What is the market like in Dallas?

Question

Im am curious about buy and hold properties. Is anyone finding many properties that meet the 50% rule or the 1% rule?

Ive heard that Texas is a good place to invest but the prices of the multifamily still seem too high to make good cash flow properties.

If you are finding these properties what areas? What kind of deals have you found?

I own a duplex here and a home but have just started learning more about real estate investing.

Samantha M. · Answer

Oops sorry meant to notify you to the post with my reply Andy, let me try that again with Andy Collins

Rick H. · Answer

While I understand the OP concerns Dallas SFR opportunities, I want to make a point about probate deals.  Most probates are NOT discounted in many areas where demand is high.  Probate, by itself, is not necessarily a catalyst or trigger that causes sellers to want to discount.

The bigger picture is that when a given local market is cold, few investors have the courage to buy.  This is when private seller carry-back financing becomes easier to get.  Couple that with a probate sale and a year or two elapsed time and you have a recipe for major back end discounts.

Most fix-n-flip people have never heard of the back end because they've focused so much on making a few coins on the front end.  If you are able to step back a bit a see the evergreen aspects of how properties at purchased are initially useful then a burden by owners as they advance in years, you may pick up on the big picture opportunity and not be part if the crowd of buyers clawing their way to find a deal today when the markets so hot.

Samantha M. · Answer

Andy Collins Understood Andy. Out of curiosity how are you mainly trying to source your deals? The MLS, wholesalers, your own marketing?

The best deals that I get are typically ones that I can source myself or from individual wholesalers that deal with motivated sellers. That seems to be the best way to get them at 70% ARV minus repairs in this market.

Andy Collins · Answer

@Samantha M.  yes, that sounds about right, but in the $100k ARV range I'm finding it tough to find 80% deals.

I try to stay in within 10 miles of my house, I avoid any neighborhoods that have a lot of rentals (which is sort of funny), etc.

I'm having to look outside of my preferred neighborhoods/school areas (not school districts, but say in Mesquite, there are certain schools that renters prefer, so I really prefer to buy in the areas that qualify for those schools.

Erik  Drentlaw  yes, that's the idea anyway,  I haven't actually gotten myself to "pull the trigger" on any of those deals,,I try to follow my business model closely, and this is something that doesn't "fit"

Samantha M. · Answer

Thanks for your clarification Andy. So I guess since the deals are hard to find right now you would consider a 75% ARV minus repairs to be a great deal and a 70% ARV minus repairs exceptional, while 80% minus repairs is "fair". Does this sound about right to you?

This has been my experience so far as well. I try to get 70% when I can but like you its just very hard to do in this market.

Thanks for weighing in.

Erik Drentlaw · Answer

Andy Collins, where are you looking at properties with an ARV of $60,000. Does that mean if you put $10,000 into it your paying $38,000?

Andy Collins · Answer

Samantha, I can't find any 70% deals right now, but yes, that what I'd love to find, with ARV of just over $100k,

I buy properties with ARV's around $100k-$110k,  but normally get them for about 80% between purchase and rehab.   I haven't bought anything in about a year because I can't find those deals right now,,the cheaper houses can still cash flow, and I'm considering buying a couple and seeing what they are like (ARV around $60k)

,,I found a deal recently on a house in an area I love that should have an ARV of about $160k,,but even at a good deal for today, it was a horrible investment, so I had to leave it alone.

Erik Drentlaw · Answer

Andy Collins Using the 50% rules 1500 turns to 750 - principal and interest equals $40!! But I think I do better than 50% because I manage myself. Hopefully the leverage will help my overall investment too.

Samantha M. · Answer

Andy Collins Just wondering Andy but what do you personally qualify as a "great deal". To me thats typically the good old 70% rule minus repairs.

Andy Collins · Answer

I'm in the Dallas area, and you can forget getting great deals, there some some ok deals, but as the saying goes, there are more people wanting to buy then wanting to sell.

You can get a 1% deal, but i don't know how in the world you have any cash flow with $1,500,in rent with $143k in the house,,,taxes along would run about $300 a month and a decent reserve for maintenance and figuring in vacancy, etc,,,

What is the market like in Dallas?

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