Bedford, TX · Member since 2016 · 79 posts · 24 votes
Hi all,
I recently read rich dad, found bigger pockets, listened to podcasts... and wanted to get into RE. doing a little research, it would appear that my timing is off as usual. Homes that where selling for 80k 2 years ago are now selling for 150. people getting into bidding wars, paying more than asking, this sounds like a bubble to me.
I also went to the Tarrant county foreclosures on Tusday, and people where bidding over appraised value on homes they could not get inside and do any kind of inspection.
So am I right to say that DFW is in a bubble and sit this out for the next few months or is this the new norm? are we going to see rents double since homes have doubled?
Curious to know what those that have been doing this for a while are doing.
Real Estate Investor/Broker · Irving, TX · Member since 2015 · 520 posts · 263 votes
9y
Every MSA is in a bubble. If you want to buy/hold look at tertiary markets. If you want to build cash for the next market cycle, flip/develop in MSA's like DFW (buy low/sell high).
That's the strategy I was taught and follow.
Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
9y
@George Genovezos I am not sure if DFW is in a bubble. I can absolutely tell you, I would NOT buy properties retail for buy and hold investments right now.
Bedford, TX · Member since 2016 · 79 posts · 24 votes
9y
Originally posted by @Account Closed:
@George Genovezos I am not sure if DFW is in a bubble. I can absolutely tell you, I would NOT buy properties retail for buy and hold investments right now.
Thank you Sir! What would you look for to start buying for buy and hold?
Investor · Austin, TX · Member since 2016 · 47 posts · 13 votes
9y
Hi @George Genovezos. Like you, I'm also new and looking for opportunities to invest in the DFW area. Good luck with everything!
I have a friend here in Los Angeles who is syndicating and buying apartment buildings in OK. Not sure what part of the state. I think the price range is $600K-$1M. Of course she has property management in place, but flies out there as necessary to check on things.
Is anyone in north Texas (DFW specifically) investing in or considering OK for either SFR or multifamily? How about LA or AR?
I might post this question in a few different discussions for more feedback.
Real Estate Investor/Broker · Irving, TX · Member since 2015 · 520 posts · 263 votes
9y
Every MSA is in a bubble. If you want to buy/hold look at tertiary markets. If you want to build cash for the next market cycle, flip/develop in MSA's like DFW (buy low/sell high).
That's the strategy I was taught and follow.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
You're right....Dallas is in a bubble. It was a super hot market about 2-3 years ago. A lot of people bought then and have since seen a ton of appreciation very quickly. Prices there now are higher than before the 2009 crash.
Rents won't necessarily double, no. Hard to say what they will do, but doubling probably isn't on the table.
You're more local to Dallas so I get why you'd want to buy there, but other investors I know have left there (for investing) and are buying out of state.
Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
9y
@George Genovezos One thing to also remember DFW is not like most other markets. A huge number of people move here everyday. There is also a huge amount of new construction. The balance of population to new homes has a lot to do with prices.
I think I did a post where I discussed the weather had been bad for lot development for about 6 month a year or so ago. That caused a shortage of lots. All the builders increased prices when that happened. So far they have not reduced them. In Collin County, for example we required at least 40 new single family houses a day to keep up with demand. Currently builders are unable to keep up with demand.
@Shaun Pruett I have a friend who does development in DFW who is doing a SF housing development Celera OK. Most people are staying closer to home for development. On rental to buy and hold, there are still deals in Collin, Fannin, and Grayson Counties.
Investor · Austin, TX · Member since 2016 · 47 posts · 13 votes
9y
Thanks @Account Closed. It almost seems like there are 2 housing markets. One consisting of all the new builds. Another consisting of existing homes.
I'm curious if there are any stats on who is buying the new homes. Is it mostly people who are relocating to DFW? Are there people in the area who see these nice, new homes and decide to purchase one? If it's the latter, I wonder what is happening to the older homes they move out of. Is there a strong demand for those properties? Maybe those are good for people who are moving into the area but cannot afford the price of the new homes.
By the way, how "new" are the new homes? 5 years? 10 years?
Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
9y
@Shaun Pruett If I say "new" I mean very new. One neighborhood near where I own houses is going to have 50 more houses closed by the end of this month. That is one neighborhood in one small suburb. Yes... I really mean 50, and yes I know there are about three weeks left in this year and Christmas is coming.
The area I mentioned has two kinds of buyers. Investors buying for rentals and first time home buyers using zero down financing.
Do people on biggerpockets know about the USDA zero down mortgages?
