Aspiring Investor moving to Dallas,TX
Member since 2021 · 15 posts · 7 votes
Hello. I have saved up for my first real estate investment. I am moving to Dallas,TX and wanted to take a step out and get started there. Since The area will be new to me and I don’t have any connections there yet I was hoping for advice. How should I go about my first venture? Since I will need housing myself I was thinking I could find a foreclosed or distressed property for under market value. Fix it up if necessary and live in it until I can find renters? Then repeat the process. Can someone please lend me as much advice as possible on this idea and anything else.
Hi @Jasmine Smith I recommend reaching out to some realtors in Dallas and see if any of them have experience working with househacking investors. Tell them what you're trying to accomplish and they should be able to point you in the right direction or give you some initial guidance.
Hi @Jasmine Smith I recommend reaching out to some realtors in Dallas and see if any of them have experience working with househacking investors. Tell them what you're trying to accomplish and they should be able to point you in the right direction or give you some initial guidance.
@Jasmine Smith. Welcome to Dallas - soon anyway. Are you coming cashed up to buy a distressed property? Or will you need your W2 to finance your purchase? Getting your financing in order is #1.
Finding foreclosures are not as easy as people would hope. And if you’ve never done this before I would caution getting a property from a wholesaler because you have no option period no inspection and no one in your corner. Just a few things to think about.
That is very much easier said then done. If you are wanting look for a undermarket value home you will not be able to find it on the MLS. If this is your first investment I would not recommend going through a wholesaler or an off market because like @Lucia Rushton mentioned you will not be properly represented in your transaction.
Why not maybe look into small multifamilies? Somewhere where you can live in your own side and rent out the other side while still having privacy? If done correctly this will or very closely cover your full mortgage.
@J Zev J. Thank you. I have connected with one realtor there already but I have not expressed my plans or goals to her though. I will be sure to inquire about this when we speak again.
@Jasmine Smith Welcome to Dallas and congratulations on the move. Happy to speak with you on the phone before you get here or meet in person when you get here.
#1 Determining how you will pay for the property....cash or financing as @Lucia Rushton mentioned. If you are using cash, then you can buy any kind of distressed property you can find. If using financing that can be more difficult. Since you are moving, if you plan to use financing, you'll probably want work first...so you can have some paychecks and income for your lender.
Foreclosure are probably at an all time low right now, could be more coming down the line, but very very few right now. Prices are high and high demand, so even the ugly ones now sell for amazingly high prices. There are a few though, so we can always look at those. I've probably been in more than 10,000 foreclosures during my career, most of those though about 10 years ago.
Live close to where you will work if you can. DFW is a giant place. Driving for example to someplace like Crowley in the Southwest part to someplace like Anna in the NE part of the metroplex could well take 2 hours.
That's just a few thoughts....feel free to ask me any questions you have or pick my brain about real estate.
@Lucia Rushton Hello! Thank you. So, I do have cash however after looking on realtor lately I’m not sure if I have enough for the Dallas market. I’ve saved over $50k thus far (please correct me if we are not supposed to talk numbers on the forum) which is good for where I am now, in Mississippi. Im moving in the spring so I have time to save more but Im not against taking out a loan if that’s the better idea. My original plan was to buy, flip, and sale here. Then use that profit to reinvest in Dallas. After listening to Brandon and David Greene suggesting to pick one thing and stick with it I figured maybe I should just keep saving and start once I move.
I did not think about those things. Thank you for bringing them to my attention. How would you suggest I get my start since distressed properties may be too much?
@Jesus Roman Thanks so much Jesus! The Multifamily idea did come across my mind. I dismissed the thought because I thought they may be too expensive. I am trying to see what would be my best options with financing. I have saved up cash but I am not against using a lender if that is the better strategy to make my first move.
Hi @Bruce Lynn Thanks for the advice. I would love to speak with you in my preparations to move. Yes as @Lucia Rushton has brought to my attention I guess I need to finalize a decision on financing before anything. Based off the prices I am seeing online, a lender may be the best choice for me. I am a travel nurse practitioner so I was considering taking an assignment in Dallas in January to go ahead and generate income there. Do you have any suggestions on how I should present myself when going to lenders? I have great credit history. I have financed a home and automobile before of course but I was wondering are there any other tips that may make me appear as a good candidate for a loan.
