Zip codes recommendations for buying rental property in Dallas

15 Replies | Dallas, Texas

Are you looking for cash flow or for appreciation?  Generally, lower end properties tend to cash flow better and higher end properties tend to appreciate faster.

In the DFW area, my experience has been that the cutoff point is between $150K and $200K.

Metroplex in general.  Obviously, there are exceptions.  I see you are in Princeton; so it might even be a little less there. 

In general, the market for rents above $1500/month is pretty soft.  In the $400K purchase price range, rental prices are around $2500/month.  Such a home will not cash flow without a huge down payment.   And homes that rent for $2500/month can take months to rent.  I am personally aware of one in a beautiful gated community that has been on the market since July.  (Not mine, fortunately.) 

What's the location of this house?

Originally posted by @James H. :

Metroplex in general.  Obviously, there are exceptions.  I see you are in Princeton; so it might even be a little less there. 

In general, the market for rents above $1500/month is pretty soft.  In the $400K purchase price range, rental prices are around $2500/month.  Such a home will not cash flow without a huge down payment.   And homes that rent for $2500/month can take months to rent.  I am personally aware of one in a beautiful gated community that has been on the market since July.  (Not mine, fortunately.) 

So, you are looking for a $0 cash flow with no appreciation...

Those are "starter homes," which are rarely built anymore.  

One thing you can ask yourself is if you are looking for younger tenants who are salaried employees or a wider age range who are hourly.  You will find more hourly types south of I-30 and more salaried types north of I-30. 

Other than that, picking "hot areas" is a lot like trying to pick stocks.  :-)



Originally posted by @Lalit K. :

Thanks James H. , I would like to go with the price range you suggested. Are there any zip code recommendations for Dallas metroplex Area?

You are very unlikely to find it in Dallas unless you have "boots on the ground" and work hard.  BRRRR can work.  But, it takes a lot of effort.

Originally posted by @Lalit K. :

@James H. I meant cash flow properties in 150K - 200K range in good neighborhood with some appreciation potential as well.

Anything that meets your price criteria.  Look at Zillow for that price range, pick a neighborhood, and then look at the rentals available in that same neighborhood.  Garland is very hot now for that price range.  So is Mesquite.  Look for homes where CMAs indicate that the neighborhood will support $100 - $120 per sq ft.  Otherwise, you are probably looking at an area that is somewhat "rough" or are looking at an area that probably will not cash flow. 

There are "We Buy Houses" signs everywhere.  So, the competition is stiff.

Because of high property taxes, you really should be close to the 1% rule or you will not see a cash flow.  Along these lines, beware of huge property tax increases each year.  Many homes have had increases of 50%+ since 2012.

Originally posted by @Lalit K. :

I see @James H. what are some good neighborhoods to look at?

Best zip codes can mean different things to different people.  I could tell you the highest appreciation is in the Park Cities, but then the minimum to get in is $1,000,000 and rents are probably in the 1/2% range.  That doesn't help you a lot if your budget is $100,000.   Since your question is pretty general, you might check out this article from DMN and Steve Brown who is our Real Estate reporter and a very good one in my opinion who has been doing it for a long time.  I think most of the time he is right on.  However there are lots of variables that can skew numbers too.   Here are some potential areas for you from some of these articles.

Flipping Zip Codes:

75216 Dallas

75224 Dallas

75241 Dallas

76106 Fort Worth

75232 Dallas

A Rated Zip Codes (maybe better for buy and hold or higher end flips):

75019 Coppell

76034 Colleyville

76092 Southlake

76226 Argyle

76244 Keller

75028 and 75022 Flower Mound

75078 Prosper.

75009 Celina

75454 Melissa

Originally posted by @Lalit K. :

I see @James H. what are some good neighborhoods to look at?

 Hey Lalit,

Several Areas around where i live (Roanoke) TX have properties in the range or $150-$250 K, 3BR/2BA mostly. but i am looking for buying fix and flips. if your strategy is buy and hold/ rentals Anywhere along I35 going North from Ft.worth to Denton is  great, several new warehouses and fulfilment centers along this corridor, there seems to be a good rental market but do your own due diligence. I'd be happy to connect with you and discuss if you prefer to talk to someone local.

Good Luck

Deepak