Cashflow $400/Door in Fort Worth, surrounding area?

8 Replies

I'm looking to invest in the greater Fort Worth area- Specifically SFH's in the 85-130k Range. My question to investors is as prices have gone up across the board in DFW, are you still able to cashflow around $400/door?

@Woody Munk If by cash flow you mean gross rent minus PITI, yes you can probably get $400 per door. If you mean cash flow net of all expenses, then no.

As an out of state investor, I would be wary of any sub-$100k properties. You will quickly get into war zones at that price point.

Unless you are doing some sort of value add, the best you're probably going to do is 1% rent to price (i.e. $120k house renting for $1200). After property management, capex, vacancy, taxes, insurance, etc. you will about break even. Best way to get cash flow in DFW right now is to look for off-market, value add properties. Or buy a bunch of cheap war zone properties and carry a gun to collect rent.

@Woody Munk Depends on your assumptions, but not in my opinion over the long term if you use property management. PM and the ridiculous property taxes in Dallas / Fort Worth take a big chunk of your cash flow.

Gross rent = $1200

Taxes = $120k * 2.7% / 12 = $270

Insurance = $75

Maintenance/Capex = $200 (I would probably use a higher number, but this is debatable)

Property Management = $1200 * 10% = $120

Vacancy = $1200 * 8% = $96 (also debatable, but in this number would also be whatever the PM charges to lease up - usually 1 months rent)

P&I with 20% down at 4.5% = $486

Total expenses = $1247


@Andrew Herrig , thanks for posting. That's very interesting. I traveled to Fort Worth for work and will continue to with the Navy. I'm looking for cash flow multi-family as an out-of-state investor.  I'm doing some analysis on DFW. Would you have any recommendations? Other cities? 

@Andrew Herrig @Jeff Foulds

I agree with Andrew. It'll be hard to find those numbers anywhere around Dallas/Ft. Worth now on a decent property. Dallas had a major boom a couple years ago and now the prices there are higher than they were before the crash. Prices skyrocketed, squished returns, inventory got low. 

Jeff, how come you are thinking out-of-state? How's the New Orleans market...not so hot right now? I haven't thought much about down there in a few years. Went and saw some operations that were flipping Katrina houses, but haven't looked much into the rental market. Is it more lack of numbers or too much risk? I have always only done out-of-state...happy to chat markets anytime.

@Ali Boone , thank you for the info.  I've definitely been starting looking at local in New Orleans (which would be much easier! ha)  I'm finding that Orleans parish seems overvalued for Buy & Hold and in talking with others that seems to be the case, but I'm new to the area and not an authority of course.  I'm not quite seeing the valuations on the lower hanging fruit with the listings, so to speak. Let me PM you here...