Do you own single family rental property in DFW?

26 Replies

I'm trying to get a feel for rent to property value. DFW seems very hard to get to 2%. You're probably lucky if you can get 1%.

I'm looking in areas such as Garland, Mesquite, around Plano and possibly further north past Allen.

Even over towards Ft. Worth near say Watauga, etc.

The DFW area is a tough market with all the Chinese investors buying and they dont play by the 2% rule.

Joe Gore

Originally posted by @Joe Gore:
The DFW area is a tough market with all the Chinese investors buying and they dont play by the 2% rule.

Joe Gore

Chinese investors? Can you elaborate?

The 2% rule is an awful rule and should be ignored. It contains a number of assumptions, most of which probably don't apply. Do you own evaluation.

Lots of folks buy rentals that are cash flow neutral or negative. They're looking for long term appreciation.

Jon Holdman, Flying Phoenix LLC

In the pass year Chinese investors been buying anything they can get plus paying way above FMV and renting them out.

Joe Gore

Joe Gore Yeah they pillaged SoCal last year this time. I got lucky and got one before they gobbled everything up.

Originally posted by @Joe Gore:
In the pass year Chinese investors been buying anything they can get plus paying way above FMV and renting them out.

Joe Gore

Interesting. Why would someone do such a thing? That doesn't sound like a solid investment at first glance.

Sorry, didn't mean to high jack a thread.

When you have deep pockets you tend to act crazy.

Joe Gore

Originally posted by @Jon Holdman :
The 2% rule is an awful rule and should be ignored. It contains a number of assumptions, most of which probably don't apply. Do you own evaluation.

Lots of folks buy rentals that are cash flow neutral or negative. They're looking for long term appreciation.

Given that the 1% to 2% rules are more guidelines than rules, do you have a guideline of your own, or do you look solely at each potential deal for its own unique merits? Of so, how do you filter the gems from the junk?

The 2% rule should be a "rule of thumb". You're rent/cost should depend on the area. Remember, the national average is something like 0.8%. In really nice areas, if you can get a 1.2% or 1.3% you're doing fine. If you are too dogmatic about the 2% rule it can lead you into some war zones that look good on paper, but don't turn out that way when you're tenants don't pay rent and then wreck the property and then it gets broken into and all the copper gets stolen... ask me how I know these things...

Medium apartment logoAndrew Syrios, Stewardship Investments | http://www.StewardshipProperties.com | Podcast Guest on Show #121

Hi Steve,

I'm an investor, rehabber and property manager in Tarrant County with investor clients from all over the country. To get 2% (I assume gross) on your property will be difficult. DFW market is a hot seller's market. And as others already mentioned, getting 1.2% is considered above average.


Medium th managemnt logoAnderson Schulle, Texas Haus | [email protected] | 817‑200‑7984

"DFW seems very hard to get to 2%....."

Can someone explain what DFW is?

I bought a new construction property in Keller in "07. I thought I would do ok with 1%. This was before I found BP and learned about the 2% rule/guideline. I break even on it.

I didn't account for the high taxes. It rents quickly and has only been vacant a total of 2 weeks since I bought it.

Never mind, I put two and two together from the location from the majority of the posters.

Dallas Fort Worth?

Correct - DFW stands for the Dallas - Fort Worth area.

@Account Closed I use the 50% rule, apply what I think I can get for financing and compute my cash on cash return.

Jon Holdman, Flying Phoenix LLC

Originally posted by @Roy Williamson :
Joe Gore Yeah they pillaged SoCal last year this time. I got lucky and got one before they gobbled everything up.

Yes our friends that were out from California mentioned this too that it is going on in Irvine as well. They said cash offers have put even 4 bedroom 1800 square foot 2 story homes up to $800k now in West Irvine 92602.

Originally posted by Anderson S.:
Hi Steve,
I'm an investor, rehabber and property manager in Tarrant County with investor clients from all over the country. To get 2% (I assume gross) on your property will be difficult. DFW market is a hot seller's market. And as others already mentioned, getting 1.2% is considered above average.

Welcome to BiggerPockets, Anderson.

Originally posted by @Richard F. :
Originally posted by @Roy Williamson :
Joe Gore Yeah they pillaged SoCal last year this time. I got lucky and got one before they gobbled everything up.

Yes our friends that were out from California mentioned this too that it is going on in Irvine as well. They said cash offers have put even 4 bedroom 1800 square foot 2 story homes up to $800k now in West Irvine 92602.

I'm curious Richard, what would a home like that rent for?

Originally posted by @Jon Klaus :
Originally posted by @Richard Flint:
Originally posted by @Roy Williamson :
Joe Gore Yeah they pillaged SoCal last year this time. I got lucky and got one before they gobbled everything up.

Yes our friends that were out from California mentioned this too that it is going on in Irvine as well. They said cash offers have put even 4 bedroom 1800 square foot 2 story homes up to $800k now in West Irvine 92602.

I'm curious Richard, what would a home like that rent for?

Hi Jon, ~$2700 a month

How does everyone acquire their rentals? Wholesalers, direct marketing, MLS?

I am going to start buying rentals in DFW in May and I was just wondering what avenues everyone was using to buy theirs.

I have rentals in Tarrant county mostly Arlington and Fort Worth. The rental market is very strong and my houses usually lease in 1-2 weeks.

I have never been able to achieve the 2% rule. I have been able to get 1.5%. I bought most of our properties off the MLS, a few off market deals and a few from letters, and a few from wholesalers.

I have a duplex and a single family, one in Richardson, the other Dallas (Oak Cliff). I am focusing on direct marketing right now. The MLS is extremely competitive, and I have not found anything there the past year or so that meets my investing criteria.

If you are using a wholesaler, expect to pay a minimum of (ARV-Repairs) x 80%. Most are closer to 85% now.

Todd Plambeck | [email protected] | TX Agent # 0681374

DFW is hot but there are opportunities out there if you put in the work. Look in the niche areas and outside the beaten path. For example a lot of the north Dallas suburbs are really hard to find deals(Irving, Allen, McKinney, Richardson) Meanwhile other areas that may have fallen by the wayside are overlooked like Tarrant county or south of Dallas.

I don't know if its the Chinese but I could definitely see hedge funds getting in the mix over inflating things. Or Chinese hedge funds.

The problem with the 2% rule is that it means different things at different price points. 2% at a $50,000 house getting $1000/mo is way different than a $200,000 getting $4000/mo. In fact the higher the price point the more likely you can be successful with less than 2%.