Houston, Texas with my good friend Pete Neubig, who is the Regional Director for Mynd Property Management for Texas.

So Pete, let's talk a little bit about Houston. You and I both know Houston and the fact that we know it's growing, but it kind of is growing in a certain direction, right? And that affects rental prices and prices of properties, right?

Energy Corridor is Moving Houston Northwest

Pete Neubig: Yeah. So back in the 50's and 60's when the city was really being developed, downtown Houston was the center point of Houston. But what's happened in the last few decades, especially in the last 20 years, is that you're starting to see that the city of Houston, the midpoint or the center is now being moved almost northwest. And there's many factors. So, the big one is that a lot of the oil companies have moved out of downtown and out of those buildings and they moved into what's called the oil corridor or the-

‍Steve Rozenberg: Energy corridor.

‍Pete Neubig: Energy corridor. Thank you. It's called the energy corridor, which is literally west and a little bit north of town. So what's happened is, because they employee so many people and then there's so many businesses that feed off of those businesses, secondary businesses, a lot of businesses are being developed there. So now what happened was that now housing is being developed there and now they just finished Route 99. Right? And so by 99 connecting, now people can get to that area of town even more efficiently.

‍Steve Rozenberg: Right. And so just so you understand, Houston is made up of, basically the freeway system is made up of loops, concentric circles. So there's an inner loop, which is the 610, then it goes out, the outer loop is Beltway 8 and then the newest is 99.And what Pete's talking about is, the energy corridor goes from downtown Houston westbound to Katy. Now what's happening is this energy corridor basically loops around the whole Northwest of Houston and that is where we're seeing a lot of growth surging because it's now available to get to.

‍Pete Neubig: Correct. And because there was a lot of available land, builders, instead of buying one plot, they can buy tracks of land and can build communities out there.

And that's exactly what's happening. So you're seeing Katy has exploded, Cypress has exploded and now they're actually going past Katy and Cypress. Places that used to be called the country are now called suburbs.

‍Steve Rozenberg: Yeah. Because now they're accessible and you're seeing that people are able to get lower prices. You're seeing families want to move out there. Because Houston is such a transient city, you're seeing a lot of people come in, they want to rent because maybe they're relocating with their company, so they're looking for rentals in these outer areas, which now are accessible and the prices are lower for now. It will go up, obviously.‍

Pete Neubig: And because everything's moving west, to get through downtown is a traffic nightmare. So if you lived on the East side, it's tough to go work for one of these oil companies to get through on the West side. So what's happening is the East side is dwindling a little bit and the land is going, actually appreciation's going up, but because there was so much land available that the price per land was actually pretty low, even on the West side.

‍Steve Rozenberg: Exactly. And one of the things you want to know about Houston is, on the East side it is restricted because of the river, the Gulf and Lake Houston. So it's physically limited on the East side. That's why so much growth is going West and now it's going Northwest. So if you're looking to buy a property and you want to know what areas are good, if you took it in a pie-type quadrant, you're looking at Northwest of Houston as really the places where you're getting great prices, you're getting great rentals, you're getting new properties. And again, there's just better school districts. Everything's new so you're getting a much better price point as of right now. Though like I said, that will change over time. But right now that's what you're getting.

‍Pete Neubig: But interesting enough, you and I like East side of town. We like the East side of town because it's blue collar and because there's a lot of gas and petroleum refineries there. But different subject for a different time. But that's ultimately why Houston is actually moving Northwest—the mid point of Houston.

‍Steve Rozenberg: So there you have it. If you want to know more, you can go to our website at mynd.co. So it's M-Y-N-D.co.

Also you can go to our Facebook group, the MasterMynd Real Estate Investment Club. There you got people like myself, Pete, other investors there. If you want to know more about Houston or any city, you can go in there, you can comment, like, engage and have conversations. So thanks everyone for watching, we'll talk to you later.

