Houston Neighborhoods with High Appreciation Rates: Where to Buy Investment Property in Houston

Up and Coming Neighborhoods to Buy Houston Investment Property

Investing in real estate is all about location, location, location, and the city of Houston offers a wide variety of great locations for real estate investment, from suburban neighborhoods to bustling urban areas. Whether you’re a seasoned investor or a first-time homebuyer, choosing the right neighborhood is key to maximizing your return when it eventually comes time to sell.

By analyzing historical data, current trends, and future projections, several areas come to the forefront as Houston neighborhoods with high appreciation rates, making them great prospects for real estate investing. Whether you're looking for a personal residence or a passive rental income, Houston has a neighborhood that suits your investment goals.

Best Neighborhoods for Investment Properties in Houston

If you plan to buy, hold, and sell for a profit later down the line, you should look at these Houston neighborhoods where home values are on the rise and rentals are in demand. From neighborhoods near downtown to areas in the outer loop, rental property investors can find fantastic opportunities throughout the city.

Oak Forest

Best Neighborhoods to Invest in Houston: Oak Forest

Buyers considering investment property in Houston's northwest region will want to explore the city's outer-loop neighborhood of Oak Forest. Among the oldest and largest residential communities in Houston, Oak Forest comprises a large number of recently renovated vintage properties from the 40s and 50s, as well as more modern new construction homes.

Real estate options in Oak Forest include land, townhouses, and detached homes. Vacant lots in the neighborhood range from a few thousand square feet to a quarter acre or more, generally priced from the $100s to the $400s. Townhome and condo properties circa the 1970s can often be found here starting in the $100s, and single-family homes in the neighborhood generally range from the $200s to the $500s. The rental market is strong in Oak Forest, earning anywhere from $1,000 a month for townhomes, condos, and older, smaller homes, to as much as $7,000 per month for some of the larger luxury properties.

Historically, Oak Forest has proven to be one of the best Houston neighborhoods to invest in. Real estate values have risen by over 60% in a 10-year period, while land has appreciated more than 40% during the same period. Demand remains strong in the neighborhood as well, with the volume of home sales increasing significantly over the past decade or so.

Reasons to Invest in Oak Forest

  • Popular Outer Loop Neighborhood
  • Convenient to Major Job Centers
  • Plenty of Parks and Recreation 
  • Larger-Than-Average Lots
  • Strong Rental Market

Cottage Grove

Immediately adjacent to the Houston Heights area lies the inner-loop neighborhood of Cottage Grove. Residents in this part of the city enjoy convenient access to major employment centers and dining and entertainment options throughout Houston's north and west sides. Cottage Grove is home to a variety of upgraded and rebuilt properties across several neighborhood sections, including the gated communities of Patterson Heights, the Reserve at Washington, and Larkin at Cottage Grove.

The area features a mix of property types. Custom townhouses and new single-family residences have replaced many of the neighborhood's older homes, typically listing from the $300s to the $600s. Several unimproved residential lots can also be found in Cottage Grove, with prices generally starting from the $200s. Rentals also perform well here, with the average lease generating more than $3,000 per month.

Prospective buyers wondering where to invest in Houston would be hard-pressed to find better real estate appreciation numbers than those in the Cottage Grove neighborhood. With steady demand supporting a solid market during the past decade, home values have risen almost 50%, while land values have more than doubled over a 10-year period.

Reasons to Invest in Cottage Grove

  • Land Value 10-Year Appreciation Over 100% 
  • Several Gated Community Sections
  • Abundant Outdoor Recreation
  • Convenient to Downtown Houston
  • High Average Rental Rates

The Heights

Best Places to Buy a Home in Houston: The Heights

The Heights, also known as the Greater Heights, has long been regarded as one of Houston's most popular neighborhoods. Known for its many historic Victorian-style restorations and numerous amenities and attractions within easy walking distance of homes here, the pedestrian-friendly Heights is among the best neighborhoods in Houston to buy a house or other real estate investment property

Houston Heights features an eclectic mix of real estate, including new construction homes, historical renovations, and several townhouses and condos. Multi-family properties typically list from the $200s, while traditional homes are generally priced from the $600s to more than $2 million. The neighborhood's restored Victorian mansions usually sell for well into the millions. Rentals in the Heights usually perform well, earning between $1,500 and more than $4,000 monthly.