Welcome to DFW! Everyone else has made some great points as well regarding location and financing. We do have a Find an Agent tab on the website as well. I would say to make at least 1-2 trips down here before purchasing. Each area is different, and as we noted, the metroplex can be a commute nightmare. Each area has it's own personality, so finding the one that fits your style and budget is going to benefit you in the long run. I also second the not using a wholesaler for a new location. You need to know the market well as well as how to do due diligence in the area.
@Lucia Rushton Hello! Thank you. So, I do have cash however after looking on realtor lately I’m not sure if I have enough for the Dallas market. I’ve saved over $50k thus far (please correct me if we are not supposed to talk numbers on the forum) which is good for where I am now, in Mississippi. Im moving in the spring so I have time to save more but Im not against taking out a loan if that’s the better idea. My original plan was to buy, flip, and sale here. Then use that profit to reinvest in Dallas. After listening to Brandon and David Greene suggesting to pick one thing and stick with it I figured maybe I should just keep saving and start once I move.
I did not think about those things. Thank you for bringing them to my attention. How would you suggest I get my start since distressed properties may be too much?
So where would you live? In the distressed property while you are working your Day job and renovating the property? I find the best practice is house hacking. That way you can put 3-5% down and the rest of your cash reserves would be available to update the property. Now in a year's time you could keep it as a rental and repeat or sell it when you are finished and repeat the process.
@Jasmine Smith Typically most lenders will want to see the job offer letter and a couple of paychecks before they will grant the loan, so good idea to have job in place, with proof of income. They may also want to see a couple years of tax returns if you have been doing this for a while to see what your yearly income is.
@Jasmine Smith, I’ve lived in Dallas for 58 years. Real estate here, about every 10 years, real estate about doubles in price as do rents. I believe It’s the most stable and predictable economy in the country.
@Jesus Roman, there are no small multi family property available in Dallas. Every investor would love to own one but they have not been permitted for new construction in 60plus years. Virtually everything is SFH or 300 to 1500 unit complex owned by Lucy Billingsley-Crow or United Dominion Realty. My town, Southlake does not permit any apartments whatsoever. Only 3000' up SFH. You have to go to Tyler or Tulsa or Shreveport to find a four plex.
Yes @Lucia Rushton that’s exactly what I was planning. Live in it as I renovate. Maybe reside in it for a year then rent it out. Find a new property and repeat the process. I guess my biggest question is how do I go about finding a really good deal if you all think I should steer clear of off market homes with it being my first project?
@Jasmine Smith I can't tell from your post - how long are you going to be in Dallas? Are you looking to buy something as a primary residence, and then turn it into a rental when you leave? Or are you looking to relocate there permanently?
If you plan to be there long-term, there is nothing wrong with renting in the short term while you get yourself established. In the short term, renting is a great deal - no closing costs, and you just move out when your lease is up.
@Nicholas L. Hi Nicholas. This will be a permanent move for me. I would like a permanent residence however I want to do whatever is going to generate cash flow to start off. I know if I move there and buy a permanent residence or lease an apartment it will be harder to get started because I’ll be trying to cover my own rent/mortgage on top of trying to finance a project. So living in a place I’m renting out or a home I’m fixing up may be the way to go?
Wow really? @Matt Bishop I came across a multi family duplex in Dallas in loopnet.
@Bruce Lynn goodmorning! I would like to connect with you for more info. I live in melissa and I’m currently struggling to find my second investment.
@Jasmine Smith - there are duplexes out there and that is a good place to start, possibly even up to a quad since you can get the same FNMA financing. I was shopping for a Cali buyer recently and there is inventory, some off-market. I don't think you said what part of town you are targeting for your hunt - that can significantly swing the price - what is your target ARV? And curious what age of property and level of rehab you are comfortable handling?
Andy
@Andy Webb Hey Andy! Thanks for responding. I haven’t had a chance to research and visit all the areas just yet. So far, I am interested in the midtown area, farmers branch, Las Colinas, and maybe grapevine if something there is in my price range. I looked into and visited Southlake- seems pretty expensive to do anything there. I am interested in looking into other areas though.
I think something built within the last fifty years is good and I have been advised not to get anything that needs a ton of work since This will be my first real estate investment and I haven't made any trusting connections with contractors, lenders, etc. If I was to start with a SFH I would like my ARV to be at least $20k-$40k I don't know if those numbers are realistic or not- again I'm still learning. If I was to do a Multifamily I'm honestly not sure what I should be expecting for ARV. What do you think?
