Dallas/Fort Worth REI. What happened?

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Dallas/Fort Worth REI. What happened?

Jason Coyle
Contractor 路 Fort Worth, TX 路 Member since 2017 路 100 posts 路 49 votes

So, what happened to REI in D/FW? It seems like this market is gaining speed in the wrong direction. There's just not many deals out there, if any, even with minimal margins for investors?

Don't get me wrong, there's tons of wholesalers that will send you more packets on potential deals than anyone wants to read,  but most appear to have intentionally fictitious numbers. So where are all the actual deals at?

Are the assignment fees sucking the profit out of everything, are the sellers standing their ground for higher offers, what do you think?

I know the recent tax increases for our area was quite a gut punch for buy and hold strategies and obviously impact REI in general, but things have seemed to be in a steady decline for the past year. And now, here we are.

I'm just a contractor but do a ton of pre acquisition analysis for investors. Lately, I haven't seen anything come through at all that has anything left for the investor, even with minimal rehabs. I have had to advise a hard pass on almost everything that has come through in the recent months. Any local REI folks out there having the same experiences?

Would love some feedback, thanks in advance!

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Adam Wright
Real Estate Agent 路 Fort Worth, TX 路 Member since 2014 路 176 posts 路 64 votes
7y

I started noticing something last month so I did a little digging. DFW is one of two metro areas that has almost all the IBuyer companies working the market. With this in mind, I did a quick check in the MLS on how many properties OpenDoor has sold over the last year. They sold around 700 properties between six months and 12 months ago. The last six months they have sold over 1300. My very unscientific conclusion is that these IBuyer companies are moving on the market share for DFW REI.

I spoke to my wife about it and she pointed out how easy it is to sell to these companies when you are needing to unload a property.   The ease of the process might be leading many sellers to go to them versus investors.  

I know that I have not seen much lately for my clients.  It seems to be the slowest it has been in awhile.  

It will come back around.  

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  • Neil Aggarwal
    Lender 路 Richardson, TX 路 Member since 2014 路 537 posts 路 228 votes
    7y

    That is exactly what I am seeing.  Give things a little more time to come back to reality.

    4Reply
  • Jennifer Ryan
    Flipper/Rehabber 路 Arlington, TX 路 Member since 2014 路 78 posts 路 58 votes
    7y

    I recently heard on the news that Dallas / Fort Worth is the fastest growing area in the country. There's just not enough inventory with this hot market so Owner Occupiers are taking anything they can get.  You're right about some of the wholesalers. I'm guessing they're getting their prices so accuracy & honesty have gone out the window...

    2Reply
  • Kyle MccawBusiness Member
    Property Manager 路 Keller, TX 路 Member since 2011 路 1k+ posts 路 1k+ votes
    7y

    classic supply and demand. The demand is so high that wholesalers can get top dollar. And the sellers, even distressed sellers, know there is more value in the house today than in the years past. On another note...contractor pricing has gotten way higher also.

    Good luck and happy investing.

    McCaw Property Management4.4907 Reviews
    WebsiteView Page
    4Reply
  • Adam Wright
    Real Estate Agent 路 Fort Worth, TX 路 Member since 2014 路 176 posts 路 64 votes
    7y

    I started noticing something last month so I did a little digging. DFW is one of two metro areas that has almost all the IBuyer companies working the market. With this in mind, I did a quick check in the MLS on how many properties OpenDoor has sold over the last year. They sold around 700 properties between six months and 12 months ago. The last six months they have sold over 1300. My very unscientific conclusion is that these IBuyer companies are moving on the market share for DFW REI.

    I spoke to my wife about it and she pointed out how easy it is to sell to these companies when you are needing to unload a property.   The ease of the process might be leading many sellers to go to them versus investors.  

    I know that I have not seen much lately for my clients.  It seems to be the slowest it has been in awhile.  

    It will come back around.  