Interested buyers will find some of the city's most impressive 10-year appreciation rates for real estate in The Heights. The last decade and change have seen home values here climb as much as 60%, while land values are up more than 90% during the same period. Historically, The Heights has been among Houston's best and most reliable real estate investment opportunities, and that trend continues today. 

Reasons to Invest in The Heights

  • Pedestrian-Friendly Neighborhood
  • Robust Restaurant and Entertainment Scene
  • Strong 10-Year Land Value Appreciation
  • Healthy Rental Market
  • Convenient to Houston Job Markets

Rice Military

Best Neighborhoods in Houston to Buy a House: Rice Military

Houston's Rice Military neighborhood sits inside Loop 610, between Washington Avenue and Buffalo Bayou. Like many similar inner-loop communities, Rice Military saw a significant number of renovations and tear-downs during the late 90s and early 2000s, making room for new construction homes and luxury townhouse development. Today, the neighborhood is among the city's most popular, offering homeowners a variety of residential sections to choose from as well as an abundance of area attractions and amenities. 

Single-family homes in the Rice Military area typically average around 2,500 square feet, with prices ranging from the $300s to $1.7 million. The rental market here is strong, with leases earning about $1,700 monthly for condo residences, while single-family properties typically generate between $2,600 and $5,000 per month.

Real estate in this part of Houston has risen substantially in a 10-year period. Home sales prices have increased by almost 30% in the last decade, while land values have gone up by more than 110% during the same time. Short-term land appreciation is evident here as well, with a five-year increase of more than 50% and a single-year return of 33%.

Reasons to Invest in Rice Military

  • 10-Year Land Appreciation Over 100%
  • Convenient Inner-Loop Neighborhood
  • Significant Recent Home Renovations
  • Strong Rental Demand

EaDo

East Downtown's revitalized district, commonly referred to as EaDo, is an up-and-coming Houston neighborhood prized for its collection of fun and funky dining and entertainment options. Located near popular landmarks like Minute Maid Park, the Toyota Center, and Houston's George R. Brown Convention Center, EaDo is one of the city's most lively and pedestrian-friendly neighborhoods. There’s a lot to be said about the appeal of living in downtown Houston.

EaDo features an assortment of properties, including single-family homes, townhouses, and condos. Many of the neighborhood's 30s-era homes are ripe for restoration, and buyers will also find several unimproved lots ready for new construction. The median list price for homes in EaDo generally runs in the $400s, while rentals in the neighborhood command nearly $2,000 per month on average.

As one of Houston's hottest spots for new residential and commercial development, the East Downtown district is beginning to show excellent returns on real estate investments in the area. For example, home values in EaDo have risen approximately 36% in a 10-year period, with expectations for significant ongoing appreciation. Continued demand and development ensure EaDo will remain one of the best neighborhoods to invest in Houston real estate. 

Reasons to Invest in EaDo

  • Up and Coming Houston Neighborhood
  • Relatively Affordable Home Prices
  • Popular Area Attractions and Activities
  • Convenient to Downtown Employers

Upper Kirby

Up and Coming Neighborhoods in Houston: Upper Kirby

Houston's Upper Kirby neighborhood is located near the Southwest Freeway and Kirby Drive amid some of the city's most popular dining and entertainment options. The area includes several well-known residential sections, like Richmond Place, Crawford, and Alabama Place, that feature original construction homes from the 1930s. Elsewhere, many of the older Upper Kirby properties have been replaced with modern townhomes and luxury high-rise condos.

Townhouses and condominiums in this part of the city generally list from the $100s to the $500s. Single-family homes in Upper Kirby start from the $500s and reach a million or more for many of the area's newer deluxe properties. Rent demand is high in the neighborhood, with the average lease generating more than $4,000 per month at roughly $2 per square foot.