Fort Myers Beach, FL · Member since 2016 · 225 posts · 124 votes
9y
Originally posted by @Account Closed:
@Shaun Pruett If I say "new" I mean very new. One neighborhood near where I own houses is going to have 50 more houses closed by the end of this month. That is one neighborhood in one small suburb. Yes... I really mean 50, and yes I know there are about three weeks left in this year and Christmas is coming.
The area I mentioned has two kinds of buyers. Investors buying for rentals and first time home buyers using zero down financing.
Do people on biggerpockets know about the USDA zero down mortgages?
Can USDA mortgages be used on Duplexes or Investment properties? I have a Duplex in Gunter, which is rural.
Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
9y
I like what Michael mentions. What constitutes a bubble? If you look at the number of folks and jobs moving in, there is ample justification for it. If that stops or slows down and there is overbuilding certainly that's a risk. It does depend on what you are looking for. For instance, if you are constructing and building class A apartments or are you looking for value add class B/C apartments. The former is always at risk of overshooting w/supply and rents coming down if there is a pullback. When Houston corrected a few years ago, class A occupancy rates and rents really got hit as $100K oil jobs fled while B/C vacancy and rents have held up pretty well.
You need to be smart in any market but someone saying prices are higher than they at the peak of the last cycle doesn't really add a lot of value to the conversation. The market dynamics are very strong and have changed in some markets...the macro trends driving companies to move here, bringing people and jobs is not going to stop just because prices are rising. Prices continue to rise on the coasts so relatively speaking its still a good move for these companies to look at places like Dallas. Add in world class infrastructure, freeways, DFW intl airport, central U.S. location, and you get a better understanding of what's truly happening. If you can justify the numbers w/realistic assumptions that are conservative, we still see reasons to be in this city. Prices have risen in Dallas, San Antonio, Austin and even Houston but you need to step back and ask, is this going to stop next year, five years, etc. Probably not, if you read links like this...and understand the what the Texas Economic Fund is focused on.
Hi my name is Alex I live in Mesa Arizona I'm an investor in real estate and business if you really want to buy property wait until 2018-2019 there is a derivative bubble. interest rates will slowly go up the stock market will crash first . The Market is primarily owned by investors and hedge fund companies on majority of the real estate and China owning 25% of real estate property real estate will crash between 2018 and 2019. if you're looking to invest you can buy homes Pennies on the dollar save your money and by at the right time and you will have cash on cash return iam not selling you anything or promoting a book just did my due diligence see guys on top
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
9y
There is likely no bubble in Dallas. There could be price points or property types with higher inventories. In LA that is 1 million plus SFRs and still not in a bubble for those. Some folks who commented have been saying LA was in a bubble 3 and 4 years ago. Wrong. Now they are probably wrong again 1000 miles away. At least they are consistant. Consider the fundamentals of supply and demand as noted. Then consider in order to have a bubble normally a certain level of over leveraged financing exist. This does not exist yet. Yes, prices are higher than before. That is what happens when supply does not keep up with demand. I am sure there is an insitition in Dallas who covers the REI forecasts that can break down all the major stats as to exactly what, where, when and why. Good luck with your search!
Real Estate Investor/Broker · Irving, TX · Member since 2015 · 520 posts · 263 votes
9y
From investopedia: "A housing bubble is a run-up in housing prices fueled by demand, speculation and exuberance. Housing bubbles usually start with an increase in demand, in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, further driving demand. At some point, demand decreases or stagnates at the same time supply increases, resulting in a sharp drop in prices — and the bubble bursts."
Why do bubbles burst? Foreign/domestic investors buying overpriced assets, interest rates going up, and a tightening of credit standards... which we are already seeing a hint of.
How is almost every MSA not in a bubble? It will burst, but because the reasons David Thompson mentions, I believe it will more so level off, rather than a decline like in previous cycles. - David you refer to C class multifamily, which in my opinion, is the safest investment in the DFW market. Everyone needs a place to live....
Everyone's got their own strategy and investment risk profile.
San Antonio, TX · Member since 2015 · 125 posts · 102 votes
9y
Look into wholesaling. A lot of the strategies you learn in wholesaling can be applied to properties that you keep for yourself. :)
You can find yourself an owner finance deal, a house that needs some repair love that you can do yourself, etc.
Also DFW is massive... while real estate as a whole is probably experiencing a little bit of a bubble... It doesn't mean there aren't phenomenal deals out there. Look at the suburbs on the outskirts of Dallas and see if you can find something good.
Best of luck!
Bedford, TX · Member since 2016 · 79 posts · 24 votes
9y
thanks all.
Gonz, I am going down that path, but my concerns are that I purchase a 200k house that is only worth 100k or I pick up a rehab only to not sell it because the bottom falls out.
Traditionally, my timing has been terrible.
The joke around my house is I need people to follow me and short every stock I buy.