Is anyone finding cashflow deals in the Dallas market?
I'm a first-time investor looking to buy my second home in Dallas, preferably something I could house hack (Duplex or SFH with an ADU or anything of that sort). I'm looking to buy with a lower down payment (most likely FHA 3.5%), live in it, and rent the rest out. Are there any specific areas in Dallas I should be focusing on for these types of deals? I haven't been successful in finding any cash-flowing deals with such a low down payment in today's interest rate market.
There are several multifamily homes that pop-up every day in the Dallas. You just need to be constantly looking or finding a way to talk to home owners who may consider selling. Having a seasoned real estate agent is also important. Good thing about FHA is its 3.5% down and you can use the rents to help qualify for a bigger loan amount. It might make sense to get a pre-approval for the financing first so you can get a head start. That will help you gauge your Maximum loan amount and know your costs up front.
You may also want to get an Express Loan Approval where the bank underwrites your file up front. Then they give you a "Commitment Letter" instead of a pre-approval letter. That allows you and your agent to put in an offer and close in 12-15 days. Making your offer a lot stronger with a guarantee and a quicker close date. Its a tough market out there right now but this will help put you a head of other buyers.
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@Edna Mensah I think it will be tough to find duplex or ADU that cashflows with 3.5% down. Probably your best house hack right now in DFW will be to buy 4-5 bedroom house and rent by the room. Otherwise typical 2-3-4 we see for sale will normally need 30-40% to hit somewhere around breakeven or cash flow a bit. Every so often you can find exceptions, but does not seem often.
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Move further towards the Waco and Bell County areas, and you will find cash flow.
The quick answer is.. no. Lol
Quote from @Jason Wray:
There are several multifamily homes that pop-up every day in the Dallas. You just need to be constantly looking or finding a way to talk to home owners who may consider selling. Having a seasoned real estate agent is also important. Good thing about FHA is its 3.5% down and you can use the rents to help qualify for a bigger loan amount. It might make sense to get a pre-approval for the financing first so you can get a head start. That will help you gauge your Maximum loan amount and know your costs up front.
You may also want to get an Express Loan Approval where the bank underwrites your file up front. Then they give you a "Commitment Letter" instead of a pre-approval letter. That allows you and your agent to put in an offer and close in 12-15 days. Making your offer a lot stronger with a guarantee and a quicker close date. Its a tough market out there right now but this will help put you a head of other buyers.
Really useful info! Thank you so much! Yes, I have already prequalified for a loan. I'm looking at roughly $500k.
Quote from @Bruce Lynn:
@Edna Mensah I think it will be tough to find duplex or ADU that cashflows with 3.5% down. Probably your best house hack right now in DFW will be to buy 4-5 bedroom house and rent by the room. Otherwise typical 2-3-4 we see for sale will normally need 30-40% to hit somewhere around breakeven or cash flow a bit. Every so often you can find exceptions, but does not seem often.
Makes a lot of sense! I'll pivot toward that direction then. Thank you, Bruce!
Quote from @Brandon P.:
A new podcast last week came out, ep 766, with a realtor/investor talking about the Dallas market specifically. He mentioned Forney, east of Dallas, as a good place to find some cheaper deals.
Thanks, Brandon! I watched the podcast as well. It seems that break-even appreciation is what the focus is on now. I'll look into the Aubrey, TX, and Forney, TX areas as well.
Check in Oak Cliff/ Cockrell Hill. You will find homes with an ADU or "back house" that people have built over time to accommodate large & extended families. Rentals are in high demand in that area so it won't be hard to find tenants. Most of the deals will be in C class neighborhoods but only you know what you are comfortable with. Just a note, lots of those C neighborhoods are on the rise. Good luck.
Quote from @Eliott Elias:
Move further towards the Waco and Bell County areas, and you will find cash flow.
Thank you for the recommendation!
Quote from @Silvia Ochoa:
Check in Oak Cliff/ Cockrell Hill. You will find homes with an ADU or "back house" that people have built over time to accommodate large & extended families. Rentals are in high demand in that area so it won't be hard to find tenants. Most of the deals will be in C class neighborhoods but only you know what you are comfortable with. Just a note, lots of those C neighborhoods are on the rise. Good luck.
Thank you so much!
@Edna Mensah
I don't know about duplexes or good house hacking areas. But I've bought 6 SFH in the last year that cash flow ok in Arlington, Grand Prairie and Ft worth. Cheapest was 168k and most expensive was 260k. Most didn't need much work to get them rent ready. I rent two of them out by the room for $800-$1200/room per room. I'd buy a SFH and rent the rooms out. I net around $1700/month off my rent by the rooms after all my expenses, and around $500/month off my others with 20% down. It's getting harder to find good cash flowing deals. But they're out there on the MLS. Just be ready to make an offer it the numbers work.