    6Reply
  • Jason Coyle
    OP
    Contractor 路 Fort Worth, TX 路 Member since 2017 路 100 posts 路 49 votes
    7y

    I agree with all of those things. Honestly, there are so many contributing factors, I think it all has accumulated to this result.

    Never really considered the I Buyers though, so that is a great point. @Adam Wright

    Very true as well on supply and demand. A typical showing for just about anything with investment potential is getting multiple offers, sometimes over asking, within minutes or hours. Depends on how many people got the email. I'm not familiar with anyone else's pricing outside of mine. I can say rehabbing a 1,500 sf 3-2-2 for 10k or 15k is a myth, unless it's a paint job and some carpet. It would buy you a few other things, but nothing substantial enough to hit the ARV's being advertised in the pitch on a deal.

    The houses that only need that level of rehab are usually "rental make ready" type properties. I see people offering 5k over asking since they have long term exit strategies, or already have a decent portfolio and can afford to add cash flow in small increments. @Kyle Mccaw

    3Reply
  • Robert Steele
    Investor 路 Lucas, TX 路 Member since 2010 路 620 posts 路 352 votes
    7y

    I agree with everything said here. Good point about the iBuyers - I hadn't considered that.

    I think it's important to underscore the mentioned point that contractor's are taking advantage of this market (no offense OP). I'm seeing at least 25% markups than from a few years ago.

    You're right; the wholesalers are either completely clueless or liars. I've called them out on it multiple times.

    How much do you think is the result of newbie investors flooding the market buying up everything in sight and then getting burned? Before another batch of HGTV newbies rotates in to replace them?

    Case in point I just passed up what looked like a good deal last weekend because the numbers were tighter than an otter's pocket. It went under contract immediately so I guess either people have access to cheaper contractors/suppliers than I do or they are willing to take a big risk, or take a tiny profit or they are newbs.

    I miss the old days when I could look at dozens of distressed foreclosures and take my pick of the litter. I'm sure it will come full circle again.

    0Reply
  • Nettles Mason
    Specialist 路 Greenville, SC 路 Member since 2014 路 149 posts 路 67 votes
    7y

    Please remember marketing cost per deal has also gone up. When I Buyers enter a market and start taking inventory the Wholesaler has to either spend more money to find deals or gets less deals per $ spent.

    One example:

    Look at the cost of PPC for "we buy houses Dallas" . Google does not set price per click. It is a real time auction when seller types. Your local market bids on this real time.  (pulse- how competitive a market is)

    In the good old days you buy a motivated marketing list, mail a letter and were the only investor talking to the seller.

    Today, you buy the same motivated marketing list as every other investor/wholesaler and send Direct Mail. Seller has received 20 text, voice drops and multiple offers before your letter gets to them.

    Speed, technology and response time are changing the industry. It is here to stay.

    Do you think the "I Buyers" are using the same 6 month old motivated seller list that are being white labeled and sold to the masses? 

      I started a huge project of tracking 500k properties in Tarrant County and all court records (pain points). If an owner has a court problem they are identified instantly. 

    Another example: real time data vs static list

    If you collect leads with a website and contact the lead in 5 minutes your conversions will be good right? If you contact the same leads 6 months later...most will have sold. You may get a conversion but your close rate will be less.

    Nobody seems to believe it is happening or want to contribute to my thread. Please look it up and give some feedback.

    Real time data is going to be the future of real estate. I Buyers have figured out how to use it and are a head of the traditional investor.

    4Reply
  • Jason Coyle
    OP
    Contractor 路 Fort Worth, TX 路 Member since 2017 路 100 posts 路 49 votes
    7y

    @nettles Mason

    So are you saying you have some deals in Tarrant County? 馃槀

    0Reply
  • Nettles Mason
    Specialist 路 Greenville, SC 路 Member since 2014 路 149 posts 路 67 votes
    7y

    @Jason Coyle Sorry, I started to answer your question "Dallas/Fort Worth REI. What happened?" - with my $.02 ...and got sidetracked. I am more intrigued with HOW the I Buyers got in touch with the seller and bought that many houses!

