Where to buy investment property in North Dallas (rentals, evictions)

[Patrick_Midwest]

Originally Posted by ThomasCrown

Buying rental properties is not a smart play right now. We're holding on to a couple of them still, but we have been selling them off over the last few years.


Here's the problem. TX has a high property tax burden. Any property you buy is going to be at today's high prices, and since there's no such thing as homesteading an income producing property, you're going to be paying taxes on the latest market value, which are currently at all time highs or close to it. That's half the problem. The other half is that rents, while they have been increasing, are not high enough to maintain a worthwhile profit margin. Even if you were able to buy a property outright, all cash, you won't be able to rent it for as much as you need to pay for taxes, insurance, etc.


We did the math on a couple properties we were interested in buying, and ended up walking away. After factoring in expected rental income, with interest rates being what they are, we make more money having that money in 1 yr CDs than we would earning rental income with current tax/market valuations, and having to do zero work or deal with renters.



There are tons of people renting their properties whose valuations are lagging actual market value by hundreds of thousands to millions of dollars, so it's still making sense for them, but they are making it very difficult for new investors to compete.

+1, I couldn't agree more with all of the above. OP, if you absolutely need to invest your monies in real estate right now, buy a cheaper REIT while market and real estate stabilize or if numbers make sense, rent your personal home which has had homestead exemption I assume and buy another primary residence. But there is no real positive cash flow on investment property out there

[WorldKlas]

Rent prices in South Irving are incredibly high in relation to the cost to purchase. But its not new inventory

[Leonard123]

Originally Posted by WorldKlas

Rent prices in South Irving are incredibly high in relation to the cost to purchase. But its not new inventory

Renting vs owning is comparing apples and oranges. Buying is not just the cost of the house and taxes but the maintenance. Maintenance and keeping everything updated is expensive, for some homes more than others. Plumbing and foundation issues are exceptionally expensive, even more stressful, and very common.

[Pinkett]

I bought an investment property before pandemic at 300k and it has appreciated to 525. The tax on this is killing us of course but we are not interested in any rental income but rather rent paying mortgage and just holding on to property until our kids are older.
I saw some houses in East side of McKinney that are in 300k range. Wouldn’t that be an ideal investment right now?

[ThomasCrown]

Originally Posted by Pinkett

I bought an investment property before pandemic at 300k and it has appreciated to 525. The tax on this is killing us of course but we are not interested in any rental income but rather rent paying mortgage and just holding on to property until our kids are older.
I saw some houses in East side of McKinney that are in 300k range. Wouldn’t that be an ideal investment right now?

Your last property appreciated with the run up in prices, so that made it worth your while.


Now prices are flat or even falling a bit still from their highs last year, so if you're not interested in rental income, but merely to pay the mortgage, that's a poor investment considering the level of expenditure needed when you could invest in the stock market for better returns. Anything you buy now is not going to see the same rapid appreciation you had before, and if you're paying interest on a mortgage, it's possible you wouldn't break even.

[Wittgenstein's Ghost]

Originally Posted by Pinkett

I bought an investment property before pandemic at 300k and it has appreciated to 525. The tax on this is killing us of course but we are not interested in any rental income but rather rent paying mortgage and just holding on to property until our kids are older.
I saw some houses in East side of McKinney that are in 300k range. Wouldn’t that be an ideal investment right now?

An investment property where the rent just pays the mortgage probably doesn't come out to be a great investment, at least not relative to opportunity cost.

[rabbit33]

Well, I've done the math over and over on rental houses in various neighborhoods, and over and over it comes out that if you have to borrow money to buy a rent house, you're going to about break even or make a small profit (and I mean small) after the mortgage payments and the expenses of running a rent house, if you charge prevailing rents. So unless you have one of the two scenarios below, you're really buying for capital appreciation, which it seems is inevitably going to slow down soon compared to the last few years of essentially zero-interest loans.

The two scenarios I've seen that end up making money:

1) Pay cash for cheap houses, stack 'em deep, rent 'em cheap, offer basic housing but keep it immaculately clean and in perfect repair. You have to be searching out bargains (and those are few and far between). Northern suburbs and exurbs of Dallas, "newish" construction? Ain't gonna be many bargains. Thus my suggestions of Mesquite, Garland, Wylie, etc.

