From London to Houston (Austin, The Woodlands: real estate, rental homes, cheap house)

[geeoro]

My wife and i are looking at buying a couple of properties in or around Houston. One will be for us and the other is going to be let out as a rental. We will spend time in Houston and time in London. Commuting is not a problem as we will not be commuting just going into Houston for pleasure. We have found some amazing properties in Spring, Katy, and areas n/w or north.These have been below $200,000
What areas should we avoid? We don't want to be too far from houston but not bothered about being in Houston.

[GeraldineGray]

Am a Brit, sold up in London, bought in Houston, done a bit of real estate.

Rental homes in Houston suburbs can often sit empty for a couple of months so be prepared to pay the mortage with no rental income and to keep the AC running to stop it turning smelly. As an investment, you might be better off to buy a cheaper home that will rent for less (ie $90-$100K that rents for $1000 p/m) but will be open to more rental offers and less likely to sit empty.
Factor into your costs not just the price of the house but also the taxes for that area.

Return on investment in Houston is NOTHING like most cities and absolutely nothing like London. You are not going to buy a house here for $75k and sell it for $250 in five or even 10 years time such as London might/did.
Houston growth is generally given as ~3% p/a, although some areas gain more and some gain nothing at all and some go down in price so in three years your ROI on a $100k house might be $110K - ie ~10% return over three years. Then you sell you will pay realtor's fees of about 6% so factor this into your investment. So, on your (now) $110k house you will pay to sell it and clear $4k.
Plus you have paid property taxes and taxable income. Hmmm.
Also, you need to understand the tax laws etc and (as a foreigner) if you sell a house priced at over $300,000, 10% will be kept back at closing to satify US taxes (it's the law, not too many ways around it).
It's tough to really make money on rentals over here unless you are doing it as a full time job or just happen to buy in the right place at the right time.

As for location, most people who buy-to-let over here, don't always live where they have their lease houses (exception is maybe River Oaks/Montrose area and a few others).

What might be a good idea, is to buy a house close to town. Build out the garage into living space for ~$15k that you could rent out for $1000 a month; that way you have a house that you can stay in, plus some income, plus Inner Loop prices generally increase more quickly than the 'burbs.

Good luck and let us know how it all works out.

[GeraldineGray]

And, just because it's interesting;

Goodbye to rip-off Britain | Martin Samuel - Times Online

[geeoro]

We are buying cash and are looking at long term not quick profit. We were thinking of living in the suburbs, maybe spring and then buying cheap rentals wherever the best location to rent out. What areas are good to live in? What are good to rent?

[SkyeAnjel]

The Klein area is a good area in Spring. Cy-fair, Tomball and The Woodlands are also great areas. Stay north of 1960 and west of 1-45 for the best resale areas.

[GeraldineGray]

To rent out cheap houses, you could just buy a few brand new ones with zero upgrades as they would rent in a flash, come with a warranty, and give you income for several years. Sell them when you see any deterioration in the neighborhood in general and run with the money while people still want to buy in that subdivision.

God, I am a mean capitalist at heart. Better watch my karma.

[geeoro]

Your Karma is fine. Thanks for the advice. So easy to make a mistake when venturing into a new area. Even though my wife is American she hasn't a lot of experience of Houston. We had thought about Austin but we feel there is more potential in Houston and you get a lot more for your money.