    What is the end result- They adapted! Again-How? I doubt they even buy from wholesalers.

    What are they doing that is better or different? (previous post)

    Serious Question- If "I Buyers" continue to grow and decide to operate at a loss for the next 5 years to gain market share what do you (subjective you or traditional buyers) do for deals? 

    0Reply
  • Joshua Brooks Sr
    Lewisville, TX 路 Member since 2019 路 6 posts 路 2 votes
    7y

    Hey Bigger Pockets Community! I agree with the lack of rental investing opportunities. My wife and I live in Lewisville and would like to rent out our property. We had Bob from PMI Premier in Southlake over and his property management company appears solid and professional. We want to be as passive as possible so we're willing to pay the property management company their cut.

    We would like to rent out our house and buy a bigger house in Argyle. God has blessed our family with another son, so we're looking to purchase a bigger house a little farther west. Plus, it's closer to my full-time job in financial services.

    However, the numbers and options don't look spectacular. I work part-time in the military as a chaplain. We used the VA Home loan to purchase the property at 2012 Sorrento LN, Lewisville, 75077. We've lived here for two years and taken good care of the place.

    We have been advised by our real estate agent and a number of mortgage brokers to wait to refinance when the numbers look good. What are your thoughts? The goal is to refinance, rent, and purchase a new house. 


    However, step 1(refinance) isn't looking so great because we won't really be able to lower our rates enough from 3.875% in order to make a small profit renting. Trying to get the monthly payment lower... Any input would be fantastic... Thanks.

    0Reply
  • Jason Coyle
    OP
    Contractor 路 Fort Worth, TX 路 Member since 2017 路 100 posts 路 49 votes
    7y

    Nettles Mason, the short answer, buyers aren't really sure what the answer is!

    My post was partially hoping someone had some strategies that were still effective on a regular basis, and partially just to have a discussion about the current market here.

    I look at tons of deals for investors and the numbers just aren't working as of late. I'm no guru, but I've been doing this for awhile now. It has never been this difficult to get into a property with even a little potential profit. Robert is correct in the fact that newbies are paying these higher prices to wholesaler and driving the prices up. Wholesalers are just looking to make as much as they can, just like everyone else, so why change it?

    I'm actively looking for properties for my investors all the time and keep coming up empty. It used to be 1 in 10 deals at least was pretty good. Now you're lucky if 1 in 30 deals hits even the lowest margin requirements. My clients are having the same issue on their own.

    If ibuyers uses the strategy you mentioned, REI for our market will slow to a drip. The only consistent thing in this world is that everything changes. I just hope the changes we've seen here aren't permanent.

    0Reply
  • Nettles Mason
    Specialist 路 Greenville, SC 路 Member since 2014 路 149 posts 路 67 votes
    7y

    @Jason Coyle   Larger investor and I Buyers are taking market share in markets all over the country.  see second link to see tech tools being used

    Recently I have become infatuated with data and how it can be used. I started a couple threads trying to get discussions about the market or better yet how to compete in the future of REI.

    The thread I started about Tarrant County was for other tech guys to collaborate but would like any feedback. I don't know if my topic is too techie or tin foil hat. I think its the 2 ton elephant in the room.

    Technology is changing in the real estate industry. CRM's, Websites, RVM's, Text, Email, DM, PPC and Call Centers have helped small business owners to explode. Most investors added 1 or all of these "Tools" over the past couple years. 

    1Reply
  • Jody Nichols
    Rental Property Investor 路 North Richland Hills, TX 路 Member since 2014 路 17 posts 路 27 votes
    7y

    I totally agree with this area being extremely hot. Wholesalers listings are basically a joke. The last 4 cash offers I have made have been between 10k & 25K over asking price and none of them have been accepted. They have all gone under contract within 48 hours and with as many as 40-80 offers. Margins would be extremely tight but I am looking for long term holding.  

