Where to find cash flowing rentals in TX?

Question

Hi all, I live in Austin and would love to invest closer to home after not so successful out of state investments. I chatted with several agents in Austin and San Antonio and it looks like finding positive cash flow in these areas is challenging without STR which I'd rather avoid.

Are there any locations in TX that still have a positive cash flow in C or better neighborhoods for long term rentals in TX?

Patrick Prunty · Answer

@Gil Segev

Consider Wichita Falls and seek out @Kyle Mccaw.  Kyle is executing quite successfully using BRRR and has picked up more than a handful of long-term cash-flow holds.  I've been lending him the short-term, acquisition/rehab debt at 90% of purchase and 100% of rehab followed by the long-term, take-out/refinance at 70% of appraised value.  In most cases he is out of pocket little to zero following the take-out loan while sitting on a nicely rehabbed, cash-flow positive single family home.  Kyle also runs a Property Management Business based in DFW that services Wichita Falls.

Rick Pozos · Answer

If you absolutely believe in the long term growth, there is no gamble. You buy for long term, thats it. If the property goes down 5% or 10% in value, it does not matter since you are holding for long term.

If you really want to find properties with equity, you have to purchase a value add property and create that equity. Find something that needs some flooring, a roof, or has some issues that is causing it to sit on the market for 50 days or 100 days. There are more of those properties these days.

OR you have to get out there and do your own marketing to find distressed sellers. Get a website, set up SEO, Facebook page that says you buy houses, etc. Get the distressed sellers to call you.

You can find cash flow in ANY city, you just have to creatively create it. It takes effort, knowledge and maybe a little creativity.

Karl McGarvey · Answer

Cashflow anywhere is tough right now. I continually remind my clients that right now the play should be long term. Year 1 numbers may not look great, but you also should analyze 5yr and 10yr numbers. The hedge on inflation is powerful, especially if you hold for a long period of time. I am currently purchasing in League City Texas, which is an area that has a great market for renters and no shortage of opportunity to keep people moving to the area.

Gil Segev · Answer

Thanks. I had this discussion with several realtors in Austin last year who recommended buying for equity and long term play in Austin. Many of these realtors promised prices would never fall here. Since then, prices dropped noticeably and property taxed went up to a level that'd put me underwater had I bought. I absolutely believe in Austin's long term growth but I won't go underwater in the short term in an equity gamble.

Jordan Moorhead · Answer

Finding B class rentals that cashflow will be hard anywhere in the US with housing demand. C class isn't all bad, we have quite a few!

Drew Sygit · Answer

@Gil Segev In most areas of the country, Class B & C rentals is where the cashflow is.

Class A prices are too high, so you don't typcially cashflow for first 3-5 years - unless you find a motivated seller or a property you can reposition easily.

Jay Thomas · Answer

Real estate is an ever-evolving market and it's important to stay on top of the trends. San Antonio and Houston are great options for long-term cash flow investments, while Dallas-Fort Worth has some available single family homes but may require more out-of-pocket expenses than other markets. Unfortunately Austin remains too expensive for many investors. It pays to do your research so you can identify the best opportunities for your goals!

Nicolas Londono · Answer

Look for mid term rentals, they can provide better cash flow, more work though. the BP podcast has an episode (or two) with Zeona McEntyre and Zarah Weaver... they also wrote the book 30 day stays.... I created my listing about a week ago on Airbnb and got my first book for 45 nights.... it looks interesting... i don't have enough info yet.

Dan Flannery · Answer

I have been finding fairly good deals around Forney lately.

Andy Webb · Answer

Absolutely - San Antonio and Houston are great markets that cash flow for long-term rentals.  I am in DFW - you can find SF here as well, but the out of pocket tends to be higher than in those markets.  Austin is too pricey.

Where to find cash flowing rentals in TX?

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