Three Texas Markets, 531 Tenanted Rentals for Sale, and Not One That Works at the Asking Price

By Steve Waller · September 11, 2026

The same answer three times

A rental listed on the open market with a tenant already in it looks like the easy version of the trade. No make-ready, no vacancy while you lease it up, income from day one. It is the listing type investors ask about most often, and over three screens now it has produced the same result every time.

• Houston, Harris County: 325 tenant-occupied actives. None cleared the purchase test at the asking price.
• San Antonio, Bexar County: 181 tenant-occupied actives. None cleared.
• The corridor south and east of Houston: 296 across three counties, 25 inside the twenty zip codes screened. None cleared.

Five hundred and thirty-one listings across three metropolitan markets, and not one of them supports a purchase at the seller's number on a hard money basis. That is not a coincidence and it is not a bad market. It is what the price of a tenanted house means.

Why it comes out this way every time

A tenanted rental is sold to a buyer who wants income, and that buyer is measured on yield, not on repair spread. So the seller prices it against a yield the market will accept, which is a retail price with a lease stapled to it. The tenant is a feature the seller charges for. It is not a discount, and nothing about having a tenant in place makes the arithmetic easier.

The screen is the same one used on the flip side: after-repair value times the advance rate, minus repairs, minus closing costs, and what is left is the most that can be paid for the house. Repairs on a tenanted file are a make-ready allowance rather than a renovation budget — a house being bought for income is not being gutted — so the test is more generous here than on a fix and flip, not less. It still fails.

In the corridor the median gap between the asking price and the maximum was 43%. The closest single file sat 15.3% over.

The part that is actually useful

Coverage tells the same story in a more usable form. Debt service coverage was run twice on every file with enough rent evidence — once at the seller's asking price and once at the maximum a lender could fund with nothing out of pocket.

• At the asking price, not one file cleared 1.25 coverage.
• At the fundable maximum, eight of eighteen cleared it comfortably — the best at 3.36, then 2.03, then two more above 1.6.

The houses did not change. Only the price did. Coverage is not a characteristic of a property. It is a characteristic of a price. Which means the answer to “does this rental work” is never yes or no, it is “at what number” — and that number is knowable before anyone writes a contract.

The rule most rental screens get wrong

A rental listed without a tenant in it should not come off the list. If the house has rent history, that history is stronger evidence of what it earns than any subdivision median, and unlike a tenant it does not leave. A closed lease on the subject property beats a neighbourhood average every time.

So vacancy is not the disqualifier. Absent rent evidence is. Screening on the tenant-occupied flag alone throws away good files, and it is the single easiest improvement to make to a rental screen.

What the evidence rests on, and what was thrown out

Rents come from closed leases on each property's own street over four years, size-matched within 25% of the subject, with the median marked down 4.5% — the measured spread in this market between what a rental is listed at and what it actually leases for.

Six of the twenty-five corridor files were published with no rent at all rather than an estimated one. Two reasons. Some street names are too common for a search to isolate — one returned fifty-eight leases, another twenty-seven, and there is no way to know which of those are the same street. And any matched set implying a gross yield outside 4% to 18% was discarded on sight, because a 23% yield on a modest house means the search found a different street, not a bargain. A suppressed number is worth more than a confident wrong one.

Seven of the twenty-five carry no after-repair value either, for the same class of reason: fewer than three closed sales in the property's own subdivision within 20% of its square footage. No value gets published below that floor.

What this means if you are buying

Stop screening tenanted listings for the ones that work at the ask. Over three markets and 531 listings that set is empty. Screen them for the ones whose gap is small enough that a seller might close it, then write the offer at the number that works and let the seller decide. The eight files in this corridor that clear coverage at the fundable maximum are all real houses with real tenants; they are simply priced for somebody else today.

And ask what the tax rate is before you fall in love with a yield. On one file in this corridor the highest rent on the entire board still failed coverage, because the city runs a 2.70% rate — more than ten thousand dollars a year on a mid-priced house, before a single repair. Tax rate is invisible in a purchase formula and decisive on a hold.

Want the numbers on a specific property?

The property-level list is licensed MLS data, so it goes out one to one rather than published here. Reply to this with the end of the market you work, or call 936-522-8951, and what comes back is the maximum purchase at both advances, the required cut, the rent evidence behind it and the coverage at both prices.

Market data is from public sources and is provided for information only. Nothing here is an offer of credit, a rate quote, or investment advice. Financing is subject to underwriting, lender approval, appraisal or valuation, title, insurance, property eligibility and program availability.

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