    0Reply
  • Matt OConnor
    Rental Property Investor 路 GA 路 Member since 2019 路 19 posts 路 11 votes
    7y

    @Jody Nichols What kind of margins do you typically look for? How much was the 10-25k over asking price as a % of the listing price on these deals and were they priced well below market value to begin with?

    Sounds like quite the seller's market.

    0Reply
  • Jody Nichols
    Rental Property Investor 路 North Richland Hills, TX 路 Member since 2014 路 17 posts 路 27 votes
    7y

    @Matt OConnor

    1. List was 120k, Offer was 131k, estimated repairs 18k, estimated ARV 160k.

    2. List was 90k, Offer was 115K, Estimated repair and adding a bedroom with bath 60k, estimated ARV 190k.

    3. List was 125k, Offer was 138k, Estimated repair 25k, estimated ARV 165k.

    A couple of others that are very similar.

    0Reply
  • Michael S.
    Dallas, TX 路 Member since 2014 路 8 posts 路 25 votes
    7y
    Originally posted by @Joshua Brooks Sr:

    Hey Bigger Pockets Community! I agree with the lack of rental investing opportunities. My wife and I live in Lewisville and would like to rent out our property. We had Bob from PMI Premier in Southlake over and his property management company appears solid and professional. We want to be as passive as possible so we're willing to pay the property management company their cut.

    We would like to rent out our house and buy a bigger house in Argyle. God has blessed our family with another son, so we're looking to purchase a bigger house a little farther west. Plus, it's closer to my full-time job in financial services.

    However, the numbers and options don't look spectacular. I work part-time in the military as a chaplain. We used the VA Home loan to purchase the property at 2012 Sorrento LN, Lewisville, 75077. We've lived here for two years and taken good care of the place.

    We have been advised by our real estate agent and a number of mortgage brokers to wait to refinance when the numbers look good. What are your thoughts? The goal is to refinance, rent, and purchase a new house. 


    However, step 1(refinance) isn't looking so great because we won't really be able to lower our rates enough from 3.875% in order to make a small profit renting. Trying to get the monthly payment lower... Any input would be fantastic... Thanks.

     Joshua, 

    I would look at it like this: Imagine you didn't own your Lewisville property. Based on the numbers, would you buy it today solely for the purposes of renting it out? If not, just sell it and deploy the cash in a property that will work better for you. I have 2 properties in the Metroplex and just bought my third but did so out of state. Prices have been going up here (and taxes commensurate to that increase) and as a result cap rates are compressed. I decided I was better off looking elsewhere even if it means taking the plunge to invest outside of my home market. So far its been a good call. 

    1Reply
  • Joshua Brooks Sr
    Lewisville, TX 路 Member since 2019 路 6 posts 路 2 votes
    7y

    @Michael S. 

    Thanks so much for your response and insight. I didn't think about it like that. Our current property doesn't appear to be very "rentable" based on the numbers and high property taxes. One of the most important things I'm learning as a newbie real estate investor is how the numbers have to be present for a good investment. No numbers, no investment. 

    Your response was an example of what Brandon Turner talks about concerning the strength of the Bigger Pockets network. I had a question and you answered it. I learned something by reaching out to the larger BP network.


    We are now working with Passive Wealth Builders to evaluate some properties in Alabama. This looks like a much better investment opportunity, especially with the high property taxes in DFW. Out of state real estate looks like our best bet. 

    Best of luck with your investment endeavors! Thanks again. Peace.

    1Reply
  • Keritan Shelby
    Investor 路 Greenville, TX 路 Member since 2018 路 31 posts 路 14 votes
    7y

    This market was having me second guess my analysis for a minute. Every deal seems to be too thin to make any sort of profit on it, and investors are actually buying them. I believe that homerun deal in the DFW market is a unicorn at the moment for anyone looking for active income. For investors looking for passive income and is solely focused on growth, DFW metropolitan area is a viable option in the long run.