2) Offer a super-premium product, charge premium prices. Well, you're not going to get there for $350k. Maybe $1M apiece. And in the exurbs you'll be competing against houses for sale. The person who can afford to pay $8000/month rent isn't going to rent that house out in Frisco. Nope, they're looking at places like the Athena, or houses in HP. And as a landlord you'd better be prepared to offer that premium product. That means all the amenities, and instant response to any issue.

And if you're really interested in long term investment property, do consider my suggestions of that region from east of Fair Park, south of 30, out to the east, along Military Parkway, Scyene Road, etc., and southeast into Pleasant Grove. Terrible parts of town now, but there aren't many places left in Dallas that are a reasonable commute to downtown and have single family lots and zoning. Like I said earlier, those of us who know Dallas, remember what Swiss Avenue and the M streets looked like in 1968. Now we're seeing something similar happening in West Dallas; before that it started over by the airpoort, and North Oak Cliff.

[TeamLynn]

I would look at anything north of 380.....Krum, Sanger, Pilot Point, Gunter, Anna, Howe, Van Alstyne, Sherman. Sherman would be my top target, then Krum.

Read more: https://www.city-data.com/forum/dall...th-dallas.html

[Wittgenstein's Ghost]

Originally Posted by rabbit33

Well, I've done the math over and over on rental houses in various neighborhoods, and over and over it comes out that if you have to borrow money to buy a rent house, you're going to about break even or make a small profit (and I mean small) after the mortgage payments and the expenses of running a rent house, if you charge prevailing rents. So unless you have one of the two scenarios below, you're really buying for capital appreciation, which it seems is inevitably going to slow down soon compared to the last few years of essentially zero-interest loans.

The two scenarios I've seen that end up making money:

1) Pay cash for cheap houses, stack 'em deep, rent 'em cheap, offer basic housing but keep it immaculately clean and in perfect repair. You have to be searching out bargains (and those are few and far between). Northern suburbs and exurbs of Dallas, "newish" construction? Ain't gonna be many bargains. Thus my suggestions of Mesquite, Garland, Wylie, etc.

2) Offer a super-premium product, charge premium prices. Well, you're not going to get there for $350k. Maybe $1M apiece. And in the exurbs you'll be competing against houses for sale. The person who can afford to pay $8000/month rent isn't going to rent that house out in Frisco. Nope, they're looking at places like the Athena, or houses in HP. And as a landlord you'd better be prepared to offer that premium product. That means all the amenities, and instant response to any issue.

And if you're really interested in long term investment property, do consider my suggestions of that region from east of Fair Park, south of 30, out to the east, along Military Parkway, Scyene Road, etc., and southeast into Pleasant Grove. Terrible parts of town now, but there aren't many places left in Dallas that are a reasonable commute to downtown and have single family lots and zoning. Like I said earlier, those of us who know Dallas, remember what Swiss Avenue and the M streets looked like in 1968. Now we're seeing something similar happening in West Dallas; before that it started over by the airpoort, and North Oak Cliff.

The problem with using cash, particularly when talking about the high end stuff, is the risk-free opportunity cost might end up outperforming. Renting out a million dollar house might not even outperform treasuries once maintenance, repairs, vacancies, capital expenditures and property management are factored in.

You can get $4500 per month on bonds with $1MM right now. That probably wins against renting out a million dollar property unless you make some pretty good assumptions about appreciation.

[TheOverdog]

The problem with using cash, particularly when talking about the high end stuff, is the risk-free opportunity cost might end up outperforming.

Most people who are interested in investing in housing aren't particularly interested in passive investing in the stock market, so even though what you are saying is completely true, it's also not particularly relevant. That's just psychology.



Also, I straight-up disagree that DFW will have limited capital appreciation, even if you bought at current prices. To stop the rise of housing prices, DFW zoning policies need to loosen and housing construction dramatically increase, tax policy/taxes need to rise dramatically, some other place will have to rise dramatically in terms of demand and supply, or some other economic factor that I can barely even imagine that is specific to North Texas, but not impacting the rest of the US that much needs to occur.