Houston is growing, and it’s growing northwest. This is for a number of reasons, each of which can help any investor determine where the best neighborhoods are to invest in going forward. For one, many oil companies have moved out of the downtown Houston area for cheaper locations in the suburbs—particularly in the Energy Corridor, a business district located in the north and west of Houston. Likewise, the completion of State Highway 99, or the Grand Parkway, has made the northwestern suburbs a far more desirable location for young families and professionals moving to or within the Houston area.

While there are many reasons why Houston is growing the way it is, these factors are not blanket facts. Some neighborhoods in other locations around Houston, such as the Third Ward to the south of the city center, are experiencing growth and investment as well; however, knowing how a city will grow and expand into the future can help any investor make the best decision when choosing a property to buy.

Many markets around the country are reaping the rewards of this booming economy. The same can be said for Houston, Texas, where many neighborhoods are attracting young families and professionals to their homes. Our guest today is Shannon Geer, with the Houston division of Mynd. Shannon is here to explain what investors should look for when determining which neighborhoods are benefitting from this boom, and how to determine whether the property they are looking to buy will benefit, as well.Steve Rozenberg: Hey everyone, this is Steve Rozenberg with Mynd Property Management and I am joined here today with Shannon. Shannon is part of the Houston division of Mynd Property Management. And today we're going to talk about Houston, and whether or not it is a strong market, and what the determining factors to help us understand, any city, how to know is it a strong market or a bad market. So Shannon, thanks for being here today.Shannon Geer: You're very welcome. Hi everybody.Steve Rozenberg: So let's talk a little bit about, obviously you and I both are in Houston, we're from Houston. So we are obviously seeing what's going on. But for people that are watching that don't know, what would you say are some good indicators to know as to whether or not Houston or any city, is a solid, strong market to own rental properties in?

Know the Days on Market

Shannon Geer: Certainly. So a couple of things that come to mind immediately. What are the rental days on market? That's a huge one. As an investor, you want to be able to make money off of your rental property. So if the days on market are 60, 90, 120 days, obviously that's going to cost you more at the outset than it's going to make you. So that would be a good strong indicator, first.Steve Rozenberg: And so just for people that don't know, days on market is when you have a vacant property and it's up for lease, now you have to get it leased, and it's going to be vacant for so many days. That's called days on market. So, you may have a property that you may be budgeting for 30 days of it being vacant, but maybe because of the time of year, for example, in the winter time, properties are going to sit longer than in the summertime. So if you were thinking 30 days and you bought the property and put it on the market November 1, it may be vacant until February 1, and now you're looking at a much longer days on market because it's slower. And because of that, your numbers would be off and you may not have the right amount budgeted. So, days on market is very, very important.Shannon Geer: In all facets of this process.

Finding the Deal and Knowing the Inventory

Steve Rozenberg: Absolutely. Now, before you get two days on market, it's even finding a deal.Shannon Geer: The property. Exactly.Steve Rozenberg: Right? The inventory of what's on the market.Shannon Geer: Exactly. The amount of inventory is very important. It's crucial to understand how much property is available.Steve Rozenberg: Yeah. Because, it could be a great deal, but if nobody can get the deal, it doesn't matter. Because normally what happens is, if there's one property in a neighborhood and all of these investors are fighting for it, normally what happens is it drives the price up. When the price gets driven up, that good deal now no longer is that good of a deal. So it's something you need to think about when you're looking at a strong market, is what is the inventory? And then secondary is, what is the days on market?Shannon Geer: Exactly. And a lot of times with that inventory as well, you're not only competing against other investors, you're competing against homeowner buyers.Steve Rozenberg: People that want to live in the house. Absolutely.Shannon Geer: So, you really do need to have a decent amount of inventory.

More Jobs Means More Tenants

Steve Rozenberg: Absolutely. What would be next on the list for people?Shannon Geer: The amount of jobs in the area. And so, one of the things that has stood out to me, one of the statistics I recently saw from the greater Houston economic partnership, is that the Houston market has added over 65,000 new jobs on average the last three years.Steve Rozenberg: And that's well above the national average, obviously.Shannon Geer: Yes. Well above the national average. And that doesn't mean that we had jobs leave and they're just—Steve Rozenberg: This is on top of jobs that are already here.Shannon Geer: Yes, this is on top of what we already have here.