    0Reply
  • Tommy Brownell
    Member since 2019 路 12 posts 路 1 vote
    7y

    @Robert Steele How tight is an otters pocket? LOL

    Good quick read, considering I am a noob and doing my research on real estate investing and also live in the DFW area. I've had these same thoughts when running numbers on deals I have found thus far and it's a bummer!! Time to finish @David Greene book on out of state investing and see how she goes!!!!!!!!!!

    0Reply
  • Robert Steele
    Investor 路 Lucas, TX 路 Member since 2010 路 620 posts 路 352 votes
    7y

    @Jody Nichols Do your numbers include holding costs, closing costs and commissions? I assume you are bundling that into your estimated repair number otherwise I can't see how you could make a profit with buying for $115K + $60K repairs - $190K ARV. Unless of course you don't use Realtors and flip within a few weeks.

    0Reply
  • Robert Steele
    Investor 路 Lucas, TX 路 Member since 2010 路 620 posts 路 352 votes
    7y

    I had two great deals fall from the heavens last weekend. When it rains it pours I guess. 

    First was $195K ask, $40K repairs/holding/closing costs with a $275K ARV. 1 DOM. Multiple offers. I bid $203K. No luck.
    Second was also $195K ask, $60K repairs/holding/closing costs with a $285K ARV. 4 DOM. No offers. I bid full price offer. Suddenly they get another offer and go with that.

    I guess I need to bid higher when there is actually some meat on the bones.

    I haven't been to the Trustee sales in a while but I am assuming it is still nuts over there with people paying retail.

    1Reply
  • Bart H.
    Dallas, TX 路 Member since 2016 路 1k+ posts 路 745 votes
    7y
    Originally posted by @Tommy Brownell:

    @Robert Steele How tight is an otters pocket? LOL

    Good quick read, considering I am a noob and doing my research on real estate investing and also live in the DFW area. I've had these same thoughts when running numbers on deals I have found thus far and it's a bummer!! Time to finish @David Greene book on out of state investing and see how she goes!!!!!!!!!!

     If you are a noob, I would not make your first deal out of state.  I know David Green and others are able to successfully do it.  But almost everyone who successfully goes out of state has some real estate experience.

    When you are brand new your biggest advantage is knowing the neighborhoods.  You can physically spend more time than anyone else to know a 5 by 5 or 10 by 10 square block area.

    There are 3 or 4 neighborhoods we know as well or better than anyone.  IF a house comes on the market, we know to buy it.

    I will also say right now, our biggest bog of a property is the first one we did out of state.  Its a college rental that we bought thinking a family member would live there as one of many roommates.  A year and a half later, we are looking for roommates.

    3Reply
  • Tommy Brownell
    Member since 2019 路 12 posts 路 1 vote
    7y

    @Bart H. That鈥檚 good to know. Thanks for the tip!! I鈥檓 still getting my feet under me but I鈥檝e been networking with realtors and slowly building a local team.

    0Reply
  • Mark SeverinoPro Member
    Rental Property Investor 路 Dallas, Texas (TX) 路 Member since 2014 路 79 posts 路 25 votes
    7y

    @Jody Nichols how did you find the seller and how motivated were the sellers when you offered?

    @Robert Steele those are some excellent asking to ARV spreads. These were MLS?

    0Reply
  • Mark SeverinoPro Member
    Rental Property Investor 路 Dallas, Texas (TX) 路 Member since 2014 路 79 posts 路 25 votes
    7y

    @Jason Coyle I love the service offering of pre acquisition analysis from your experienced and professional view. Are you doing so for a fee or exclusively drafting a bid for a SOW? I see you are located in FTW but would you also do Dallas? 

    0Reply
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