Rental Property in Frisco, TX

[Chong Linghu]

Hi all, I am a newbie to play the game. Now I am looking into an out of state rental property in Frisco, TX. The property selling price is around 250k. 4 bd, 2 bath, built in 1994. The leasing ranges from 1850-2200 among Similar properties in the same area. I searched, the location is good, near to Toyota stadium and a few shopping malls. My concern is that the property is a little aged. I might need to spend a lot on repairs. My agent is kind of pushing me to go to this one. Her points are the mortgage rate is going up, the hot real estate season is coming, and housing price is expected to rise in 2017. Anyone lives in Dallas knows more about this area? What do you think? Should I wait for more listings or just go with this one? Thank you.

[Bart H.]

Everyone has their own criteria for a good deal.

I would say this, very few deals that are under the 1% criteria (monthly rent/Purchase price) will provide either cash flow or a ROI. if you are at $2,200/$250,000=0.9%.

I think you will find most people living in Frisco, at least at the top end of the rental market will expect a rental that isnt dated.  You may be closer to the low side than the high side.

Also still being a relative newbie ourselves having gotten into the game in the 2012/2013 time frame, I can tell you it will be a challenge to do a rehab and manage the property remotely.  Unless you have construction in

I will say this, Frisco is a vibrant growing community in the DFW area, the center of the metro area continues to move northward.  I am sure Frisco properties will continue to appreciate, but I think the deal as you outlined it will at best be cash flow neutral, and likely will be cash flow negative while you bet on price appreciation to create a return on your investment.