Is Dallas, TX a good place to invest?

6 Replies

Hi, I travel to Dallas to see a client of mine and have been impressed with the city's growth. I looked at the ROI for purchasing and renting and it just didn't seem so enticing compared to my investment properties in Miami and Doral areas. Can someone with experience in investing in Dallas, TX weigh in? I am looking strictly newer properties (built in the last 10 years) in good neighborhoods.

Just like everywhere else the market here is hot. Home prices have skyrocketed the past few years. If you want to find 1% deals you’ll likely have to find those off-market.

Newer homes (<10 years old) for under $200k in nice neighborhoods rarely show up and if they do they move quick. A typical 3/2/2 in a desirable neighborhood will likely rent for a little under $2,000/month. Just like Florida, we don’t have a state income tax so our property taxes are relatively high.

It’s a great area to invest however it’s not a great time to my opinion. Population is growing rapidly due to a lot of companies relocating here. Housing supply is really low so demand is high thus driving up prices. Yeah, there is a ton of new construction going up however there is also a major labor shortage causing labor costs to rise as well. At a certain point the cost to build simply won’t be worth it, especially if/when that correction everyone seems to mention finally comes around.

Rental rates are also healthy and growing. All that being said I haven’t come across anything that has piqued my interest but that doesn’t necessarily mean you and I are looking for the same thing. I’m not in any rush and know that we’re overdue for a correction in housing pricing and that is what I’m waiting for. If I see a great deal I’ll move on it but I just haven’t seen anything that moves the needle for me.

There are good deals out there, turn-key properties that will have positive cash flow and aren’t too hard to find. If you want to find great deals you’ll have to work for it and compete with other investors...but that shouldn’t really be a surprise.

I think Dallas is a great place to invest--for the value add investor. I enjoyed Kyle's analysis, but disagree on his prediction that we are due for a correction. The incomes and median home price ratios are still quite strong and don't point to a large supply of over leveraged buyers. Prices may go flat as additional units are built, but it won't "correct" to a lower price in the near future. My $0.02 YMMV

I agree, I think that Dallas is mostly picked over.  The easy money has been made.

I don't expect a huge correction, but then again I also don't really expect much price appreciation outside of normal inflation. 

Unless another big company comes here. (ie Amazon), I think the market is cooling off a little.  I think it will be strong over the next 15 years or so, but I don't think DFW will be anything unique from other fast growing metro areas around the country.

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@Apkesh Kumar There's no doubt that Dallas has a booming population and job market. The problem is that they also have some of the highest tax rates and homeowners insurance rates in the nation which means they don't cash flow well. If you're looking to maximize cash flow, I would recommend looking at Midwest markets like Indianapolis and Kansas City. They may not be as glamorous as Dallas but they both have strong economic and demographic fundamentals with very good cash flow. If you want to look in to either of those markets I can share my insights with you.

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