Upper Kirby real estate remains one of Houston's best investments, particularly with regard to home value appreciation over the past several years. Real estate sales prices here are up over 30% over a single year, nearing a return of 50% over the previous decade. Demand for properties in the neighborhood also remains strong, with the number of residential units sold near a 10-year high.

Reasons to Invest in Upper Kirby

  • Abundant Dining and Entertainment
  • Convenient to Top Houston Attractions
  • Commands High Average Rent Rates
  • Strong Demand for Rental Property

Garden Oaks

Garden Oaks sits just outside Houston's Loop 610, near West 34th Street and North Shepherd. The neighborhood is one of the city's oldest residential developments, dating back to the 1930s. Many of the area's original homes have since been restored to their former glory, while others gave way to new luxury townhouses and modern custom homes.

Home types in Garden Oaks vary from cozy bungalows to larger ranch-style properties, most measuring between 2,000 and 5,000 square feet. Residential lots in the neighborhood typically run larger than most in Houston, averaging just over a quarter of an acre. Single-family homes here are generally priced from the $500s to over $2 million, and rental rates average more than $2,500 a month. 

Real estate in Garden Oaks has proven to be a solid choice for both short-term and long-term investment. Land values have shown returns of more than 20% in a single year, 33% over five years, and more than 100% during the last decade or so. Home values have risen similarly, up almost 80% over 10 years. The investment potential for Garden Oaks remains strong, with demand for property in the neighborhood showing no signs of slowing.

Reasons to Invest in Garden Oaks

  • Popular Northwest Houston Neighborhood
  • 10-Year Land Value Appreciation Over 100%
  • Consistently Strong Real Estate Appreciation
  • Recently Renovated Single-Family Homes 
  • Quarter-Acre Average Lot Size

West University Place

Where to Buy Houston Investment Property: West University

The iconic neighborhood of West University Place is among the best places to live and invest in Houston. West University, or West U as it's known locally, sits in one of the city's most coveted spots, convenient to Memorial Park, The Galleria, Rice University, Houston's Museum District, and the city's vibrant Downtown area. Some of Houston's best dining, shopping, and entertainment venues are just minutes away for homeowners living in West U. 

This upscale neighborhood comprises primarily single-family properties, many dating back to the 30s and 40s. Numerous vintage homes here have been updated and restored, while some older units were replaced with new construction. Today, West University features over 1,600 residential properties with layouts averaging around 4,000 square feet on lots ranging up to a quarter acre or larger. Homes in West University Place normally list from the $600s to $3 million and more. While the upfront investment is high, so is the potential cash flow—monthly rents for homes in West University can reach $5,000 and up. Even smaller homes and townhomes easily command more than $2,000 per month.

West University Place real estate offers buyers a proven investment opportunity. Home values have improved steadily over a 10-year period, showing more than a 60% gain, while land values in West U have risen by 85% over the same period. Sales volume in the neighborhood has remained steady as well.

Reasons to Invest in West University Place

  • Strong 10-Year Land Value Appreciation
  • New Construction and Recent Renovations
  • Larger-Than-Average Homesites
  • High-Demand Inner-Loop Neighborhood

Best Suburbs to Buy Investment Properties Near Houston

Houston's suburbs present amazing opportunities to buy an investment property with a great cash flow. The Greater Houston rental market is dominated by single-family homes, which typically command higher rents than condos and townhomes. In addition, population growth keeps the demand for rental housing strong, especially in Houston's fastest-growing suburbs.

Pearland

Where to Buy the Best Houston Income Property: Pearland

Pearland is a great place for real estate investors, as it's one of the most affordable suburbs of Houston to buy a home and yet has a higher median rent than many of its neighbors. This low entry barrier and high cash flow potential is a recipe for success.

The majority of rental properties are houses rather than condos or townhomes, and the median list price for Pearland homes for sale is typically in the mid-to-high $300s. Median rent across all property types is roughly $2,300, with home rentals at $2,500.

