I am not new to BiggerPockets, but this is my first time ever posting a question. I have been buy and hold investing in distressed properties in Southern California since 2009. I am now ready to branch out into other markets and am looking on advice on investing in El Paso, Texas for under $125K. Is there anyone on the forum that has experience investing in Texas that can give me an idea as to which areas to stay away from? What are the pros and cons to investing in Texas?
Thanks a lot for your help!
Hi @Cynthia Ortiz ,
Texas is a great place to live and invest as attested to by the number of Californians (at least there jobs) that are moving here. El Paso is an interesting market. It is very neighborhood specific; some great, some not so much. You definitely need some local help to understand which blocks are where.
One thing to remember about all of the Texas market, and El Paso specifically: Texas is about cash flow, not appreciation. Most areas still have enough vacant land within reasonable travel times that new construction holds down the appreciation of existing homes. Not to say it's not there but 7% is a great year and 3-4% is more common. That means you need to be positive cash flow when you buy and not count on rising property values to bail you out of overpaying.
Thanks for the tips Roy! I will definitely not bank on appreciation, and I plan on traveling to the area before buying.
It's true though, as much as I'd hate to admit it, a lot of Californians do leave for Texas!
hello Cynthia, I actually lived in El Paso for 4 years and still have rental there. First, like Roy said, the market is definitely CASHFLOW. Don't expect for much appreciation. However, it is any excellent! rental market. They are very family oriented there. The city is absolutely BLOWING UP right now. Highly driven by the military there. Not sure if you knew but in total they will have brought around 30-40k new soldiers into the city plus their families. (I was stationed there while in the army a few years back) They have been expanding the city to absorb it since 2010/2011. The city is broken up into 5 main areas. The west side, this will be your upper end area. This is where the "city's money" is at. The northeast, not bad of an area, but wouldn't be my first choice. A bit more crime. Central, nicely kept but this will be your older, retirees. You have the south side. Stay away from this area. Here are the poorest of the poor of the city, unless that is your strategy (section8 type stuff). Lastly you have the east side. Personally I would put my money here. The way the city is positioned they are right up against the new Mexico border to the west AND to the north. To the south is the Mexican border. That leaves only one way for expansion, east. You will get cheaper homes here but all of the "new" city will be around you. Lastly, as I mentioned, it is a military town. Renting to military does mean sure steady income, but it also means higher turnover. Just something to think about
oh and one last area I would stay away from. The lower valley. That's east of the south side. I know this might sound crazy and don't mean to scare you but most of the drug smuggling into the city for through the lower valley. Lol it's not obvious though. It's one of the things that you would need to be local to know. But the city really is super safe. I how all that helped.
There are some good nice neighborhoods in the South Valley though, for example some of the newly built (< 10+ years) areas off of Joe Battle (Loop 375), etc. I've got family there and my father-in-law has a few residential rentals. It has exploded over the past couple of years, we notice lots of changes every year when we go to the Thanksgiving parade.
Good info! Thanks for the advice Addiel!
Hi Cynthia, it is amazing how much previous posters know about El Paso. I cannot be more agree with them. I have been living in El Paso for the last 9 years and investing in local RE for about 7 years (4 units so far)
These are my $0.02:
1) I think you can easily find distress property with a budget of 125k. I think if your strategy is Buy and Hold; you can even buy a Duplex with that budget for a better cashflow.
2) Watch for property Taxes; they are around 3% of the value of the property; they for sure affect appreciation and cashflow.
3) Again, as everybody suggested: Don't go for appreciation; with a 3% property taxes; there is no way people can afford property taxes if their homes double in price; the market doesn't support it.
4) I think Texas is a very landlord friendly state. People is very friendly here; I have never experienced an eviction.
5) No need for Earthquake or Tornado insurance; El Paso has been free of those natural events so far.
6) I agree with investing in the East side; that is the fastest grow section of the city and since a lot of sales happened around 2005 and 2007; there are a good number of distress properties.
I hope this helps.
Good luck investing,
Thanks Jaime Barragan! Does anyone happen to know a decent realtor that deals with foreclosure listings in the area?
I like my RE Agent; I don't know how good he is with Foreclosure Listings; do you want his contact information?
Yeah that would be great! Thanks!! One more question....do you have difficulty finding tenants for your rentals? The rental market in El Paso seems a little saturated right now.
originally from el paso tx, moved to LA not too long ago and I'm planning to buy a rental property in EP, let me know if you find something or need some help with the area
I was stationed in El Paso from 2013-2015 and bout a short sale on the North-East side. So far it has worked out great. It is my second investment property and my favorite. I plan on buying more in El Paso in the near future. For the area I really like the price per sq ft method. At least its a great starting point. The High (new construction) is about $85, the average is about $74, and the low can be as low as the mid $50s (obviously very distressed properties). I paid $61 for mine and it needed little work. Carpet, paint, the basics. On a 30 year loan at 4% i can cash flow about $300 a month on a value of 125K. However, I chose a 15 year to pay the home off faster since I dont need extra cash flow this being in the military. I'm cash flowing only about $40 a month after everything with the 15 year. So far my property manager has been very good (which is hard to say with most). Also, my RE agent is also an investor which really helps because he already has teams of guys who can do rehab work at a great price. He also is Latino so he speaks Spanish which is a huge plus. You will want to stay away from the "devils triangle" which is the area between dyer st, hw 54, and 375. Not a huge area but I wouldnt invest inside those limits. If you want my agents info or my property managers info just send me a PM. Good luck! PS: My house was rented within 12 hours of being on the market... I do not believe the rental market is saturated. :)
Curious how this ended? Update?
El Paso market seems to be getting tighter. With 5.5 months of supply, rental deals that cash flow are difficult to find. I have been searching for a good property for the past 6 months.
Also, I think there is two markets here, one for the extremely cheap housing sub 1,000 sq feet @ ~ $70/sq foot. Also, a higher end new construction where you see near i10/375 loop and near Edgemere/Zaragoza where you can find new homes between 1400-1800 square feet @ $110-115/sq foot.
Again, I am new but live in the area.
I also see a lot of jobs on the upper west side and the far east. With the upper west you have the new hospital that just opened, you have west towne center (yes it is retail jobs). Then on the far east you are close proximity of the new ARMY hospital (2019 opening)? Don't know a firm number on number of jobs created but the place is massive.
Like was mentioned before these two areas is where the growth is at.
I know im super late to this conversation but thought id add a little something for those who stumble upon this thread in the future.
I've lived in El Paso for nearly 6 years (2012-2018) and have one rental property there. The advice i've read above seems spot on. Personally, i'm an optimist and believe there is opportunity everywhere-this includes El Paso. However, the thing that concerns me is the current state of supply and demand. Its definitely a renters market right now. There was a surge of homes and apartments that's been built starting in '09 and hasn't stopped since. Many soldiers are guaranteed a VA loan and more often then not, paying a mortgage is cheaper then the current rental rates. This has lead a lot of military soldiers to invest in homes that they later rent out when they change duty stations.
The newer neighborhoods on the Far east side are beautiful but it seems they start to deteriorate once the original owner moves out and new renters come in. Its barely noticeable at first. It starts off with one or 2 homes but as the years pass it becomes half the neighborhood with "for rent" signs in front and the weeds begin to sprout up.
With that said, I go back to my original point where there is money to be made.
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