Best areas in DFW area to invest in rental SFH/townhome/duplex

25 Replies

Looking to find a good locale in the DFW area that can provide good appreciation and price-to-rent ratio. Depending on property type, willing to consider 150-280K price range.

I've heard good things about Arlington, but want to get some expert advice on other up-and-coming areas here!

Also, is there a strategic advantage to looking near big corporate headquarters (e.g. HDQs for American Airlines/Toyota etc.)?

There is always an advantage to looking at the areas around the new companies that are moving into the area.  No real surprise there.  As for cash flowing areas, it's a total crap shoot.  And, just like with anything else the numbers have to make sense.  Arlington is solid, but the rental rates have tended to be a little lower, so you have to find a deal.  And, I would strongly recommend the western side of Arlington, say Center Street and west toward Ft Worth, if you're south of I-30.  North of I-30 is pretty much fine across the city.  Unless you are sinking a lot of capital into it to force cash flow, I would suggest you keeping the property under $150k.  You're going to be hard pressed to much that will cash flow above that level.  Also, be aware that Texas property taxes are higher than you might expect, and they increase every 1-2 years.  You have to figure that into your deal evaluation, because a property that cash flows this year may not next year.  It shouldn't scare you away, but you definitely want to take it into consideration.

Let me know if there is anything I can help you with.

@Hattie Dizmond appreciate the input! Any particular justification as to why North of Arlington is a better choice?

Also, would you have any insights into Euless and Frisco as investing areas? A few websites I've researched pegged Frisco as a good location to buy a property. Euless meanwhile is pretty cheap, but I am not sure how rentable properties there are.

Thanks!

I live just North of Frisco in McKinney. Prices are high in Frisco and would be hard to find something cheap enougj to cash flow. North of 380 in Anna, Princeton etc seem to be a little more affordable. Lots of growth in Collin County and companies like Toyota and Liberty Mutal have brought in thousands of jobs and decrease home supply and driven prices up. 

Originally posted by @Rita Lo :

@Hattie Dizmond appreciate the input! Any particular justification as to why North of Arlington is a better choice?

Also, would you have any insights into Euless and Frisco as investing areas? A few websites I've researched pegged Frisco as a good location to buy a property. Euless meanwhile is pretty cheap, but I am not sure how rentable properties there are.

Thanks!

Rita, it isn't necessarily that North Arlington is better, just that I would avoid the eastern part of Arlington, particularly between I-30 & I-20.  That area is sketchy.  There are "deals" to be found in that area, but the schools are poor, and your rental rates will be low.  Not to mention I believe the tenants you'll find in those areas are the kind that will just be problems.  North Arlington just doesn't really have a large swath that suffers from the same problem.  Once you past Center Street, headed west, the problem mostly resolves for the area between I-30 & I-20.  Southwest Arlington, particularly between south of Arkansas Ln & north of I-20 and west of Woodside/Kelly Elliot, is a good area.  The schools are excellent and there is a nice mix of property types.  

Euless is an interesting area.  It's part of a trio of cities Hurst-Euless-Bedford (aka...HEB) that are situated along Hwy 183, and are separated from Irving by DFW Airport.  Those 3 cities share a consolidated school district.  There are some strong areas in there, but there are also some seriously dumpy areas.  And, it isn't nearly as clear cut as Arlington as to where those are.  I will do deals in HEB, but I'm very careful with them.

Frisco is the tale of 2 cities.  The old part of Frisco has been around forever, and it is now starting to re-gentrify.  I personally think there's value in the older part of the city.  Most of the city is relatively new development.  If you can find a deal there, I'd definitely gobble it up.  It probably has some of the strongest rental demands in the north part of the Dallas side of things.  Although, West Plano is good as well.  

As you may have noticed from this response, the DFW area is simply huge, and there isn't one answer that will suffice for all of it or even one city in most cases.  Arlington itself is near 500k people.  You have to speak in term of sub-markets and macro areas here.

I'd be happy to talk, if you want additional information.  My contact information is in my profile.

I agree with @Hattie Dizmond ’s suggestions and reasoning. I’d also point out the Lewisville and Carrollton have strong rent demand and good investment numbers. Denton has some good pockets if you want to look further north. 

Here is list of good cities for investment (Again different area make some difference).

You will find property in range of 150-200K here with around 0.8% rent.

  • Little Elm
  • Royse City
  • Cedar Hill
  • Arlington
  • Crowley
  • Burleson
  • Denton
  • Carrolton
Originally posted by @Tyler Hodgson :

I agree with @Hattie Dizmond’s suggestions and reasoning. I’d also point out the Lewisville and Carrollton have strong rent demand and good investment numbers. Denton has some good pockets if you want to look further north. 