Transient Isn’t Necessarily Bad

Steve Rozenberg: Right. So a good economy, obviously, is always going to be good for a market because for every two jobs that are created, one house is created, statistically. So, what that tells you is if you see more jobs being created than are leaving, that is a good sign because most of these jobs that are being created could be from other companies that are coming into the area. So for example, there have been a lot of companies in the last couple of years who have moved their corporations to Texas—move their headquarters here. And normally when that happens, you're going to get residents that are going to come, maybe they will eventually buy, but what they're going to do is they're probably going to rent first to figure out the area. And that makes it a strong market because you have an inflow and you're not just regenerating the jobs that are currently existing.Shannon Geer: Exactly. And when we have those big corporations move their headquarters here, we get what are called the transient tenants.Steve Rozenberg: A lot of transients. Absolutely.Shannon Geer: And those are tenants that are coming in, maybe they're coming in from out-of-state, out-of-country, and they're not necessarily going to make their permanent residence here, but they're going to be here for three to five years. They're going to rent more than likely instead of buy. And those are the great tenants also.Steve Rozenberg: Absolutely. And a lot of times when people hear the word transient, they may think it's a lower level rental. That's not the case. When you talk about Houston because of oil and because of the medical industry and the exporting port, there's a lot of drivers in the Houston economy that make it a strong market. Because of that, you have a lot of upper-level jobs. So you have a lot of CEO level, executive level positions coming into the city. And as you said, they may be here for three years, five years. And if they're out-of-country they are not able to buy a house or they can't buy a house because they're only going to be here for short time, which is great when you have a rental property.So all of these things, again, are good economic indicators and the data doesn't lie. The data is going to tell you the story. And this is for any city that you look at. But again, this is Houston, because we know Houston. We know it's a solid market. And Shannon clearly states why Houston is such a solid market and why it is growing so rapidly, and why it's great for owning rental properties.Shannon Geer: It is. So when you're ready, let us know.Steve Rozenberg: Yep, let us know. Well, thank you everyone for watching. I am Steve. This is Shannon. If you want to find us online, you can go to mynd.co. So it's M-Y-N-D.co. Or you can find us on Facebook at the MasterMynd Real Estate Investment Club where there's other fellow investors there. You can join and you can engage in comment and have discussions with people like me and Shannon in the group to talk about investment properties. We'll talk to everyone later. Bye.Shannon Geer: Bye.Finding a property to purchase can seem difficult to the uninitiated investor; however, there are indicators that every investor can look for which reveal the desirability and potential profitability of a property.For example, the number of available properties in an area can be the first deterrent or attractor from or to a market or neighborhood. If there are only a few properties being fought over by a number of investors, the prices will inevitably go up. And while that property may be in a great location with enormous potential, losing money at the outset is often a bad idea.Likewise, the available number of jobs is a clear indication of whether there will be tenants available to rent. As the number of available jobs increase, so, too, do the available number of tenants. And while these are not the only indicators, looking at the numbers is always a good strategy when determining which property to buy and where.

Making a property move-in ready often requires more than cleaning up. Today we are on-location at a property in Houston with Pete Neubig, Regional Director of Texas with Mynd Property Management, to discuss what needs to be done to make this property move-in ready, and what investors and property managers should look out for when making their own property ready for new tenants.Steve Rozenberg: Hi everyone. This is Steve with Mynd Property Management and I am here in Houston, Texas, with my good friend, Pete Neubig, who is the Regional Director of Texas for Mynd. Pete, so tell us a little bit about this property that we're at now.Pete Neubig: Sure. So, we're in a house in Katy. One of the things that we like, as investors in Katy, is that they have a really good school district, which brings really good renters or tenants to the property. So, in this house here, we're standing in the living room.What we like about this house is, notice here we have laminate flooring. And then we have the tile from the kitchen area, the dining room and kitchenette area. And we like the fireplace, it's real nice.