Pearland's proximity to downtown Houston and areas like the Texas Medical Center means that commutes are short, making Pearland an attractive option for those who want to be close to the city. Additionally, Pearland offers many amenities like parks, shopping centers, Pearland ISD schools, and restaurants that make it a desirable place to live. All these factors combine to make Pearland one of the best Houston suburbs for investing in an income property.

Reasons to Invest in Pearland

  • Low entry barrier—homes are very affordable
  • Relatively high median rent
  • Short commute to downtown is attractive to renters
  • Rapidly growing population, increasing housing demand

Cypress

Cypress is a great place to invest in an income property, offering a respectable median rent across all property types of around $2,290. Many homes for sale in Cypress list in the mid-$300s to mid-$400s. Cypress is also seeing rapid growth thanks to the Grand Parkway.

The rental market in Cypress is active, with many potential tenants looking for affordable housing options. The city also offers plenty of amenities that make it an attractive area to potential tenants, including shopping centers, golf courses, parks, trails, businesses, and schools in Cy-Fair ISD. All these factors make Cypress one of the best suburbs in Houston for investing in real estate.

Reasons to Invest in Cypress

  • Population growth and real estate development has potential for high appreciation
  • High-demand rental market
  • Townhomes can rent as high as $3,000 per month in some areas

Katy

Where to Buy Houston Rental Property: Katy TX

Katy has historically enjoyed consistently high demand among renters, making it a rock-solid choice for investors. Katy's rental market is dominated by single-family homes, which have a median rent of around $2,450 per month. Katy homes for sale usually have a median sale price in the high $300s.

If you're buying a home in the Katy area, it's important to make a distinction between the city of Katy and the Greater Katy area. Only a small portion of what's typically referred to as "Katy" is actually incorporated as the city and gets city services, but the entire Greater Katy area is served by Katy ISD, a major draw to the area. Generally speaking, south of I-10 is in higher demand. East of the Grand Parkway is generally older, typically with more affordable homes (which may need updates) and more established neighborhoods with mature trees. West of the Grand Parkway has more new construction, but also has a longer commute to downtown Houston.

Reasons to Invest in Katy

  • Katy ISD is in demand among many who move to the Houston metro
  • A variety of areas to choose from, each with factors that make them appealing to investors
  • Very large rental market

Spring

Located just north of Houston in Harris County, Spring is one of the best areas in Houston for investment properties, as it's enjoying a surge in demand. The best investment properties are typically the single-family homes in the area, which have a median rent of around $2,200. With homes for sale in Spring having median prices in the low-to-mid $300s, investors can find excellent deals on properties with solid rental potential.

The city has seen significant growth in the past few years due to its convenient proximity to both Houston and The Woodlands, both of which offer major employers, shopping centers, and other attractive amenities. Furthermore, the robust job market includes several large company headquarters nearby, creating more job opportunities for potential tenants. One of the most notable is ExxonMobil, one of the biggest Fortune 500 companies. The oil giant moved its headquarters from Irving to Spring in 2023, and the rental market is reaping the rewards.

In addition to its affordability and strong job market, Spring offers plenty of recreational activities like golf courses and parks that help attract renters year-round. Its easy access to major highways also makes it appealing for commuters who want convenience. Overall, Spring is an ideal spot for investors looking for reliable rental income and a good return on investment.

Reasons to Invest in Spring

  • Company headquarters (including ExxonMobil) moving into the area is increasing rental demand
  • Affordable housing market make it an easy market to enter
  • Rapidly growing area; potential for high appreciation

Invest in Your Future in Houston

Any investment has its risks and uncertainties, but investing in real estate has traditionally been seen as one of the best investments you can make. By conducting thorough research and working with experienced professionals, you can make informed decisions that maximize your chances of success. Ultimately, the neighborhoods listed here represent some of the most promising areas for real estate investment in Houston and present opportunities for long-term growth and financial security.

Houston's thriving real estate market offers many opportunities for investment. From the tranquil suburbs to the lively city center, there are options to fit every investor's goals and preferences.

Ready to find your dream Houston home? Reach out to The RealFX Group at (512) 956-7390 to contact an experienced local real estate agent and discover your new Houston home today.

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