Agreed.  Denton is a strong area.  My only caution there is to make sure you are comfortable dealing with the college crowd, because Denton is a college town.

Thanks all! This leaves @Michael Deng and I with a lot to think about.

Just curious: a few of you mentioned that we should keep our properties between ~100-150K. I assume that is just for SFHs? Does anyone have experience with townhomes/duplexes, and how does the market for those look?

@Rita Lo Thank you for asking this question, as I was just about to ask it myself. I've been trying to look for a deal in Arlington for a little while now and keep coming up with low or negative cash flow, possibly due to overestimating expenses, but everything I'm reading seems to indicate that Arlington may not be the best place to look. DFW in general is very interesting to me, however. I'm definitely going to investigate some of these other suggestions. 

My question is: do any of you Arlington/DFW locals have a property management company or person who is just terrific? I'm in California, so I definitely need someone in the area. 

Thanks!

@Rita Lo Thank you for asking this question, as I was just about to ask it myself. I've been trying to look for a deal in Arlington for a little while now and keep coming up with low or negative cash flow, possibly due to overestimating expenses, but everything I'm reading seems to indicate that Arlington may not be the best place to look. DFW in general is very interesting to me, however. I'm definitely going to investigate some of these other suggestions.

My question is: do any of you Arlington/DFW locals have a property management company or person who is just terrific? I'm in California, so I definitely need someone in the area.

@Jessica Muto I personally believe instead of hiring a property manager, you should vet a team of sub-contractors or some general contractors to handle the repairs, and get a good education on the landlord/tenant laws and the lease, then you can market the properties yourself. A property manager will end up being very costly and you probably won't be happy with the results. If you are going to be a buy and hold investor, you just need to be educated on the best practices. We don't spend more than a couple hours managing our 8 properties, and I never go to see them.

I have a few properties near UTA and it's under 200K. I recently found a tenant prior to closing and tenant moved in the day they closed. The demands are high in this area and I get calls daily for rentals in this complex. Pretty high rental rates with over 8% cap. 

@Jeff Richardson Thanks so much for your feedback! My main concern with managing myself is that I live in California and obviously would not be able to respond to emergencies, etc, very quickly myself. Also, I'm at a disadvantage not knowing the area, the costs associated with utilities and maintenance, upgrades, etc, and the good and bad areas of town. How do you handle stuff like a burst water main in the middle of the night or other situations at your properties? 

@Julie Nguyen Thanks for the tip! I'll definitely look into that area. 

@Jessica Muto When we buy properties, they typically need a lot of work in order to get them for under market value. We use general contractors along with sub contractors to complete the work. Managing repairs from a distance isn't much different than managing them close to home, you won't be doing the repairs, so you will be using a contractor that comes highly recommended and that you have vetted, through references. Before you buy a property, you'll want a list of contractors that you can rely on for not only the rehab, but any issues that may come up. You can get references from BP members, FB groups, and other online sites. Realtor.com has an overlay when looking at listings that shows the amount of crime an area has, it is broken down by city blocks in many instances. You can also post on BP to get other investors opinions.

@Jeff Richardson Thank you! I JUST finished reading @David Greene 's book about Long Distance Real Estate, so I'm on board with your suggestion. As the owner of a plumbing company here in San Diego, I'm definitely more sensitive to asking for free advice from busy professionals while I'm still deciding if this market even makes sense. I've got a good real estate agent in the area, and am still looking for a property manager and haven't yet started looking for a contractor. Any referrals are definitely appreciated! 

Thanks everyone! This is a fun process, but I'm still learning what questions to even ask! It's been great reading everyone's advice. 

@Hattie Dizmond @Rita Lo I was born in Arlington and live here now off of I-20 and Matlock. I would agree with the analysis and say that east of Collins and south of I-30 is sketchy. I grew up in 76014, dodging gangs and all that and pretty much refuse to live there. Limestone Dr. has a duplex up for sale now and I still remember how that street made me feel as a kid! Would not buy. 

As for West Arlington, the area north of 287 all the way north to North Green Oaks ( that whole swatch from Cooper street to Fort Worth) has a lot of custom homes, mature neighborhoods, and some streets of decent-looking duplexes. 

On the main sites (Zillow etc.) I rarely see multi-family listed in Arlington and find myself having to look in Fort Worth more than I'd like to. So, I think preparing yourself to look north of Dallas or in HEB as mentioned is smart.

@Karl Farmer , My 2bed/1bath is a small duplex (sublett and cooper st) goes for 1050/mo. I like to think I could get more but I have a long time no hassle renter. My 3/2 in southwest (76016) is in a neighborhood that averages 130-150k values and goes for $1450.  Hope this is helpful.

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