Beginner Investor in Texas

20 Replies

I am new to Texas and looking to start my real estate investing journey. I have read some books and have been hanging out here to get educated. As the markets have run-up in the last few years and because of high property taxes in Tx, I have not been able to come across any deals that would cash flow. Also I am looking for multi-family homes, which seem to be difficult to come by here. I am W2 professional with decent savings for a down payment and high loan eligibility, but don’t want to buy a non cashflowing property at an all-time high.

Are there any areas in Tx that I should research more where I can still get positive cash flow on multi-family homes or should I look out of state?


Appreciate any advice for starting my REI journey!

@Pretty Khare and @Trevor Reed


I’m also looking to invest in Texas (DFW area specifically) and having trouble finding cash flowing deals. I’ve done some research and it seems like the cash flowing opportunities are in C/D class areas like south Fort Worth or the southern part of Dallas. I’m not against that per se, just cautious.  I’d love to connect with you both to get your thoughts on the area!

The reality is, these days, you're going to have a much more difficult time finding a cash flowing multi than SFH. The reason is because everyone is thinking exactly the same thing you are, so prices are high.

Sounds good @TrevorReed. look forward to connecting 

Originally posted by @Trevor Reed :

Hi @Pretty Khare There are certainly deals around.  I'm in DFW (mostly the northern part) and regularly find or finance deals in the area.  Even though taxes are high, rents are high and we have a very strong renter market.  I'll send you a PM. 

Eric - is this a general statement true for all markets or only specific to Tx?

Originally posted by @Eric James :

The reality is, these days, you're going to have a much more difficult time finding a cash flowing multi than SFH. The reason is because everyone is thinking exactly the same thing you are, so prices are high.

Originally posted by @Pretty Khare :
Eric - is this a general statement true for all markets or only specific to Tx?

Originally posted by @Eric James:

The reality is, these days, you're going to have a much more difficult time finding a cash flowing multi than SFH. The reason is because everyone is thinking exactly the same thing you are, so prices are high.

It's true in a lot of areas.

The DFW real estate market has exploded over the last 5-7 years. You are not missing anything. The housing market here is primarily single family. Due to a lack of inventory and low interest rates our market is very competitive. Like most major U.S. markets prices have continued to rise. The minimum budget for a single-family home in a class A Fort Worth neighborhood is $250K. The available fixer-uppers are gone in days. All properties are receiving multiple offers. Winning bids have been $25k-$50k over asking. The 1% rule does not apply in this market. If you can house hack you may be able to cash flow. It's best to go in with your eyes wide open.

@Alanna Sandoval

I focus on properties under 200k in the DFW area. Rent in the 1300-1700 range is what I target. That's my sweet spot. I target C+ hoods in ft worth, Grand Prairie and Arlington. Huge demand for rentals out here and the coming years. Rent values have gone way up and will continue to rise over time. So if the cash flow isn't great on a deal right now, just know rent prices will go up a couple hundred in the next few years to help with your ROI. PM me if you need any help.

Getting in now and financing a property as a primary, with intent to rent it out after you've lived there a year or two (perhaps even with paying roommates) as rents continues to rise, may not be a bad way to get into a tough market. 

Originally posted by @Reid Chauvin :

Getting in now and financing a property as a primary, with intent to rent it out after you've lived there a year or two (perhaps even with paying roommates) as rents continues to rise, may not be a bad way to get into a tough market. 

Would have loved to house hack.. however I already have two kids and own a SFR in Austin. So looking for non-owner occupied investment properties

Originally posted by @Ronald Rohde :

What % DP are you putting down? Plenty of cash flow if you increase your down payment and reduce CoC. How many units on multi-family?

Looking to put 20% down to maximize leverage and CoC while still cashflowing. I understand the trade off between cashflow and CoC. However taking on more debt will help grow much quicker but also increases the risk if a property doesn't perform, so there are tradeoffs

Originally posted by @Pretty Khare :
Originally posted by @Ronald Rohde:

What % DP are you putting down? Plenty of cash flow if you increase your down payment and reduce CoC. How many units on multi-family?

Looking to put 20% down to maximize leverage and CoC while still cashflowing. I understand the trade off between cashflow and CoC. However taking on more debt will help grow much quicker but also increases the risk if a property doesn't perform, so there are tradeoffs

Definitely look at commercial deals then, you will cash flow and hit decent CoC.

@Trevor Reed Hey Trevor! I’m also a newbie here and trying to build my own network. Have you had any experience with pre-foreclosures or distressed homes? I’ve been driving for dollars in the Plano area and found some potential off-market leads. I decided not to move forward to pursue until I at least get a contractor relationship. Any thoughts/advice?

Thanks!

-Mark

@Mark Tacazon    Very few foreclosures in DFW right now.  Could be some coming down the pike maybe a year from now.  However foreclosures don't always mean they're a good deal.   There are always distressed properties.

Don't wait to find a contractor....lender first, then deal, then the contractor....no contractor will be on standby for you waiting to buy a home.