Northern Phoenix, AZ vs Frisco/McKinney, TX

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Northern Phoenix, AZ vs Frisco/McKinney, TX

Bella Kapulkin
Member since 2022 · 2 posts · 0 votes

Hey all, 

my husband and I are new to real estate investing. We sold our house in California almost a year ago, and are in the process of determining if we will try to stay here or if we will move out of the state. In the mean time we want to invest a portion of our earnings from the house sale into a rental. We want a single family home and have 300k to put down. We are debating between Northern Phoenix (AZ)  and the suburbs of Dallas, specifically Frisco and McKinney. I know people say just choose a market and go with it but I would like to hear if there are any parameters we should look at in making that decision, and how to do so properly. 

for example, I know property taxes in Dallas area are higher than Phoenix but average house prices are still lower in the suburbs of Dallas. We also have friends in the suburbs of Dallas who are looking to invest there which on one hand might be easier as they can help us out in case we need someone we trust to physically go to the property. On the other hand would we be in competition with them? 

I might be overthinking all of this but would love to hear some feedback on how to choose between the markets. 

Thanks, 

Bella

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  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    3y
    Quote from @Bella Kapulkin:

    Hey all, 

    my husband and I are new to real estate investing. We sold our house in California almost a year ago, and are in the process of determining if we will try to stay here or if we will move out of the state. In the mean time we want to invest a portion of our earnings from the house sale into a rental. We want a single family home and have 300k to put down. We are debating between Northern Phoenix (AZ)  and the suburbs of Dallas, specifically Frisco and McKinney. I know people say just choose a market and go with it but I would like to hear if there are any parameters we should look at in making that decision, and how to do so properly. 

    for example, I know property taxes in Dallas area are higher than Phoenix but average house prices are still lower in the suburbs of Dallas. We also have friends in the suburbs of Dallas who are looking to invest there which on one hand might be easier as they can help us out in case we need someone we trust to physically go to the property. On the other hand would we be in competition with them? 

    I might be overthinking all of this but would love to hear some feedback on how to choose between the markets. 

    Thanks, 

    Bella

    There are so many rentals and there is so much demand, that you shouldn't even think about being competition. 

    What attracts you to Northern Arizona?

    Property taxes in Texas are a LOT higher than in Arizona. You don't control how property taxes increase so you can expect they will stay high in TX and even go higher.

    Dallas neighborhoods can be pretty rough so be careful.

    Depending on what you want to do I have a 4/2 with pool in Phoenix near Grand Canyon Univ under contract. Good rental neighborhood. I'm ready to assign to someone for a fix & flip or buy & hold rental. Mostly just junk removal and kitchen update. As a rental it wouldn't need to be updated. ARV is about $350k and I'd assign it for $255k.

    0Reply
  • Bella Kapulkin
    OP
    Member since 2022 · 2 posts · 0 votes
    3y
    Quote from @Account Closed:
    Quote from @Bella Kapulkin:

    Hey all, 

    my husband and I are new to real estate investing. We sold our house in California almost a year ago, and are in the process of determining if we will try to stay here or if we will move out of the state. In the mean time we want to invest a portion of our earnings from the house sale into a rental. We want a single family home and have 300k to put down. We are debating between Northern Phoenix (AZ)  and the suburbs of Dallas, specifically Frisco and McKinney. I know people say just choose a market and go with it but I would like to hear if there are any parameters we should look at in making that decision, and how to do so properly. 

    for example, I know property taxes in Dallas area are higher than Phoenix but average house prices are still lower in the suburbs of Dallas. We also have friends in the suburbs of Dallas who are looking to invest there which on one hand might be easier as they can help us out in case we need someone we trust to physically go to the property. On the other hand would we be in competition with them? 

    I might be overthinking all of this but would love to hear some feedback on how to choose between the markets. 

    Thanks, 

    Bella

    There are so many rentals and there is so much demand, that you shouldn't even think about being competition. 

    What attracts you to Northern Arizona?

    Property taxes in Texas are a LOT higher than in Arizona. You don't control how property taxes increase so you can expect they will stay high in TX and even go higher.

    Dallas neighborhoods can be pretty rough so be careful.

    Depending on what you want to do I have a 4/2 with pool in Phoenix near Grand Canyon Univ under contract. Good rental neighborhood. I'm ready to assign to someone for a fix & flip or buy & hold rental. Mostly just junk removal and kitchen update. As a rental it wouldn't need to be updated. ARV is about $350k and I'd assign it for $255k.