Quote from @John Morgan:
@Edna Mensah
I don't know about duplexes or good house hacking areas. But I've bought 6 SFH in the last year that cash flow ok in Arlington, Grand Prairie and Ft worth. Cheapest was 168k and most expensive was 260k. Most didn't need much work to get them rent ready. I rent two of them out by the room for $800-$1200/room per room. I'd buy a SFH and rent the rooms out. I net around $1700/month off my rent by the rooms after all my expenses, and around $500/month off my others with 20% down. It's getting harder to find good cash flowing deals. But they're out there on the MLS. Just be ready to make an offer it the numbers work.
Thank you so much John! This is super useful.
Quote from @Edna Mensah:Am I understanding correctly that you own a home that you're going to keep and live in, and are looking to purchase a property in Dallas as a "second home"?
I'm a first-time investor looking to buy my second home in Dallas, preferably something I could house hack (Duplex or SFH with an ADU or anything of that sort). I'm looking to buy with a lower down payment (most likely FHA 3.5%), live in it, and rent the rest out. Are there any specific areas in Dallas I should be focusing on for these types of deals? I haven't been successful in finding any cash-flowing deals with such a low down payment in today's interest rate market.
I believe for FHA you have to have a "qualifying circumstance" in order to purchase as a "second home".
And for conventional I believe you'd have to put 10% down for a second home.
Or by "second home" did you just mean "your next home"?
Quote from @Michael Castro:Hi Michael, I’ll be renting out the first home. And moving into the second home in Dallas when I purchase it. My job is based in Dallas so that’s sufficient for buying it as my primary residence with less money down provided I rent out my first home. I guess my question is more focused on finding a property that will cash flow in Dallas. I’m planning to house hack it or rent it out after I move out.
Quote from @Edna Mensah:Am I understanding correctly that you own a home that you're going to keep and live in, and are looking to purchase a property in Dallas as a "second home"?
I'm a first-time investor looking to buy my second home in Dallas, preferably something I could house hack (Duplex or SFH with an ADU or anything of that sort). I'm looking to buy with a lower down payment (most likely FHA 3.5%), live in it, and rent the rest out. Are there any specific areas in Dallas I should be focusing on for these types of deals? I haven't been successful in finding any cash-flowing deals with such a low down payment in today's interest rate market.
I believe for FHA you have to have a "qualifying circumstance" in order to purchase as a "second home".
And for conventional I believe you'd have to put 10% down for a second home.
Or by "second home" did you just mean "your next home"?
Quote from @Edna Mensah:
Quote from @Michael Castro:Hi Michael, I’ll be renting out the first home. And moving into the second home in Dallas when I purchase it. My job is based in Dallas so that’s sufficient for buying it as my primary residence with less money down provided I rent out my first home. I guess my question is more focused on finding a property that will cash flow in Dallas. I’m planning to house hack it or rent it out after I move out.
Quote from @Edna Mensah:Am I understanding correctly that you own a home that you're going to keep and live in, and are looking to purchase a property in Dallas as a "second home"?
I'm a first-time investor looking to buy my second home in Dallas, preferably something I could house hack (Duplex or SFH with an ADU or anything of that sort). I'm looking to buy with a lower down payment (most likely FHA 3.5%), live in it, and rent the rest out. Are there any specific areas in Dallas I should be focusing on for these types of deals? I haven't been successful in finding any cash-flowing deals with such a low down payment in today's interest rate market.
I believe for FHA you have to have a "qualifying circumstance" in order to purchase as a "second home".
And for conventional I believe you'd have to put 10% down for a second home.
Or by "second home" did you just mean "your next home"?
Understood thank you for clarifying- you literally meant your second home purchase as opposed to the technical term of "second home".
As I've seen it mentioned, renting by the room is where my clients are seeing the most success right now. It would also allow you to get into much nicer neighborhoods vs having to buy somewhere like Oak Cliff/ Cockrell Hill. Also an area like Oak cliff with an ADU often won't qualify for FHA unfortunately, but you could always do conventional 5% not a huge difference. One common reason is a lot of those lower priced homes and duplexes have window units instead of central AC.
I would also reach out to Lucia Rushton for some help. @Lucia Rushton
I moved to dfw a year before the pandemic… it was a cash flow positive environment. Not now! Unless you want to live like a cockroach and “house hack” garbage in 110F weather… invest in something else or somewhere else.
The math doesn't make sense, especially for being in the middle of nowhere LOL. Maybe if you hustle for an off market deal and eventually land something decent. I've met people that ended up buying the property they were renting directly from the owner, or buying it as a live in caregiver, etc. Avoid the MLS and agents.