North Dallas SFR Deal Analysis Help

3 Replies

Hey everyone, I am a new investor trying to be my first property. I've identified a potential opportunity in north Dallas that I would love your help analyzing. The property is 12003 Hoblitzelle Dr. It is a 4 bed, 2 bath, 2,200sq/ft SFR. I plan to use it as a house hack initially but am factoring in all potential expenses once I move out. It is listed at $189k and does not have any other offers currently (been on MLS for about 2 weeks). Rental comps in the area are a little difficult. Much smaller units have rented for about $1,600. I am using $1,1775 as my number but am open to feedback. The total estimated taxes on the county website are $2,179. The house was built in 1954. I have a spreadhseet that I used to analyze, but I cannot seem to attach it to the forum. My projected cash on cash return was 11% factoring in all of those numbers, which would definitely be a "move forward" number for me. What are y'alls thoughts?

@Adam Beasley nice to meet a fellow Texan. Most people on Bigger Pockets are pretty friendly but I would still caution you in the future on including the address for a deal you are reviewing.  Someone could come in and buy it before you.  If you don't include the address...then there's no chance of that happening.  Just trying to help protect a good deal for you here.

Now, for analyzing the deal:  Since this is your primary home first, I would ask "does this home fit your current needs in a home"?   Meaning, is it located where you need.  Does it provide your family (if you have one) what they need.  Is your commute time reasonable, etc.  Since this will be YOUR want it do be your home first and the investment second.  If you have to comute for an hour and a half but you make good rental income it won't be worth it after living there for a while.  If it does meet your needs, then let's move to the numbers.  

The rental comps you will find on this home are not what you should use.  Rental comps are for someone renting the entire property.  Since this is a Single Family Home that you will live in, you will just be renting rooms out.  So the right place to check on the rents for that are Air BNB or VRBO.  But those types of rentals are long term so finding a true rental comparison might be difficult but you can ball park it.  Also, when qualifying for the mortgage for this property you will not be able to use rental income to help you qualify since this is a Single Family Home.  Not sure if that makes a difference based on your financials but just wanted you to be aware of it.  Feel free to ask more questions if needed.  Thanks!

Thanks @Andrew Postell ! Total rookie mistake on dropping the address. Here's to hoping that people in Dallas are kind haha. I will definitely take that in mind moving into the future. 

I am definitely trying to analyze this through the eyes of a pure investment. I do not have a family but have roommates that will accompany me for the room rentals, so the numbers are great for the living portion of owning the property. 

As for the mortgage, I have already pre-qualified for a 5% down loan so I should be good on that respect. 

My office looks out to that neighborhood. We are on the opposite side of I-75. What I like about that neighborhood is that it is really close to the DART station. I'd be concerned that this particular house is 50% higher price than nearly every house it is surrounded by.  My assumption is you would be living in the house and renting out the other rooms. I don't see how it would be possible to rent out a few rooms for $1,775. I think someone can rent out a whole house, in a better neighborhood, for around $1,500. 

By briefly looking at that house and knowing the neighborhood that it is in, the price listed at $189k seems high. However, it is a really large house for 1954. Also that price point is the sweet spot for first time homeowners in DFW. The market has slowed down quite a bit which should help you find the house that fits your needs and budget. The tax rolls have this house around $100k, so you can reasonably expect those taxes to rise significantly if you purchase anywhere close to $189k. 

In conclusion, your rents appear high, and the price of the house seems high to me considering it doesn't have updates at all. If you move forward with this house, have the seller fix everything the inspector finds, given how soft the market is, I think you can reasonably expect some seller concessions.

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