Pick the Right Paint Color

Pete Neubig: Now, with this house here, the owner probably lived in this house. I don't know for sure, but most likely, because you could tell the coloring on the walls. Now, even though the coloring is kind of bluish, which we're not—Steve Rozenberg: We wouldn't pick that.Pete Neubig: As investors, we would use the color beige. It's still a soft enough color, and it was a really good paint. And it's in good shape.Steve Rozenberg: And the nice thing about these houses, especially here in Texas, is the kitchen area is open, so it makes the house look much bigger because the kitchen is open.Pete Neubig: Along with the high ceilings, as well.Steve Rozenberg: Yeah, the high ceilings, as well. 80% of your time is spent in the kitchen. So again, this is good. The kitchen looks great. I mean, the stainless steel appliances. The cabinets look good. This house is ready to go.Pete Neubig: This house is going to run a little bit higher than a normal house that we have. This house is going to rent about $2,000. And so that's why, with a house for $2,000, you will get new paint. You want to have a nice floor and you want to have the higher-end, nicer appliances.Steve Rozenberg: Yeah. So we'll take a look around the rest of the house and we'll show you some more stuff.Okay. So now we are in the master bedroom. Good size. You can tell, like you said earlier that there's distinct colors here, right? Blue paint, but it still looks nice.Pete Neubig: The paint's a little too dark for me. But because you have the high ceiling, and you have a lot of windows, it doesn't make the room too small.Steve Rozenberg: It doesn't make it dark.Pete Neubig: Now the thing I like about this house, and this is not something I would normally do. Normally, I would do carpet in bedrooms. But, look at how beautiful this floor looks. And so it actually brings like a real modern look to it. And so, when people come to see this to rent this, the flooring doesn't matter at this point. You can put an area rug here. Paint is in really good shape here. The crown molding, and you notice the two tone paint which makes it look real nice. And then of course the small things like you have new switch plate covers.

It’s the Little Details That Matter

Steve Rozenberg: Yeah. It's the little details like the switch plate covers that make a huge difference.Okay. So, now we are in the master bathroom. This is a typical master bathroom for a house. And like you said, someone obviously probably was a person that lived in this property before they turned it into a rental, just the way it was taken care of.Pete Neubig: The main thing you can tell here, Steve, with this whole house is how clean it is. So, there's two things that really sell properties to renters. Number one is paint. Does it have that new paint smell, or at least, does it look like brand new paint? Which this house has the brand new paint look. And two, is it clean? This house is incredibly clean.Steve Rozenberg: Yeah, very nice. And you know, again it looks open and everything, let's take a look at the master closet. Now, this is a little bit bigger than the average master closet. So, just to give you an idea. But look, this is pretty big. This could be a bedroom in some cities, right?Pete Neubig: I know my first place I lived in, I rented a room that was smaller than this whole room. But yeah, this is an incredible master closet.Steve Rozenberg: And they did a great job with the shelving and everything.Pete Neubig: And the nice thing is, again, you have got this type of flooring throughout the house. So, there's no carpet in this house. So, mainly when somebody does move out two years later, it's minimal. And if they dump this chip, you just pull this whole thing up.Steve Rozenberg: That one piece.Pete Neubig: Correct.Steve Rozenberg: This right here is another bedroom, and this is what's considered a Jack and Jill closet. But here's another bedroom that, again, looks nice. This could have been a nursery or something.Pete Neubig: If you look here, you can see there's a couple of holes that were here for nails. They were able to paint over. Because it's so small, you can barely see. You can see if you look for. But if you're a tenant looking at this—Steve Rozenberg: You're not going to go to that. It's not going to be a problem.Pete Neubig: And it's not like I'm not paying rent to this house because of this right here. So, we don't like doing a touch up in most cases. But there are some cases where it does work very well, especially on this type of paint.Steve Rozenberg: And then again, the flooring doesn't? It's shiny. It looks good. It's open. You've got the white half, and then it goes to the dark paints. If it was all dark, it may look a little darker. This just happened to be the way it is with the halfway, and that looks pretty good.Pete Neubig: And it's like little things like this, a little blemish. But, when the house is super clean, when the house is super light, the paint is great in most everywhere in the house, and you got great flooring and it smells good in the house, that's when these little things get—Steve Rozenberg: You get higher rent. And even something like this—if you look at the blinds, these are nicer, upgraded blinds. They're a little more expensive, but it just adds a nicer touch. And if you want more money for your rental property, these are the things you have to do—these finishing touches that make the difference.Pete Neubig: Correct, and these two inch blind, they'll last longer than your little vinyl blinds that tend to break pretty quickly.

