Investor Friendly Agent - Dallas, TX

[Dustin Keller]

Hi,

I am exploring new home builds as an investment property in the Dallas, TX area. Specifically, in McKinney/Princeton towns. Wanted to get more information on these locations, along with expected taxes/insurance for a new home building. I currently own 19 rentals in Ohio/Florida, but looking at new markets to invest. 

[Bruce Lynn]

There are a few issues with new builds around here, so tread carefully.

1. Many builders won't sell to investors.

2. The ones that will (there are some in Princeton) get too many investors in my opinion.  So instead of being in a neighborhood with mostly owner/occupants, you get stuck with cheap construction in neighborhood full of tenants.  The tenants will be hard on those homes and I fear what these neighborhoods will look like in 10 years.  I hold my breath on appreciation.  Many of these investors are known not to upkeep property and just run them into the ground.  That's your competition when renting or exiting.

3. Some neighborhoods don't allow investors or have restrictions on investors and the rules can change. I've seen 3 neighbors the past year try to impose new restrictions on investors from increase HOA dues/registration fees, etc. Some from day one say you have to live in the house owner/occupant for a year before renting, or limit rentals to a certain number.

4.  Be care of PID/MUD taxes.  Nobody likes these.  People complain about property taxes in taxes, but then will buy in a neighborhood with PID or MUD.  This can add 1-2% to your tax burden for the next 20-30 years depending on the structure.  My first question is always do you have MUD/PID.  That's almost always a deal killer.

5. You will probably do better with resales, in neighborhoods with more owner/occupant mixture vs new.

6. Every now and then there can be an exception.  Builder trying to finish out year end for example with one more sale.  Opens window for investors.

7.  Princeton has no demand drivers in my opinion.  It's a fair distance to McKinney to drive with a lot of traffic.  McKinney is probably better, but if you're thinking of the community I'm thinking about on the very far north side of McKinney, it's basically the same issue as Princeton.

8. If you do buy new 100% get your own home inspection.  These houses are built super cheap and I see a ton of mistakes in them.  Use a great realtor.  We can often get better deals than you can get on your own.  Sometimes they send us deals, they're not advertising to general public.