Where to Invest in Houston for PadSplit Co-Living Rentals

Why Houston’s Co-Living Market Matters for Affordable Housing Investors

Houston has quietly become one of the hottest cities for affordable housing innovation, and much of that momentum is coming from the rise of PadSplit co-living rentals. In this episode of the Affordable Housing & Real Estate Investing Podcast, host Kent Fai He sits down with Blake Lewis, Senior Account Executive at PadSplit, and Ryan McCarthy, Houston-based investor and founder of Passive Investor Network (PIN).

Together, they unpack why Houston is one of the best markets for affordable co-living, how investors can structure deals, and which neighborhoods are proving to be top performers. This conversation matters for every investor, developer, and advocate trying to meet today’s affordable housing demand while still generating strong returns.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments.

What is PadSplit and Why Should Investors Care?

Blake Lewis describes PadSplit as the world’s largest co-living platform for essential workers. The company partners with investors to convert traditional single-family homes into multiple rentable bedrooms, providing affordable housing for service workers, nurses, teachers, and other essential employees .

• For tenants, PadSplit offers safe, affordable, and flexible living.
  
  

• For investors, it creates higher rental yields by renting by the room instead of by the unit.
  
  

Blake notes that PadSplit has grown from 300 rooms in Atlanta in 2019 to more than 8,000 rooms nationwide today . Houston was the first expansion market outside of Atlanta, chosen for its large workforce, affordable housing stock, and flexible zoning.

Why Houston is a Prime Market for Affordable Housing Co-Living

Ryan McCarthy has been investing in Texas real estate since 2011 and now manages nearly a third of all PadSplit rooms in Houston. He breaks down why Houston works so well for this model:

• Flexible zoning: Unlike most U.S. cities, Houston has no formal zoning laws, making it easier to retrofit and adapt properties.
  
  

• Massive workforce: The city’s economic base includes oil and gas, healthcare, education, aviation, and retail.
  
  

• Housing affordability gap: While historically affordable, Houston rents are rising fast, pushing more workers toward co-living solutions.
  
  

Ryan emphasizes that Houston’s lack of zoning creates a pocket-by-pocket opportunity. Success often comes down to choosing the right street, not just the right zip code .

What Are the Best Neighborhoods for PadSplit in Houston?

When investors ask, “Where should I buy in Houston for PadSplit rentals?”, both Blake and Ryan point to several high-performing areas:

• Pasadena & Ship Channel corridor: Strong demand from industrial and refinery workers, plus proximity to Houston Hobby Airport.
  
  

• Texas Medical Center area (77051, 77021, 77033): Traveling nurses and hospital staff drive occupancy near one of the largest medical centers in the U.S.
  
  

• Near Northside & Independence Heights: Rapidly developing, adjacent to downtown, with new transit lines and cultural appeal.
  
  

• Fifth Ward / East End: Poised for major growth with the East River mixed-use project transforming old industrial parcels into residential and entertainment hubs.
  
  

• Greater Heights adjacency: Properties just outside the Heights neighborhood benefit from rising property values and tenant demand without the high purchase price .
  
  

Ryan stresses that public transit access (ideally within half a mile) and ample parking are critical. He also warns investors to avoid outer pockets that lack transportation or job proximity.

What Does the Data Show About PadSplit in Houston?

Blake Lewis shares key performance metrics for Houston PadSplits:

• 640+ active bedrooms with about 89–90% occupancy.
  
  

• Median vacancy turnaround of 10 days, trending downward.
  
  

• Eviction rate under 0.5%, far below the national average of 6%.
  
  

• Sweet spot occupancy at ~90%: enough availability to attract new members without long vacancies .
  
  

These stats give risk-averse investors tangible proof that the model works in Houston.

Should You Remodel or Build New for Co-Living?

Ryan contrasts two investment approaches:

• Remodeling existing single-family homes: Roughly $30,000 per room all-in (purchase + rehab + furnishings). Yields 10–15% ROI with shared bathrooms plus a few suites.
  
  

• New construction builds: Roughly $40,000–$45,000 per room, but allows for all en-suite bedrooms, higher rents ($245+/week), longer tenant stays (12–14 months), and near-zero vacancy.
  
  

With new builds, investors also benefit from lower maintenance costs, better design for co-living, and the ability to strategically pick the best submarkets .

Key Insights for Investors

• Think beyond one tenant, one lease: Renting by the room increases revenue and occupancy stability.
  
  

• Location is hyper-local: Success depends on picking the right pockets, not just the right neighborhoods.
  
  

• Design for member experience: Private bathrooms, larger rooms, and thoughtful touches (like local artwork) boost tenant satisfaction and retention.
  
  

• Financing is accessible: Construction loans typically cover 70% of after-repair value or 90% of loan-to-cost, with draws released as work is completed.
  
  

• Partner with experts: Leveraging PadSplit’s platform and local teams like Ryan’s removes friction for out-of-state investors.
  
  

Memorable Quotes

“We are the world’s largest co-living platform for essential workers. Our mission is to provide safe, affordable housing while helping investors build generational wealth.” – Blake Lewis

“Houston doesn’t have zoning. That means you can create value street by street if you know where to look.” – Ryan McCarthy

“Private bathrooms change everything. They extend tenant stays, reduce vacancies, and make co-living feel like home.” – Blake Lewis

“The first thing we ask investors is: what are your goals? Without a plan, real estate becomes guesswork.” – Ryan McCarthy

Common Questions This Episode Answers

How profitable are PadSplit rentals compared to traditional single-family rentals?
PadSplits often generate 2–3x the revenue of a standard single-family lease because each room is rented individually at affordable weekly rates.

What are the biggest risks in investing in PadSplit in Houston?
Risks include choosing the wrong submarket, underestimating renovation costs, or ignoring parking/public transit needs. Working with experienced operators reduces these risks.

Why does occupancy target around 90% instead of 100%?
A little vacancy ensures that new tenants can always find available rooms, keeping demand consistent.

What financing is available for new construction PadSplits?
Most investors use construction loans with 70% loan-to-value or 90% loan-to-cost structures, followed by refinancing into long-term debt once stabilized.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. By spotlighting leaders like Blake Lewis and Ryan McCarthy, the podcast continues to position itself as the go-to source for practical, tactical strategies in affordable housing.

DM me @kentfaihe on IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.