Exterior and Garage are Important, Too

Steve Rozenberg: Yep, so we're going to go walk a little bit more. We're going to show you the backyard, and show you what is out there.Okay, so now we're in the backyard. This is a beautiful backyard. It's got a covered backyard porch, which is very nice. Pete, talk about the backyard—kind of the grass and the structure and what's important to know about back here.Pete Neubig: Yeah. So, one thing, the nice thing is they do have a little concrete here and it's covered, so you can spend time out here, which is a seller. But, notice here how the landscaping is kept up real nice.But more importantly, notice the fence. So, a lot of times, we have clients that they don't want to fix a fence. There's broken pickets. But most of our residents, about 80% of our residents have a dog or some kind of pet. And so it's important that you have the yard and the fence kept up real well.Steve Rozenberg: And it's important that you do this before the property is rented because once someone's here with an animal, and then the animal gets out because the fence is not fixed correctly, now it's a bigger problem.Pete Neubig: Well and also, aesthetically, it's pleasing. The fence looks good, the landscaping looks good, people come in, and you want to sell the property, right? And so to rent it, is to have good landscaping and, just like you do to paint, you want to have good landscaping, you want to have the fence kept up.Steve Rozenberg: The extras are good here. So, let's take a look at the garage. This is a standard garage for a Texas property. This is called the detached garage. And so this is what a detached garage looks like. Very well taken care of.Pete Neubig: Well, this is what a detached garage should look like. One thing you notice with the garage is that there are no things in the garage. So, there's nothing in the garage, right?Steve Rozenberg: Which is important when you're trying to rent a property, that you don't have just stuff and put all of your trash in the garage while you're trying to rent it.Pete Neubig: Especially if you haven't lived there in the past. And then notice, it's not finished. And it's okay if it's not finished. Here in Houston anyway, having a finished garage is not really necessary.Steve Rozenberg: It only has to be finished if it's attached. If it's detached. It does not have to be. If it's attached, meaning it's part of the house, then it's got to be finished.Pete Neubig: Then you want it to be finished. Correct. And of course it has the electronic garage door opener, which is necessary. Especially on a house that's renting for $2,000, you want to make sure that you have that as a feature.Steve Rozenberg: Absolutely. Hey everyone. So, this was a house that was made to be rent ready. It's a beautiful house. What does this rent for, about roughly Pete?Pete Neubig: So, this house is around $2,000. It's in Katy, which is a little suburb. It's about 30 minutes West of downtown Houston. It's close to two major highways, 99 and I-10. And it's in a great school district. So, and it's on a col-de-sac. Near parks. It's an amazing house.Steve Rozenberg: Again, this is a great area. It's a great house. But again, this shows you what a house looks like, from what a make-ready could be, to what is done after and when the property is ready. So again, this is a standard house in Houston, Texas. If you want to know more about Houston and learn about it, go to our website. It's mynd.co, M-Y-N-D.co. Or you can go to our Facebook group, MasterMynd Real Estate Investment Club on Facebook. We'll talk to everyone later. Bye.When making a property move-in ready, it’s the little details that matter. This can mean replacing switch plate covers, or changing out old blinds. Likewise, new tenants look for a property to feel new and clean. This obviously means making sure the house, itself, is clean, but also means touching up the paint or repainting completely.It also means keeping up with landscaping and, equally important, maintaining the fence. As many tenants have pets, having a well-maintained fence is a clear draw. It also makes the home more attractive, overall. Keeping the interior and exterior of the property maintained, as well as thoroughly cleaning a property before showing it are necessary to get tenants in quickly and keeping them happy, overall.