    Thanks for the reply. 
    what attracted us to both markets is developing areas with growing populations. House prices that were within our range, while still being family friendly. Also those are areas that we could see ourselves moving too which meant that should we decide to leave California we could potentially settle in that area and then be able to manage the property ourselves. 
    How is development of norther phoneix? We Just visited Dallas suburbs and there is so much construction and building of business and shopping centers. Seems promising. 
    0Reply
  • Allan C.
    Rental Property Investor · Member since 2018 · 826 posts · 810 votes
    3y

    @Bella Kapulkin consider parking your funds into Tbills or CDs until you decide where you will move. My belief is your own proximity to the rental is more important than having a friend in the area.

    I self-manage rentals in several cities across the country and find it easier to manage the ones in similar time zones. You’ll eventually have your team to take care of the various rental activities, but your ease of communicating with the boots on the ground makes a difference.

    The city itself is somewhat irrelevant unless you’re comparing tenant friendly vs business friendly, or high cost vs low. Markets are efficient and your returns will be similar across comparable asset classes, so focus on factors that will improve your likelihood of success as an investor.

    0Reply
  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    3y

    @Bella Kapulkin. Choosing where to love is so much more than the cost of the property taxes. Shoot me a DM if you want to talk about North Dallas

    0Reply
  • Jennifer Volek
    Real Estate Agent · Arlington, TX · Member since 2016 · 151 posts · 54 votes
    3y

    Hi Bella,

    Just want to comment on a few things, hopefully it will help you with deciding where to invest. I think that having friends in the area is a huge benefit! As far as taxes go, yes they are higher, however taxes are deductible at the end of the year. The Frisco/Mckinney are is a very high demand area and you would have no issue renting. I also think that the economy is more stable in Texas than Phoenix. I hear Phoenix got hit hard during the last recession. I am an investor/agent in DFW and would love to assist in any way i can. Good luck.

    0Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    3y
    Quote from @Bella Kapulkin:
    Quote from @Account Closed:
    Quote from @Bella Kapulkin:

    Hey all, 

    my husband and I are new to real estate investing. We sold our house in California almost a year ago, and are in the process of determining if we will try to stay here or if we will move out of the state. In the mean time we want to invest a portion of our earnings from the house sale into a rental. We want a single family home and have 300k to put down. We are debating between Northern Phoenix (AZ)  and the suburbs of Dallas, specifically Frisco and McKinney. I know people say just choose a market and go with it but I would like to hear if there are any parameters we should look at in making that decision, and how to do so properly. 

    for example, I know property taxes in Dallas area are higher than Phoenix but average house prices are still lower in the suburbs of Dallas. We also have friends in the suburbs of Dallas who are looking to invest there which on one hand might be easier as they can help us out in case we need someone we trust to physically go to the property. On the other hand would we be in competition with them? 

    I might be overthinking all of this but would love to hear some feedback on how to choose between the markets. 

    Thanks, 

    Bella

    There are so many rentals and there is so much demand, that you shouldn't even think about being competition. 

    What attracts you to Northern Arizona?

    Property taxes in Texas are a LOT higher than in Arizona. You don't control how property taxes increase so you can expect they will stay high in TX and even go higher.

    Dallas neighborhoods can be pretty rough so be careful.

    Depending on what you want to do I have a 4/2 with pool in Phoenix near Grand Canyon Univ under contract. Good rental neighborhood. I'm ready to assign to someone for a fix & flip or buy & hold rental. Mostly just junk removal and kitchen update. As a rental it wouldn't need to be updated. ARV is about $350k and I'd assign it for $255k.

    Thanks for the reply. 
    what attracted us to both markets is developing areas with growing populations. House prices that were within our range, while still being family friendly. Also those are areas that we could see ourselves moving too which meant that should we decide to leave California we could potentially settle in that area and then be able to manage the property ourselves. 
    How is development of norther phoneix? We Just visited Dallas suburbs and there is so much construction and building of business and shopping centers. Seems promising. 

    Phoenix is very healthy. There a re a lot of new high tech facilities being built including Intel and Taiwan Semi Conductor. And of course, is famous for leisure and sunshine.

    I think both are strong candidates for a great lifestyle.

    Phoenix doesn't get earthquakes, tornadoes or hurricanes. So you might miss the excitement that Texas offers. We chose Phoenix/Scottsdale because of the lifestyle and it's a short drive to the mountains and ocean.

    You might want to do a one week vacation in each before making the final decision.

    0Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    3y

    I'm invested in both places.  I think both are pretty similiar in lots of ways, so for the most part I don't think you can go wrong in either city.

    One thing that worries me a bit about long term investing in Phoenix area is ...water availability.   Where will it come from?

    I'm biased probably as I live in DFW area, but I like the growth prospects north of the areas you mention.

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