Yes @Lucia Rushton that’s exactly what I was planning. Live in it as I renovate. Maybe reside in it for a year then rent it out. Find a new property and repeat the process. I guess my biggest question is how do I go about finding a really good deal if you all think I should steer clear of off market homes with it being my first project?
"Really good deal" is what everyone is looking for. You have to create the deal. Lots of success investors in DFW. Maybe when you get here it might be easier to find something that really works for you.
@Jasmine Smith - welcome to the BP family. I’ve read the responses from others and agree that doing a house hack is likely the best place to start. Probably something that does not need extensive rehab. I also agree that you should not use a wholesaler until you have more experience. Some wholesalers may take advantage of a new investor and if you back out of the deal with one, you will likely lose your earnest money deposit, usually $5K.
Because the FIRST investment deal is so crucial (if it goes well you will most definitely continue your REI journey, if it goes badly you may never want to buy another investment property) I suggest that you first spend a good amount of time (3-6 months or even longer) to educate yourself on how to become a successful real estate investor in the particular niche (house hack, BRRRR, single family, multi-family, wholesale, flip…) that you will pursue.
At the same time, learn your market so you know what rent rate and ARV you can expect for a given property. Go to open houses, check out Zillow, the BP calculators and other online resources. Analyze a lot of deals so you can actually recognize a good one and be ready to jump when a good deal comes across your radar.
Develop your criteria and be specific on what you are looking for - (location, type, minimum cash flow, minimum CoCR..etc). This makes it much easier to quickly eliminate properties that do not meet your criteria and will save you and your realtor many hours.
I recommend keeping any rental units within a 30 minute drive from your home, less drive time is even better. This is critical if you will self manage.
Get financing in place so you can move quickly on a deal. Find out what documentation your banker requires, what LTV will they give you (what % you need to put down), it helps if you can get a Pre Approval letter. NOTE - if the property needs a lot of rehab, a traditional lender most likely will not touch it. You can refinance after repairs are done using a traditional lender.
Develop your team - investor friendly realtor, investor friendly banker/loan officer, insurance agent, contractors, handyman…etc.
Do not do what I did back in 2006 and spend $3K on a Robert Allen weekend seminar. There are plenty of online resources for FREE. Although I did recoup my $3K, since my first deal shortly after the seminar was a flip with $25K profit. I likely would not have done that flip without some dedicated training to give me some level of confidence… and dogged determination to not waste my $3K by taking no action.
You should start building a resource library of books to read and CD’s / podcasts to listen to while you drive. The BP podcasts are great. There are others that do a great job too. Make you car a “University on Wheels”.
Here is my list of recommendations for some books. The first 3 are absolute must reads:
1) The Richest Man in Babylon by George Clason
2) Rich Dad Poor Dad by Robert Kiyosaki
3) The Millionaire Real Estate Investor by Gary Keller
Several great books by Brandon Turner and David Greene of BP fame.
Build a Rental Property Empire - Mark Ferguson
The Weekend Millionaire’s Secrets to Investing in Real Estate - Mike Summey & Roger Dawson
How to Get Started in Real Estate Investing - Robert Irwin
FLIP: How to Find, Fix, and Sell Houses for Profit - Gary Keller, Clay Davis, Rick Villani
What Every Real Estate Investor Needs to Know About Cash Flow…and 36 Other Key Financial Measures - Frank Gallinelli
Set for Life - Scott Trench of BP
Anything by Ken McElroy (Rich Dad Advisor)
Feel free to PM me if I can be of further assistance. I’m not even sure how that is done, but I’ve seen others post it so it must be doable on this BP site.
“Formal education will make you a living. Self-education will make you a fortune.” ~ Jim Rohn
Hope this helps,
Ken
Thank you @Ken Dunn right now I am reading BRRRR by David Greene! It has been speaking on the same beginning steps you just explained. I will add some of these other reads to my least. I have been dedicating an hour a day to learning, reading, or listening to YouTube videos on real estate investments. Sounds like I need to focus more on learning about house hacking. I really appreciate your advice, super helpful!
@Andy Webb No I meant $20,000 - $40,000. Are those numbers too low of a goal?